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Volvo Cars said on Tuesday it will transform more than $300 million of outstanding loans to its affiliate Polestar into equity, a move designed to streamline manufacturing and center production of a key electric model in the United States.
The Swedish automaker confirmed it will immediately convert roughly $274 million in credit into shares, followed by an additional $65 million conversion scheduled for the second quarter of 2026. The second փուլ will coincide with a similar transaction led by parent company Geely Holding.
Once completed, Volvo Cars will nearly double its ownership stake in Polestar to just under 20%, reinforcing its strategic ties after previously reducing its holding in 2024.
Company executives highlighted the benefits of continued collaboration. Polestar CEO Michael Lohscheller said the partnership ensures shared manufacturing capabilities, commercial alignment and access to an extensive service infrastructure.
Polestar currently builds its Polestar 3 electric SUV in both South Carolina and China. Under the new arrangement, production in China will be phased out, leaving the U.S. facility as the primary global hub for the model.
Volvo Cars CEO Hakan Samuelsson said concentrating production in Charleston would improve efficiency while reaffirming confidence in the company's American manufacturing base.
The decision reflects broader efforts by Geely to integrate its brands more closely, reduce costs and optimize capacity across its global operations. It also comes at a time when automakers are adjusting to softer demand for electric vehicles in key markets, particularly in the United States, alongside rising tariff pressures that are reshaping supply chains.
Like many EV-focused companies, Polestar has faced financial strain as it scales operations, managing significant cash outflows and ongoing debt obligations.
Since returning as CEO, Samuelsson has emphasized deeper coordination across Geely-owned brands. He recently confirmed that the upcoming Polestar 7 will be produced at a Volvo facility in Slovakia, further aligning manufacturing strategies.
In a separate development, Volvo Cars announced it will take on exclusive distribution of Lynk & Co vehicles in Europe, signaling continued expansion of its role within the Geely ecosystem.
