LONDON (WNN) – Swedish automaker Volvo said on Monday it plans to raise at least 25 billion kronor ($2.9 billion) by selling shares to fund its electric vehicle transformation strategy.
Volvo Cars and its parent company, Chinese carmaker Geely, have applied to hold an initial public offering on Nasdaq Stockholm, with shares expected to begin trading before the end of the year.
The money raised from the IPO will help meet Volvo’s lofty ambitions. The company aims to nearly double sales to 1.2 million vehicles by 2025, half of which will be battery electric cars, and wants its entire lineup to be fully electric by 2030.
“We are going to change the fastest in the business, to electrification – 2030. No more combustion cars. And that is just part of it,” CEO Hakan Samuelsson said in an interview.
Volvo’s plans also include selling more directly to customers and aiming to have half of sales through online channels by the middle of the decade.
“All of this costs a lot of money. So we are now making a primary issue of new shares to secure equity for that change.”
Volvo is based in Gothenburg, Sweden, but has been owned by Geely, one of China’s largest independent automakers, since 2010.
The company is proceeding with the share sale, even as semiconductor shortages have stymied global auto production.
Chief financial officer Björn Enval said the shortfall would persist at least until the end of the year. But because the crisis is being felt in the car industry, automakers may shy away from selling more expensive models or offering lower discounts for higher profit margins, which makes for lower sales.
“From a financial point of view, this shortage of semiconductors is not such a big problem,” Enval said. “Of course, some customers have to wait longer than we want for the delivery of cars. And so that’s a problem. But it’s a problem we’ve learned to live within and we’ve got very little time in it.” I don’t see any improvement.