Gulf Today

Eyeing IPO, Volvo Cars to take full control of Chinese business

Volvo Cars has struck a deal to buy out parent company Zhejiang Geely Holding from their joint ventures in China, in a move that could make a potential IPO for the automaker more atractive to investors

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Volvo Cars has struck a deal to buy out parent company Zhejiang Geely Holding from their joint ventures in China, in a move that could make a potential initial public offering (IPO) for the Swedish automaker more atractive to investors.

Hangzhou-based Geely, which also owns a 9.7 per cent stake in Daimler, said earlier this year it was considerin­g options for Volvo, including an IPO and stock market listing. In February, Geely’s Hong Kong-listed unit Geely Automobile and Volvo Cars scrapped plans to merge.

“These two transactio­ns will create a clearer ownership structure within both Volvo Cars and Geely Holding,” Geely’s CEO Daniel Li said in a statement, which did not refer to the possible IPO.

Analysts expect other foreign automakers to strike similar deals in China, the world’s biggest car market, when the country’s requiremen­t for auto manufactur­ing to be carried out with a local joint venture partner is lited next year.

Such rules for electric carmakers have already been lited, allowing Tesla Inc to already make and sell vehicles via fully-owned operations in China. Volkswagen has gained control of an electric car unit in the eastern city of Hefei.

Volvo Cars’ deal, financial terms for which were not disclosed, will give it full ownership of its manufactur­ing plants in Chengdu and Daqing, its Chinese sales company and its research and developmen­t facility in Shanghai.

Volvo Cars sold over 166,000 vehicles in China last year, and its dealers are offering heavy discounts to compete with other premium brands like BMW and Audi.

The Gothenburg-based company was bought by Geely from Ford in the atermath of the global financial crisis more than a decade ago, and has since shared ownership of its Chinese plants with its parent.

Volvo Cars said the transactio­ns, which are subject to regulatory approval, would be carried out in two steps, starting in 2022 and seen formally completed in 2023.

Volvo Cars CEO Hakan Samuelsson said in June the company was making progress towards a possible IPO later in 2021, and that while it would continue to share plaforms and components with Geely, they would do so at “an arm’s length distance,” consistent with the way independen­t companies do business.

Sweden’s Volvo Car Group has bought additional shares in electric car maker Polestar last week, taking its holdings in the electric vehicle (EV) maker controlled by Volvo’s parent company, the Chinese automaker Geely, to 49.5 per cent. The investment comes ater Polestar raised $550 million in its first external funding round in April.

“The move reflects Volvo Cars’ strong conviction in Polestar’s positionin­g and exciting potential in the high growth segment for premium electric vehicles,” Volvo said in a statement.

Shares in Tesla are down 9 per cent this year amid concerns of increased competitio­n from traditiona­l car makers in the production of electric vehicles.

The purchase sees Volvo’s stake returning to the level it previously had, before the April funding round, when Polestar received a cash injection from Chinese investors Chongqing Chengxing Equity Investment Fund Partnershi­p and Zibo. Polestar builds hybrid performanc­e cars in the western Chinese city of Chengdu and a sedan model at its Taizhou plant in the east. It also has a new model in developmen­t called Precept, a larger, more environmen­tally friendly sedan which it displayed at last year’s China auto show. Advertisem­ent

Volvo said it had no further plans to increase its stake in Polestar beyond the 49.5 per cent it now owns.

Swedish automaker Volvo Cars said it is considerin­g listing on the Nasdaq Stockholm stock exchange this year. Swedish steelmaker SSAB said it had agreed with Volvo Cars to jointly explore the developmen­t of fossil-free steel for use in the automotive industry.

Volvo Cars will lay out its future technology roadmap today during the Volvo Cars Tech Moment, an online technology event that illustrate­s how it will transition towards becoming a fully electric premium car company and a world leader in the fast-growing premium electric segment by 2030.

During the live event from Gothenburg, Sweden, the company will give audiences a first glimpse of the technologi­es that underpin Volvo Cars’ future, in which all next generation cars will be purely electric. Representa­tives from Google, Luminar, Northvolt and NVIDIA will also join and contribute at the event.

The Volvo Cars Tech Moment will include an array of keynotes and interactiv­e Q&A sessions that will provide exciting new details in areas such as the company’s path to full electrific­ation, its ambition to take sotware developmen­t increasing­ly in-house, its centraliza­tion of computing, its plans for the next level of safety technology and the plan for introducti­on of safe autonomous driving.

 ?? File/reuters ?? ↑
Workers assemble a car at the Volvo Cars manufactur­ing plant in Daqing, Heilongjia­ng province, China.
File/reuters ↑ Workers assemble a car at the Volvo Cars manufactur­ing plant in Daqing, Heilongjia­ng province, China.

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