Volvo Is Done Propping Up Struggling Polestar

Volvo Is Done Propping Up Struggling Polestar

Happy February! It’s Thursday, February 1, 2024, and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. Here are the important stories you need to know.

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1st Gear: Volvo To Offload Polestar Stake

Swedish automaker Volvo is preparing to part ways with electric vehicle maker Polestar as the two companies face struggles around the world. Polestar, which started out as a subsidiary of Volvo, is owned by the Swedish company and Chinese automotive giant Geely. Now, Volvo is looking to offload its shares in the EV maker onto Geely.

According to Bloomberg, Geely is preparing to free up funds to support Polestar and “relieve” the “financial pressure” that the company piles on Volvo. The move would see Volvo offload some of its 48 percent stake in Polestar to Geely. Bloomberg reports:

Geely, owned by Chinese billionaire Li Shufu, said it’ll fully support Polestar as an independent brand, which won’t affect its 79% holding in Volvo Cars. The Swedish manufacturer, which owns a 48% stake in Polestar, will continue to cooperate with the EV maker across key business areas, including development and manufacturing, it said Thursday.

The move comes as both Polestar and Volvo face issues with the global switch to electric vehicles. Polestar has reportedly faced a “slower than expected” ramp up in production, while the launch of Volvo’s flagship EX90 EV has been plagued with software issues and delays.

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As the two companies drift further apart, it’s hoped they can each find their footing in the EV landscape. Volvo boss Jim Rowan said that while his company will remain a shareholder in Polestar, the offloading will help Volvo invest in its own EV future and would “allow Polestar to go and get funding from other sources,” Bloomberg reports.

2nd Gear: Cruise Can’t Stop Burning Through Cash

Cruise had a pretty awful year in 2023, with the GM-backed autonomous taxi company grounding its fleet after a series of high-profile crashes and collisions. Now, General Motors has revealed what that cost, and it’s quite a lot.

The Washington Post reports that Cruise lost more than $3 billion in 2023, and now GM is looking at ways to cut operating costs to slow the rate at which it burns through cash. The losses of $3.48 billion in 2023 were up on the $3.2 billion that Cruise lost in 2022. The Post reports:

General Motors-owned self-driving car company Cruise’s operating loss totaled $3.48 billion in 2023, a staggering deficit that comes as the company faces two federal probes over an October crash in San Francisco and uncertainty over when it will resume its driverless testing program around the country.

Cruise, once regarded as a front-runner in the autonomous car industry, has been bleeding money since General Motors acquired it in 2016. While General Motors said Tuesday that it “remains committed” to Cruise, the automotive giant also said it will reduce Cruise’s expenses by about $1 billion to “slow the cash burn and align with a narrower focus in 2024.”

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As GM endeavors to cut costs at Cruise, the question of when the autonomous taxis will be back on the road remains up in the air. According to Reuters, the company had been set to outline its plans for a return to America’s streets in March, but that has now been “delayed indefinitely.”

3rd Gear: Tesla Sued For Dumping Hazardous Waste

After struggling to justify the pay packet of its boss, Elon Musk, Tesla is now facing calls to explain its handling of hazardous waste. The U.S. automaker is faces legal action over the way it disposed of certain toxic substances leftover from its production facilities.

Reuters reports that more than 20 Californian counties have sued the American EV maker, claiming that it “mishandled hazardous waste at its facilities.” Not a good look for a company supposedly out to save the planet. Reuters reports:

The lawsuit from Los Angeles, Alameda, San Joaquin, San Francisco and other counties was filed on Tuesday in California state court. It seeks civil penalties and an injunction that would require the company to properly handle its waste in the future.

The counties accused Tesla of violating state unfair business and hazardous waste management laws by improperly labeling waste and sending the materials to landfills that cannot accept hazardous material. California’s hazardous waste management law carries potential civil penalties as high as $70,000 per violation per day.

The kinds of hazardous substances that the case relates to includes many of the essential ingredients that go into a car. We’re talking about things like paint, antifreeze and used batteries. There are even reports of diesel being improperly disposed of by Tesla, which is weird for a company focused solely on electric power.

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Tesla hasn’t yet commented on the case.

4th Gear: Slow EV Demand Is Latest Production Nightmare

It isn’t just Tesla that’s facing issues in the world of electric vehicles, however. Now, Forbes has taken a deep dive into the way struggling EV sales are shaking up the whole automotive supply chain, and it doesn’t look good.

According to the new report, the slowing EV revolution is causing all kinds of headaches for parts suppliers around the world. As global automakers rushed to electrify their lineups, Forbes reports that companies from huge manufacturing behemoths to “mom-and-pop” shops all jumped onboard the switch. However as demand for EVs isn’t quite what was expected, the troubles are starting to surface. The site explains:

Joseph McCabe, president and CEO of AutoForecast Solutions, an industry advisory firm, said “the hard part about forecasting EV demand is: When does the new-adopter apex hit? It has come. And now sales have slowed. And what is happening is that suppliers are still being told to come up with obnoxiously large volumes when the reality is that the market is definitely [sliding] back.”

The “increasing uncertainties” mean that many suppliers will either have to cut costs or turn to automakers and ask for support. While that might work for some, others are sure to fall by the wayside as the challenge of new EV manufacturing practices take hold.

After the automotive supply chain was rocked by the pandemic, it sounds like it might have just made it out of the frying pan but right back into the fire.

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