June 16 (Reuters) - Polestar said on Monday it

had secured a $200 million equity investment from major

shareholder PSD Investment, a company controlled by Geely

Holding founder Li Shufu.

The Swedish electric vehicle maker will sell more than 190

million Class A American depositary shares (ADS) to PSD

Investment - which will now hold 44% of Polestar.

After the transaction Li Shufu will hold a total of 66%

in Polestar through PSD investment and the Swedish subsidiary of

Geely.

The Swedish automaker has faced challenges in boosting

demand for its vehicles amid a softer market and intense

competition, and like many other EV makers had a need for

further funding.

While the automaker has received loans from various banks in

the past year, further financial support from Geely

and Li Shufu, also known as Eric Li, have until now not

materialized.

The transaction will also reduce Volvo Cars' stake in

Polestar to 16% from 18%, after the Swedish automaker cut its

holding and halted financial support last year amid analyst

criticism over the burden Polestar placed on its resources.

Polestar said the private investment in public equity (PIPE)

transaction is intended to provide working capital and fund

general corporate purposes.

The company said that prior to the closing of the

transaction PSD Investment plans to convert 20 million of its

Class B ADS shares into Class A ADS shares, in a bid to keep its

total voting power in Polestar below 50%.