Volvo raises €500-M for electric transformation

MANILA: Volvo Cars has raised €500 million from a diverse set of global investors for funding and accelerating the carmaker’s transformation towards becoming a fully electric carmaker by 2030, and becoming climate neutral and circular by 2040.

Over two-thirds of the proceeds will fund the research and development of electric powertrains for next-generation pure electric Volvo cars and related new platform technology. The rest will be invested in boosting the company’s production capacity of fully electric cars.

The €500-million green bond was issued under Volvo Cars’ Euro Medium Term Note program. The bond matures on May 31, 2028, and will be listed on the Luxembourg Stock Exchange.

The successful placement shows that there is still a demand for sustainable investment opportunities. Above all, a three-time oversubscription illustrates the strong trust that investors put not only in Volvo Cars, but also in the company’s climate plans and electrification strategy. 

Volvo was the first established car maker to commit to full electrification and aims to sell only pure electric cars by 2030. By mid-decade, it aims for half of its global volume to consist of pure electric cars.

Recently, Volvo was recognized for its environmental, social and governance (ESG) progress by Sustainalytics, an independent ESG research, ratings, and data firm. In particular, the firm highlighted Volvo Cars’ work to manage its energy efficiency and to limit its carbon output.

In 2020, Volvo Cars established a Green Finance Framework in alignment with the ICMA Green Bond Principles. This allows the company to fund its ambitious climate plans and electrification strategy by issuing green bonds or obtaining green loans, where all proceeds will be used for climate-related and environmental projects. Shortly after the creation of the framework, Volvo raised the €500 million. 

“Sustainability is central to our purpose and business, and key to our future success,” Chief Financial Officer at Volvo Björn Annwall said. “The high interest for our green bond is encouraging and a clear sign that the market believes in Volvo Cars and the investment plans we’ve developed to deliver on our climate ambitions. It also reaffirms our commitment to the Paris Climate Agreement and to become a climate neutral company.”

Annwall concluded: "The financial community has a critical role to play in driving sustainable development, and we plan to continue to offer sustainable financing and investment opportunities in the future as we shift towards full electrification.”

Photos from Volvo 

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