Helena Soderpalm, Abhinav RAMnarayan

STOCKHOLM, (Reuters) – Volvo Cars hopes investors will invest in its long-term strategy for electric vehicles and get past concerns about supply chains and the transition to batteries as it prepares to launch its first European IPO this year.

China’s Zhejiang Geely Holding has shares in the Swedish carmaker. Shares will start trading on Friday. That is one day after the listing size was decreased and it priced the shares at the bottom end of an previously announced range.

This listing occurs at a moment when investors are keen to invest in the electric vehicle sector (EV). Elon Musk’s Tesla (NASDAQ) saw its market value reach $1 trillion this week.

Investor enthusiasm has been dampened by concerns about Geely’s control over listed businesses, global supply chain problems and Volvo being caught up in trade wars with China.

Geely accepted last week that it would give up its enhanced voting rights which would have granted it 98% in any shareholder vote upon listing. This was despite the fact that its share has fallen to just 84%.

Volvo Cars’ models include the XC-90 SUV. The company is currently transforming into an entirely electric vehiclemaker. In the nine first months of 2020, its Recharge electric models made up 24.9%. Polestar is 49% owned by Volvo Cars.

The key to the IPO’s success is faith in this transition.

Frank Schwope from NordLB Automotive said that it was easier for a new company, like Tesla, to begin manufacturing electric vehicles. But for someone like Volvo who has to transform the existing infrastructure and fire people, it can be a difficult task.

Even if the price is not as anticipated, it can be a positive sign for other businesses. He said that the COVID-19 epidemic was an “inflection point” for electric mobility.

Investors have not yet given their approval. Volvo wanted a valuation between $18 billion and $23 billion. The shares were priced at 53 Swedish crowns per share, the lowest price in this range.

According to a source, the owner wanted the deal to go through this time so the investor was willing to invest.”

It was a difficult IPO market in the past few months. Therefore, it made sense for us to reduce the size of the deal and set a sensible price. He said that this was how price discovery works.

Expectations of rising inflation leading to higher interest rates all over the globe have eroded stock market confidence. In fact, there has been a rash of IPO cancellations both in Europe and in the United States recently.

Deals that were made in 2017 are still being closed. The Renaissance IPO Index for recently-listed companies is down 10.6%.

Volvo Cars’ 2018 flotation effort was delayed due to trade tensions, and the downturn in car stocks.

($1 = 8.5883 Swedish Crowns