Volvo Cars revises margin and revenue targets amid EV market challenges

Volvo Cars has cut its margin and revenues goals for the second time this year on the back of the difficulties in the EV market coupled with tariff pressures. This decision follows the company's decision to drop its controversial target of getting 40% of its sales from EV by 2030 and shift to plug-in hybrid electric vehicles instead.

Volvo car which is controlled fully by Geely has recently lowered its operating margin before joint venture and associate target to 7-8% from more than 8% it set earlier this year. The company also abandoned its revenue plans that struck at USD 550 billion-USD 600 billion Swedish crowns (USD 53.5 billion - USD 58.4 billion) and promised to overtake growth of the premium car market.

This adjustment means that Volvo has downgraded it financial targets twice in the last year. In January this year, the automaker withdrew the prior-year goals of attaining EBIT margin of between 8-10% and annual selling of 1. Some of the goals presented are the production of 2 million cars by mid-2020s, first unveiled in 2021.

Mitsubishi’s move away from an all-EV strategy by 2030 is a process escalated by the slowing demand for electric vehicles and tariffs placed on Chinese electric cars by the EU, US and Canada. Recently, Volvo’s CEO, Jim Rowan said that the shift to the all-electric future is longer as compared to what the companies still planned for. ‘Business is not Sport,’ Rowan continued, ‘It’s, however, about constant evolution and learning’.

Christina Bu, the head of Norway’s EV association, did not discuss the issue saying that other car makers have also tweaked their goals of selling electric cars. It is noteworthy that she called for sustained and durable political commitment towards the support of EV transition.

Amid optimisation of its logistical service, the Volvo has stated that its EX90 model, planned to be in the delivery this month, will act as a foundation for the technology of future models. The company also outlined plans to employ a single software system based on the Nvidia chips and to use ‘megacastings’ to produce a single piece aluminum underbody for vehicles in order to cut costs.

Nevertheless, this year’s and even August’s dynamics in car sales have revealed certain positive trends along with the existing challenges that Volvo has faced at the market level.