Penetration of battery-powered EVs in Germany is expected to decline slightly from last year to 15% with sales down 20% during the January to July period, according to HSBC. For Europe, it expects EV penetration of 14.8% in 2024, compared with 14.5% last year.
Under its revised target, Volvo will now aim to turn 90 to 100% of its global sales to electric cars and plug-in hybrids by 2030. It will also continue to invest in hybrid technology amid growing consumer demand.
Despite the shift in its target, Volvo said demand for premium EVs had continued to grow and its gross margin on battery-powered cars reached a record 20% in the second quarter.
“We have been very clear that fully electric cars also need to be profitable,” chief commercial officer Björn Annwall said. “Our strategy remains the same but it’s also about adjusting to reality.”
Still, analysts have warned that higher tariffs in the US and Europe on Chinese EV imports will probably keep prices high since companies will be forced to produce vehicles in higher-cost plants outside of China.
To boost demand, mass volume carmakers have offered cash incentives, which have hurt their margins.
Volvo already has plants in China, Sweden and Belgium, and is constructing a new factory in Slovakia, which will begin producing vehicles in 2026.
But to address the rising tariffs, the company said it would produce its EX30 EV model in its Ghent plant in Belgium as well as in China from next year.
Rowan told the Financial Times the group had enough land in Slovakia to build a new battery plant if it wanted to.
Some analysts have speculated that the extra capacity can be used to produce other Geely-owned brands looking to bring production to Europe.
“At this point in time, the plan for Volvo is to first build its own cars,” he said, while not ruling out the possibility.
Written by: Kana Inagaki in Gothenburg
© Financial Times
