STOCKHOLM: Volvo Car AB and its parent Geely may need to take Polestar Automotive Holding private, according to Bernstein, which sees shares in the struggling electric-car maker declining further amid intense competition.
The company, which listed in 2022, is "on a road to nowhere,” Bernstein analyst Daniel Roeska said in a note. "We love the innovative asset-light strategy, we like the cars, but we don’t think the company should be a stand-alone equity.”
Bernstein said it was initiating coverage of the company with an underperform rating, attributing a target share price of US$1.15, indicating a 44% downside. The stock has plummeted more than 82% in the past year.
The note added to pessimism around Polestar after Swedish bank SEB last week said it could no longer attribute a value to the company as the continued cash burn made it difficult to find a valuation floor.
"Ultimately, we would like to see the concept and brand survive, but think it would make more sense for Polestar to eventually fold back into the Volvo Cars-Geely ecosystem,” Roeska said.
Polestar chief executive officer Thomas Ingenlath defended the company in an interview Friday, saying "anybody interested in the value of the company only needs to go to the ticker to see that it is trading at US$4 billion worth.”
The separate listing was a "meaningful exercise” with the company well along in establishing itself successfully in the EV market.
He wouldn’t say whether Geely and Volvo Cars had expressed any limits to their patience. "It’s our own interest to not make this company always dependent on being funded by our shareholders.”
Since its 2022 listing in the US, Polestar has been tapping its key backers Volvo Cars and Geely for new funds as it aims to more than double production over the next two years.
The two largest owners hold 88% of the shares and more than 93% of the voting rights.
Representatives of Volvo Cars and Geely Sweden declined to comment.
The company has struggled to gain market share in a weakening economic environment and tough competition from Chinese manufacturers that are selling battery-powered models at lower prices.
The challenges could grow this year, with consumer enthusiasm for EVs cooling.
"A lot of companies in the EV business have been hit and we are no exception,” Ingenlath said. He also stressed he remains "very motivated” to stay on as chief executive and is convinced 2024 will be a successful year.
Over the past 12 months the company has lost 44% of its value.
