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Volvo’s IPO will be ahead in the electric car race

October 9, 2021

V.OLVOS SPORT subtly recalls its Swedish heritage, from the tiny blue and yellow flags that adorn some models to the “Hammer von Thor” headlights that illuminate all vehicles. A brand that combines Scandinavian design with safety and environmental concerns has helped Volvo in recent years to expand its presence beyond its European heartland to China and America. It hopes it will continue. An IPO announced on October 4th will make it both “more Swedish and more global,” said Hakan Samuelsson, Volvo boss.

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At the Swedish end, the Stockholm listing will strengthen Volvo’s Nordic identity. Globally, the IPO offers the opportunity to draw on a broader pool of investors while expanding its global reach while remaining small and agile enough to cope with the rapidly changing automotive business. And Samuelsson insists that his relationship with Geely, the Chinese company that Volvo has owned since acquiring Ford for $ 1.8 billion in 2010, isn’t going to change much. Geely intends to remain the largest shareholder and the two companies will continue to share cost and technology.

When Geely went public for Volvo in 2018, the alleged reason was an impending trade war between China and the West. In reality, the decision probably had more to do with the fact that no one else thought the company was worth $ 30 billion. This rating now looks more reasonable. Volvo suffered losses under Ford, producing 374,000 American-owned cars last year to make 773,000 with a healthy profit in the 12 months to June. The goal of producing 1.2 million cars a year by 2025 seems achievable. It is also leading the way in selling its cars by subscription or directly to consumers at a fixed price rather than through dealers.

More importantly, Volvo is ahead of most of its competitors when it comes to satisfying the growing appetite of motorists and investors alike for electric vehicles (EVs). It’s pledged to go fully electric by 2030, well before most of its competitors; Outsourcing the internal combustion engine business into a standalone operation to focus on electric vehicles; and partnered with Northvolt, a Swedish battery company, to build a gigafactory and secure supplies. It also owns Polestar, an EV-only brand, which last month announced plans to go public next year as part of a reverse merger with a special acquisition company (and hopes to achieve a valuation of $ 20 billion). The reliance on Volvo for manufacturing capabilities and retail and service networks puts Polestar in a better position than most competing EV startups that lack both.

Geely will rake in a manageable profit after owning Volvo for about a decade. The Chinese company will retain a dominant stake, but through the IPO will focus on its reorganization from a holding company with various automakers to a transportation technology group that also manufactures the smartphones and satellites that provide transportation services and ultimately autonomous vehicles. For its part, Volvo expects nearly 3 billion in the IPO. If that is the case, the rivals have even more catching up to do.

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This article appeared in the business section of the print edition under the heading “Electric Blue and Yellow”

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