Volvo reaches milestone with planned IPO

06 October 2021

Volvo Cars is planning an initial public offering (IPO) in what has been called one of Europe’s biggest listings this year. The Swedish carmaker, owned by China’s Zhejiang Geely Holding, intends to float on Nasdaq Stockholm, raising SEK25 billion – around €2.46 billion – by issuing new shares.

Geely Holding, which acquired Volvo Cars for $1.8 billion in 2010, plans to remain the company’s largest shareholder. However, it is unknown what stake the Chinese parent company would retain. Trading will commence later this year, with proceeds from the IPO helping the carmaker to go full-electric by 2030. The deal could value the company at up to $25 billion (€22 billion), according to people familiar with the matter.

‘The decision to proceed with an IPO will help strengthen our brand and accelerate our transformation strategy – towards full electrification, direct consumer relationships and the next level of safety,’ said Håkan Samuelsson, CEO of Volvo Cars. ‘This will position the company to deliver continuous growing volumes, revenues and profitability.’

Volvo broke the mould by being one of the first traditional carmakers to phase out internal-combustion engines (ICE). The manufacturer rolled out its first fully-electric car, the XC40 Recharge, last year. By 2025, half of its global sales will consist of battery-electric vehicles (BEVs), with the rest made up of hybrids.

The carmaker’s intention to go public closely follows last week’s announcement of electric vehicle (EV) maker Polestar – a Volvo spinoff – to list on the US Nasdaq stock exchange through a special purpose acquisition company. A coincidence? Likely not. Analysts say Polestar’s IPO paved the way for Volvo’s stock exchange flotation. Volvo currently holds close to 50% in Polestar and is expected to keep its stake in the luxury EV maker.  

Transformation and growth

The Gothenburg-based carmaker has come a long way since Ford sold the business at a massive loss to Geely over a decade ago. It has evolved into a technology-driven premium brand that now competes with the likes of BMW and Mercedes-Benz, something which is also reflected in the company’s sales figures.

The latest data released this week shows Volvo sold 530,649 cars in the first nine months of 2021, an increase of nearly 18% compared to a year ago. Despite the ongoing chip shortage that has forced carmakers around the globe to slow production, Volvo reported sales growth in the nine-month period across Europe, China, and the US. The carmaker also profited from online sales, which jumped 360% year-on-year.

‘We have supported the transformation and growth of this iconic Swedish brand during a period of unprecedented change in our industry,’ said Eric Li, chairperson of Volvo Cars’ board of directors. ‘Over the past decade, Volvo Cars has turned itself into one of the world’s fastest-growing carmakers.’

A listing will diversify Volvo’s ownership base and provide shareholders with another opportunity to invest in a highly competitive automotive company. While Volvo will initially not surpass the market capitalisation of some of the top players – such as Toyota, Volkswagen and Daimler – its focus on electrification, sustainability, and digitisation will draw in plenty of interest from investors.