By Dominic Chopping

STOCKHOLM--Volvo Car will give Polestar shares worth around 9.5 billion Swedish kronor ($919.4 million) to its shareholders as it pares down its stake and follows through on a pledge to stop funding the electric car maker.

In a statement Friday Volvo said it will distribute 62.7% of its Polestar stake to its shareholders. After the distributions, Volvo will retain an 18% stake in the EV carmaker.

Volvo and its Chinese owner Geely founded Polestar as a stand-alone EV maker, separate from Volvo's substantial in-house effort to go electric. Through a special-purpose acquisition company merger, the two listed it on Nasdaq in 2022. Polestar shares have fallen 89% since then.

Analysts have highlighted how Volvo's 48% stake in Polestar has been a drag on its resources, with the joint venture struggling with losses amid the slow consumer uptake of electric vehicles and the increasingly competitive market, tapping Volvo for around $1 billion in financing while it works through a turnaround plan.

Earlier this month, Volvo said it was evaluating its Polestar shareholding and vowed to stop providing further funding.

The distribution announced Friday will enable it to concentrate resources on the next phase of its transformation, with Geely continuing to provide operational and financial support to Polestar, it said.

"As we embark on the next stage of our transformation, gearing up to lead in next-gen mobility, our focus sharpens on Volvo Cars' development," said Jim Rowan, Volvo Car Chief Executive.

"As we have significant operational collaborations with Polestar and a financial relationship, it is logical for us to retain influence through a smaller 18.0% stake in Polestar. That said, Volvo Cars will not provide further funding to Polestar."

Volvo will seek approval for the deal at its annual general meeting next month and said the distribution will be made by way of a 2:1 share split.

Write to Dominic Chopping at

(END) Dow Jones Newswires

02-23-24 0235ET