Volvo Gets Cold Feet Over EV’s, and They Are Not the Only Ones

Sweden’s Volvo, which is owned by China’s Geely, have announced that they will no longer fund their sub-brand Polestar, the all-Electric Volvo-clone wannabe-lookalike thingy brand.

This comes after the company haemorrhaged cash into the loss-making brand but still missed all the sales targets.

They are not the only ones that seem to be having a major rethink. The likes of GM and Honda, and BMW and Renault, and Volkswagen have all made major announcements about the future of their EV offerings.

It would seem that legacy car makers cannot emulate the examples of start-ups like Tesla or BYD who spent heavily with cheap money to create their disruptive empires before they turned a profit. 

It would also seem that investors are turning away from EVs as well after they bet an estimated USD1.2 Trillion to engineer the clean new dream.

Much of Europe is concerned that Mr. Trump may win the next US election which would mean rolling back much of the current administrations’ carbon reduction measure which in turn would stall EV growth.

And with an uncertain future, investors get cold feet. China is bucking this trend with copious quantities of government cash that allow domestic producers to dominate the home market and export cheap throw-away products. 

That is, until the EU erect some massive trade barriers which the Chinese manufacturers won’t have the range to drive around.

For the future of EVs, politicians have to give subsidies and for this the government has to believe that EVs are the way forward, many still do.. The theory is that if manufacturers can reach critical volume then the prices will fall, we will all be able to afford an EV and the world will be saved. 

Poppycock I say!

Polestar was always a bit of a problem child for Volvo. They have a plan for a flurry of new models but thus far they have not managed to make sufficient sales of their one and only mass-market offering, the Polestar 2. 

It is a highly competitive market so the company claimed that it was chasing profit and not volume.  Which I believe is double speak for “Oops, no one likes our cars”. Polestar is not officially dead yet, Volvo will be allowing Geely to take it over and whilst no more money will come from Volvo, they will still offer technical assistance.

As I mentioned, Geely of China is a major stakeholder in both Volvo and Polestar and they are saying that they will continue to support both brands. For what it is worth, Volvo also claims that their profits on their own EV models is increasing in an orderly fashion and has now reached 13% compared to the 2% that Polestar managed.

So it is not all bad news for EV wannabes then. Well, the planned IPO for Renault’s wholly owned Ampere division has been cancelled. According to the company, the Division of Renault that was developing their all-Electric platform was healthy enough not to need the infusion of cash.

Which sounds to me like there was no appetite in the market for the shares so rather than be embarrassed they decided not to do it. You decide.