Volvo Car will increase its ownership in Polestar to 19.9% by converting $274 million of debt into equity, strengthening its position in the struggling electric vehicle maker. The Swedish automaker, controlled by Zhejiang Geely Holding Group, originally founded Polestar as a standalone EV brand before its 2022 Nasdaq listing through a SPAC merger.

Polestar shares have plummeted 96% since going public, battered by mounting losses and fierce competition in the EV market. The company has relied heavily on Volvo for financial support, drawing approximately $1 billion in financing over recent years. This latest move comes as Polestar faces slowing EV adoption and intensifying market pressure.

The debt-to-equity conversion not only increases Volvo's stake but also signals continued support for Polestar despite its challenging market position. The deal includes plans for U.S. manufacturing collaboration between the two companies, though specific details weren't disclosed. With Volvo now holding nearly a fifth of Polestar, the Swedish automaker maintains significant influence over the EV startup's future direction.