Always up to date information for free
Just sign up to Tram myFT Digest — delivered directly to your inbox.
Volvo Cars has abandoned its ambitious target of selling only electric cars by 2030 as global growth in battery-powered vehicles slows.
The Geely-owned Swedish group was the first of the traditional automakers to commit to a full transition to electric vehicles and remains the most bullish about the transition even as rivals like Ford and General Motors have also abandoned their EV ambitions.
Volvo CEO Jim Rowan on Wednesday blamed changing market conditions and consumer concerns about a lack of charging infrastructure for the company’s revised target.
“We will be ready to go all-electric this decade, but if the market, infrastructure and customer acceptance are not there yet, we can wait a few more years,” Rowan said as he introduced Volvo’s new electric and plug-in hybrid sport utility vehicles.
Electric vehicle sales growth has slowed globally, largely due to a lack of affordable products, with battery-powered vehicles costing about 20 to 30 percent more than conventional gasoline-powered vehicles. The slowdown in sales growth has been particularly severe in Europe, where Germany and other countries have abruptly ended subsidies for electric vehicle purchases.
According to HSBC, the penetration rate of battery electric vehicles in Germany is expected to fall slightly from last year to 15%, with sales falling 20% in the January-July period. For Europe, HSBC expects the penetration rate of electric vehicles to be 14.8% in 2024, compared with 14.5% last year.
According to its revised goals, Volvo will now aim to shift 90 to 100 percent of its global sales to electric vehicles and plug-in hybrids by 2030. The company will also continue to invest in hybrid technology amid growing consumer demand.
Despite the change in focus, Volvo said demand for premium electric vehicles continues to grow, and its gross profit margin for battery-powered vehicles hit a record 20 percent in the second quarter. “We were very clear that fully electric vehicles also need to be profitable,” said chief commercial officer Björn Annwall. “Our strategy remains the same, but it’s also about adjusting to the reality.“
However, analysts have warned that higher tariffs in the United States and Europe on electric vehicles imported from China could push up prices as companies are forced to build them in higher-cost factories outside China. To spur demand, high-volume automakers have offered cash incentives that have hurt their profit margins.
Volvo now has factories in China, Sweden and Belgium, and building a new factory in Slovakiawill start producing the car in 2026. But to address the issue of rising tariffs, the company said it will produce the EX30 EV model in Ghent Factory in Belgium as well as in China next year.
Rowan told the Financial Times that the group has enough land in Slovakia to build a new battery factory if it wanted to. Some analysts have speculated that the additional capacity could be used to manufacture other Geely-owned brands that are looking to move production to Europe. “At this point, Volvo’s plan is to first build its own cars,” he said, but did not rule out the possibility.
