$Polestar Automotive (PSNY.US)$ Volvo Cars shares surged 23%...

Volvo Cars shares surged 23% as the Swedish automaker said it will stop providing funding to EV startup Polestar as it ramps up its own investment.

Volvo Cars said it's "evaluating a potential adjustment to Volvo Cars' shareholding in Polestar, including a distribution of shares to Volvo Cars shareholders" in which Geely (HK:175) would become a significant new shareholder in Polestar. Volvo Cars (SE:VOLCAR.B) holds a 48% stake in Polestar (PSNY), while Geely holds 79% of Volvo.

Geely will continue to provide full operational and financial support to Polestar going forward, while Volvo Cars will extend the repayment period for an existing convertible loan.

Volvo and Polestar will still collaborate in research-and-development, manufacturing and other functions.