Volvo reduces its profit forecast after abandoning EVs by 2030 goal
Swedish automaker Volvo Cars slashed its margin and revenue ambitions for a second time in a year on Thursday, a day after it abandoned its EV-only target by 2030, citing the impact of tariffs and a decrease in demand for electric vehicles.
Slowing demand for EVs, partly due to a lack of affordable models, as well as the effects of EU, U.S. and Canadian tariffs on electric cars made in China, have made market conditions increasingly difficult for automakers.
Volvo Cars, which is majority-owned by China’s Geely, lowered its target for operating profit margin excluding joint ventures and associates to 7-8% from above 8%.
It also scrapped a sales goal of 550 billion-600 billion Swedish crowns ($53.5 billion-58.4 billion), instead saying it expected to outgrow the premium car market. Volvo has revised its revenue and margin targets for the second time this year. In January, it retracted a goal of annual EBIT between 8-10% with sales of 1.2million
carss by mid-decade that was first announced in 2020. While the EV manufacturer had taken pride in its unwavering belief that it would achieve full EV sales before 2030, on Wednesday it decided to follow others and aim for 90% of sales to be a mixture of plug-ins and EVs by then. “We’ve seen that the transition will take a bit longer than what we initially thought,” CEO Jim Rowan said to Reuters. “As I’ve said before, business isn’t a game about perfection. It’s all about progress and adaption,” he said on Thursday. Rowan said the removal of some subsidies was contributing to the EV slowdown.
Christina Bu, head of Norway’s EV association, said she was not surprised by Volvo’s decision to dampen its near-term electrification goals.
“They are following after quite a few other automakers who have gone out with similar statements earlier, so it’s not too surprising,” Bu said. She echoed that strong, long-term support is needed for the EV switchover. “Strong policies are still necessary to be able to get this transition to work”, she told Reuters.
In releases ahead of a planned investor event in Gothenburg, Volvo said that starting with its flagship electric EX90 model – which the Swedish automaker will begin delivering to customers this month – it will have a single “technology stack” for all
car
models.
Volvo
Car
s said separately it will use a single software system backed by Nvidia chips for all future models and will rely on “megacastings” – massive presses to make large single-piece aluminium vehicle underbodies – to cut costs for electric cars.
It also reported on Thursday a 3% year-on-year increase in car sales in August.
