A Volvo car store worker presents a Volvo XC60 and other models via livestream in Shanghai, China, March 18, 2024.
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Volvo Cars Toyota Motor Corp. said Thursday it is cutting its margin and revenue targets, after announcing it is no longer targeting 100% electric vehicle sales by 2030.
The Swedish carmaker, majority owned by China's Geely Holding, said it was now targeting a 2026 EBIT margin target of 7-8%, down from “above 8%”, due to “increasing complexity, particularly around global trade and tariffs”.
It added that it now aims to “continue to outperform the luxury car market through 2026,” rather than sticking to its previously announced revenue target of between 500 billion Swedish kronor ($48.6 billion) and 600 billion kronor.
International trade disputes and ever-changing tariffs have become a major headache for automakers as they navigate the geopolitics of the European Union, China and the United States, while also seeking a competitive advantage in a market dominated by the shift to electric vehicles.
Volvo Cars shares were up 3.2% in early afternoon trading after falling 10% so far this week.
The company is holding a capital markets day in Gothenburg, Sweden, where it will discuss its product plans for the coming years, with a focus on the shift to electric and hybrid models. Volvo Cars has five fully electric models on the market, with five more under development.
However, the company revealed on Wednesday that it will not target 100% electric vehicle sales by 2030 — which it defines as “electric vehicles” — and is instead looking for a range of 90% to 100%, allowing for continued sales of mild-hybrid models. Mild-hybrid cars have internal combustion engines that use some electric assistance.
Volvo cited consumer demand, slower-than-expected charging infrastructure rollout, withdrawal of government incentives in some markets, and uncertainty over new tariffs on electric vehicles in various markets as reasons for the change.
It said it remains committed to all-electric vehicle sales in the long term “when market conditions are right.”
Many automakers have reported challenges in transitioning to electric vehicles, particularly due to weak demand. At the same time, many consumers continue to complain about inadequate charging infrastructure and cite concerns about vehicle range.
Volvo Cars also announced Thursday that it is extending its partnership with the US chip giant. Nvidia The company is also working on features including advanced driving assistance and autonomous driving. It also said it will shift to a “single technology group” as it looks to lower the costs of manufacturing electric vehicles.
Volvo Cars reported global sales rose 3% year-on-year in August, driven by a 32% increase in Europe, while China sales fell 23%, figures released Thursday showed. Fully electric and plug-in hybrids accounted for 25,028 of the 52,944 cars sold — or 47% — in August 2024, with the rest being mild hybrids and internal combustion engine vehicles.
In July, the company reported record quarterly operating profit of SEK 8.2 billion.
