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Volvo to stop funding Polestar, sees stock rise dramatically

STOCKHOLM — Volvo Cars said on Thursday it would stop funding Polestar Automotive Holding and was handing responsibility for the struggling luxury car brand over to Volvo's top shareholder China's Geely Holding. The announcement sent the Swedish automaker's stock up more than 30% at market open. The heavy involvement by Swedish-listed Volvo Cars in Polestar, where it owns around 48% of the shares, has been criticised by analysts who see the stake as a drag on Volvo's resources. Like other new EV brands and startups, Polestar has struggled to make headway, particularly since Tesla started a price war last year. The automaker said earlier this month that it had missed its already-reduced delivery targets for 2023. Polestar's shares are down just over 83% since it went public in June 2022 via a merger with a special purpose acquisition company, or SPAC. Volvo Cars said it has considered handing Polestar shares over to Volvo's shareholders, which would make Geely a big direct owner in the brand. Shares in Volvo were up 20% at 0814 GMT, after they soared 32% at market open. Geely in a separate statement welcomed Volvo's decision to focus its resources on its own development. "Geely Holding will continue to provide full operational and financial support to the independent exclusive (Polestar) brand going forward," the Chinese group said. "This support will not require a reduction of Geely Holding shareholding in Volvo Cars," it added. However, the broker Bernstein said it saw a distinct possibility that the Geely ecosystem could sell down its shares in Volvo. Polestar last week said it planned to cut around 450 jobs globally, or about 15% of its workforce, amid "challenging market conditions". It also said in November that it would try to reduce its reliance on external help, publishing a revised business plan, which included getting additional loans from Volvo and Geely. The news could raise questions about the viability of Polestar, which aims to become cash flow break-even in 2025. Some analysts have said it could make more sense to fold Polestar company into Geely. Volvo Cars meanwhile reported a bigger than expected rise in fourth-quarter operating earnings on Thursday, with operating income excluding joint ventures and associates rising to 6.7 billion Swedish crowns ($643.83 million) from a year-earlier 3.9 billion. Analysts polled by LSEG had expected adjusted earnings before tax and interest (EBIT) of 6.5 billion.

California adapts ZEV mandate with PHEVs for smaller automakers

California is the nation's largest market for zero-emissions vehicles with over 100,000 of them estimated to be on the roads there. The state's goal is to keep that number growing every year. To that end, the California Air Resources Board is now tweaking its rules in a way that might not boost ZEVs but could mean more plug-in hybrids for the Golden State. Jaguar Land Rover, Mazda, Mitsubishi, Subaru, and Volvo asked for an exemption to the state's zero-emissions vehicle mandate last year due to their relatively small development budgets compared to larger automakers. CARB denied their request but did craft a compromise, according to Automotive News. Rather than being required to offer a ZEV in the state, companies with an annual global revenue of less than $40 billion, like those in this group, may instead sell plug-in hybrids to earn ZEV credits. The companies aren't completely off the hook, though. If these plug-in hybrids don't earn enough credits, the corporations must buy them on the market to make up the difference. Automakers with popular electric models like Nissan and Tesla have made a big business through this trading system by selling their surplus to rivals. Tesla alone pocketed $51 million in the first quarter from this part of its business, according to Automotive News. The changes to the regulations also aren't set in stone, yet. CARB is meeting in 2016 and could adjust things further at that time. Related Video: News Source: Automotive News - sub. req. via Hybrid CarsImage Credit: Justin Sullivan / Getty Images Government/Legal Green Jaguar Land Rover Mazda Mitsubishi Subaru Volvo Emissions Electric Hybrid California zev credits zero emissions vehicle

Weekly Recap: Toyota, Mazda team up to 'make cars better'

Toyota and Mazda are teaming for a noble purpose: to "make cars better." That's how the two Japanese automakers termed their partnership, which was announced this week. So what does this actually mean? The companies said they will set up a joint committee to look for areas of cooperation and named safety and the environment as issues they plan to tackle. From a product perspective, it's believed that Toyota is interested in Mazda's Skyactive engine portfolio. In turn, Mazda has its eye on Toyota's fuel-cell and plug-in hybrid technology. While more specifics were not confirmed, the companies said the "agreement will go beyond the traditional framework of cooperation," and it has the potential to be a long-range partnership. "The main purpose of this initiative is to enhance the appeal of our cars," Toyota president Akio Toyoda said at the announcement. Previously, Mazda has licensed Toyota's hybrid tech and assembled compact cars for Toyota in Mexico. Akio Toyoda said these projects "triggered" the automakers to explore further collaboration. Dave Sullivan, product analysis manager for AutoPacific, said the tie-up echoes Daimler's wide-ranging work with the Renault-Nissan alliance. "This could be a well-groomed match due to each having very unique skill sets," he said. OTHER NEWS & NOTES Volvo selects South Carolina for US factory Volvo confirmed this week that it will build its first US factory in South Carolina, with construction set to begin this fall. The company first revealed plans in March, though it didn't announce a site. The plant will have initial annual production of 100,000 units, though the vehicle or vehicles to be assembled were not specified. The factory, located near Charleston, will open in 2018 and ultimately employ 4,000 people. The facility will help Volvo continue its growth strategy, which includes strengthening its presence in the US market, where it wants to sell more than 100,000 cars per year. "Building a plant in the US is a reflection of Volvo Cars' commitment to the US and the key role the US plays in our growth objectives," Lex Kerssemakers, senior vice president, Americas, said in a statement. Ford GT spied on the road The 2017 Ford GT was spotted testing around the Blue Oval's headquarters in Dearborn, MI, this week. The raw body panels were exposed, and they lacked paint or camouflage. It's the first time the GT has been captured on the street after a spring of auto show reveals.