Volvo has announced that it has purchased additional shares in its performance electric vehicle spinoff Polestar, increasing its stake back to 49.5%. Gothenburg’s shareholding in the company stood at 50% before it was diluted by a fundraising programme back in April.

Then, Polestar received US$550 million (RM28 billion) from a group of investors led by Chongqing Chengxing Equity Investment Fund Partnership, Zibo Financial Holding and Zibo Hightech Industrial Investment. South Korean conglomerate SK was also part of the investors plumbing money into the company.

Volvo said it has no plans to further raise its stake in or consolidate Polestar, which it jointly owns with parent company Geely. The additional stake will be acquired from PSD Investment, the private investment company of Volvo and Geely chairman Li Shufu (Eric), which will remain the second largest shareholder. The transaction is slated to be completed shortly, subject to certain conditions.

The move, said Volvo, reflects its “strong conviction” in Polestar’s positioning and potential in the burgeoning premium electric vehicle sector. It added that Polestar has made significant progress in establishing itself as a pioneer in the market, as customers become more savvy and environmentally conscious and EVs cheaper and more advanced.

Aside from utilising Volvo and Geely’s architectures for its vehicles, Polestar also leverages Volvo’s manufacturing capabilities. It recently announced that its next model, the 2022 Polestar 3, will be built on the same Ridgeville, South Carolina plant as the S60 and the production Concept Recharge. Future production is expected to shift to Europe by the middle of the decade.

Polestar traces its origins back to 1996 as Flash Engineering, a race team owned by Jan Nilsson. The Volvo-affiliated team was sold to Christian Dahl in 2005, after which it assumed the Polestar name. Volvo purchased the tuning division in 2015 and spun it off as an independent carmaker two years later; the race team, rechristened Cyan Racing, remains under Dahl’s ownership and now fields Lynk & Co vehicles, winning the World Touring Car Cup (WTCR) two years in a row.