The shares of Sweden-based electric vehicle (EV) maker Polestar (NASDAQ:PSNY) are down about 10% today. PSNY stock is sinking after reporting that it would no longer receive funding from its parent company, Volvo (OTCMKTS:VLVCY), whose headquarters are also based in Sweden. But China-based Geely (OTCMKTS:GELYF), which controls Volvo, may provide PSNY with financial backing instead.

Unlike PSNY stock, Volvo’s ADR shares, trading with the ticker VLVCY, are rising over 25% on the news.

More About the Changes in the Volvo-Polestar Relationship

In addition to ending its funding of Polestar, Volvo is contemplating giving the shares of PSNY stock that it owns to Volvo’s shareholders. Volvo owns about 44% of PSNY stock. Such a spin-off would give Geely, which owns nearly 79% of Volvo, a huge stake in Polestar.

In a press release this morning, PSNY stated it “welcomes Geely… as a potential direct new shareholder.” Polestar added that “Volvo…will remain a strategic partner in areas across R&D, manufacturing, after sales and commercial.”

Volvo CEO Jim Rowan said that the move would enable the automaker to concentrate on improving itself going forward.

PSNY Stock: Polestar’s Deliveries Are Up

Polestar’s deliveries rose just 6% last year to 54,600 EVs. However, the company’s new luxury SUV, the Polestar 3, is supposed to start being delivered to Americans in the next few months. Car and Driver reports that the EV is “fairly quick “and is “good to drive.” The publication also referred to it as “a handsome beast,” and the EV’s range of 300 miles is quite competitive.

Given these points, I believe that the EV could take significant market share away from Tesla’s (NASDAQ:TSLA) Model Y.

On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.