Volvo committed to electric future despite downturn in EV interest

Volvo is committed to its electric-only future and isn’t worried by recent weakening of demand for electric cars, boss Jim Rowan has said. The Swedish manufacturer intends for its EV sales mix to hit 50% by 2025 and 100% by 2030. It sold 113,419 EVs last year, a 17% rise on 2022 and 16% of its total global sales. Those sales came from two models, the Volvo XC40 Recharge and Volvo C40 Recharge, so the firm anticipates rapidly growing its EV sales with the new entry-level Volvo EX30 and flagship Volvo EX90 SUVs this year. Rowan also said those new EVs will match or better Volvo’s combustion cars in terms of gross profit margins. There have been signs that demand for EVs has softened as firms look to expand sales from early adopters to the mass market, with those buyers put off in part by higher prices, while manufacturers are concerned about lower profit margins. “The reason there’s so much negative around the slowdown of EVs is that there are two different segments: the premium segment and the mass market,” Rowan said. “The mass market has been affected by some companies not getting to price parity with ICE, but we see the premium EV segment growing and we’re taking market share in that. So we’re still bullish about the premium EV market going forward.” Rowan said that “it’s important for our sustainable future that we go fully electric, but it has to be done with sustainable margins”. He added: “It's reassuring to see amid all talk about weakening or softening BEV demand and lousy BEV margins for many players that during last year we grew our BEV sales and increased our gross margins.” Volvo has continued to push further into the premium segment and in future will shift its financial focus from sales units to revenue. Rowan said the brand's premium push was vital to ensuring high demand for its EVs. Volvo boss Jim Rowan Asked when Volvo’s EVs will match its ICE cars for gross margin, Rowan said that the EX30 – which uses parent firm Geely's EV-specific SPA platform – “takes us pretty much there.” He said: “We’re at between 15% and 20% gross margin on that car, and many of our competitors struggle to reach that on their ICE cars.” Rowan added that the gross margin of the EX30 is achieved despite its comparatively low £33,000 starting price and could improve further as Volvo learns and develops the platform and through supply-chain efficiencies by growing its volume sales. “If you can do that on a small car, which is the most difficult size to do that on, you’re well positioned for the future,” said Rowan. “As we develop our architectures and get more vehicles on bespoke EV architectures, that will help: the XC40 and C40 are still on CMA, which is really an ICE platform that we redesigned, and you lose some efficiencies when you do that. “The EX30 and EX90 are born electric cars, and that means we can increase the gross margins on those cars. So at least we as Volvo Cars in the premium segment have already reached parity in margins.” Rowan also highlighted the extra efficiency and margins that can be gained through the reduced complexity of the supply chain from an EV, due to the vastly reduced number of parts. But while Volvo is firmly focused on a fully electric future, it will continue to offer mild-hybrid and plug-in hybrid cars. In fact, it will update its entire line-up of PHEVs in the coming years. Rowan said those models “constitute an important bridge into the full electric future” and that Volvo data shows many customers have gone from a PHEV to an EV. He also said that Volvo’s shows more than 50% of the energy used by its PHEV fleet is electricity, so “they’re being used more as an EV than an ICE [car]”.

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Volvo committed to electric future despite downturn in EV interest

Boss Jim Rowan told Autocar that it’s "important for our sustainable future that we go fully electric"

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Volvo committed to electric future despite downturn in EV interest

Boss Jim Rowan told Autocar that it’s "important for our sustainable future that we go fully electric"

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