Volvo Cars and Polestar said on Tuesday they plan to consolidate all global production of the Polestar 3 electric SUV at Volvo‘s plant in South Carolina — ending manufacturing of the model in China.
Separately, Volvo Cars announced that it is converting approximately $274 million of its outstanding shareholder loan to Polestar into equity, with a further $65 million conversion expected later in the second quarter.
“The move to consolidate global Polestar 3 production in Charleston helps generate efficiencies for both companies, whilst also underscoring our confidence in the plant and the role it plays in our manufacturing footprint,” said Håkan Samuelsson, Volvo Cars‘ chief executive.
Chinese giant Geely Holding Group continues seeking synergies withing its controlled brands.
Earlier this week, Volvo announced that it plans to become the exclusive distributor of Lynk & Co in Europe.
Manufacturing Shift
The Polestar 3 is currently built at both the South Carolina plant and at Volvo‘s facility in Chengdu.
The decision reinforces the strategic role of the Charleston plant, which already serves as Volvo‘s global production hub for the fully electric EX90 SUV.
Both the EX90 and Polestar 3 are built on Volvo’s SPA2 architecture, enabling the two models to share a production line.
Volvo has invested $1.3 billion in the South Carolina facility over the past decade and says the plant has an installed production capacity of 150,000 vehicles per year.
Chinese-made vehicles exported to the United States face tariffs exceeding 100% under the Trump administration’s trade policies.
By moving all Polestar 3 production to South Carolina, Volvo and Polestar eliminate exposure to those duties for US-bound vehicles and create a tariff-free export base for other markets.
Financial Restructuring
Polestar disclosed that Volvo Cars has agreed to convert approximately $274 million of its shareholder loan into equity, roughly doubling its stake in the EV maker from 9.8% to 19.9%.
The conversion price will be set at 95% of the 30-day volume-weighted average price in Polestar shares up to March 27.
A second conversion of approximately $65 million is expected later in Q2 to prevent dilution from a separate Geely transaction, keeping Volvo’s holding at the 19.9% level.
In total, Volvo will convert roughly $339 million of debt into Polestar shares.
Geely Sweden Holdings is also converting approximately $300 million of debt to equity under a deal first announced in December 2025.
The remaining approximately $661 million of Volvo’s shareholder loan has been extended to December 2031. The transactions carry no immediate cash impact for either party.
Volvo has provided Polestar with approximately $1 billion in financing since the EV maker went public.
“We are grateful for the continued support from Volvo Cars in helping us to strengthen our balance sheet and reinforce our liquidity profile,” said Polestar CEO Michael Lohscheller.
Shares of the premium EV brand have lost approximately 96% of their value since the company listed on Nasdaq through a special purpose acquisition company (SPAC) merger in 2022.
