Volvo Announces IPO In A Bid To Accelerate Shift To Electric Cars

Renowned Swedish automobile maker Volvo, by owned China’s Zhejiang Geely Holding – Volvo, has announced plans to take on an initial public offering in Sweden’s Nasdaq Stockholm exchange and are expected to start trading before the end of 2021. The automobile company said its aim of going public and issuing new shares is to raise an equivalent to $2.86 billion which is about 25 billion kronor.

Geely remains the largest privately owned automobile company in China and also owns a considerable amount of share since its Volvo. Earlier in the year, both companies refused plans for a merger. It’s unknown which side this move would see Geely on if it would sell an ampule amount of its shares in Volvo or not. Although the automobile brand didn’t make any specific target valuation of its entire company following its IPO or say the amount of stake it would hold on to. But it’s expected Geely would be interested in remaining a big-time shareholder of the company.

“We have been discussing an IPO for many years, and now we come to a point where we really want to secure our transformation,” says Volvo’s Chief Executive Hakan Samuelsson. He added that the company had wanted to ensure it could raise the $3bn “independent of market conditions”.

Volvo said that proceeds of the public offering will be put into good use especially with the task of securing the future by phasing out fleets powered by gas, converting its auto fleet into a fully electric fleet, and becoming an EV-only company by 2030. According to Volvo’s Samuelsson, in an interview, he said that “Volvo will be an electric car company and the intention here is to secure the future of the company.” A report from The Wall Street Journal hinted that plans by Volvo to go public are currently being finalized and details would be made public in little or no time. Also, proceeds of this public offer will also be used for the in-house production of electric motors and batteries for supply in Europe, the U.S., and China.

The automobile maker made its first announcement of the fully electric car in 2020. This introduced automobile lovers to its SUV range called the XC4 Recharge. The SUV is designed with the ability to charge its own batteries to 80 percent capacity within 40 minutes. The follow-up to XC4 Recharge is the XC40 Recharge and the XC90. The XC40 Recharge would later in 2021 and XC90 SUV which would be unveiled in 2022. The XC40 would be set at a starting price of $54,895, the vehicle has been described as a good luxury subcompact SUV and would be one that offers its users a considerable amount of pleasure. Volvo has managed to land a spot of being recognized as the brand for safety.

Since the acquisition by Geely from Ford in 2010, Volvo has since transformed impressively. Today the Volvo brand can be comparable with similar brands and is sometimes referred to as Germany’s best. Eric Li, Geely’s Chairperson in an interview said “We have supported the transformation of this iconic Swedish brand during a period of unprecedented change in our industry.” He added that “We would continue to support the Volvo cars as a majority shareholder in this ongoing global success story.” Volvo sold as many as 660, 000 cars last year, a year where the pandemic hit various economies of the world. Volvo targets boasting of sales as many as 1.2million vehicles by the end of 2025.