Swedish car manufacturer Volvo Autos cut its margin and revenue targets for the second time in a year on Thursday, a day after it dropped its electric-only vehicle target by 2030, citing the impact of tariffs and a decline in demand for electric vehicles. electric vehicles.
Declining demand for electric cars, partly due to a lack of affordable models, and the effects of EU, US and Canadian tariffs on electric cars. autois made in Chinahave made market conditions increasingly difficult for automakers.
Volvo Autos, which is largely owned by China’s Yellowishlowered its target for operating profit margin excluding joint ventures and associates from just over 8% to 7-8%.
It also scrapped a sales target of 550-600 billion Swedish crowns ($53.5-58.4 billion), saying instead that it expected to outgrow the premium auto market.
This is the second time in a year that Volvo has scaled back its margin and revenue targets, after deviating in January from a target of annual EBIT of 8-10% and revenue of 1.2 million autoannually in the middle of the decade, first announced in 2021.
While the electric vehicle maker prided itself on its unwavering commitment to selling fully electric vehicles by 2030, it decided on Wednesday to follow the lead of other automakers and now aims for 90% of its sales to be a mix of plug-in vehicles by then. hybrids and electric vehicles.
“We have seen that this transition is going to take a little bit longer than we thought when we first set the targets,” CEO Jim Rowan told Reuters.
“As I have said before, business is not about perfection, it is about continuous progress and adaptation,” he said in a statement on Thursday.
According to Rowan, the elimination of certain subsidies contributed to the decline in demand for electric vehicles.
Christina Bu, head of the Norwegian EV Association, said she was not surprised by Volvo’s decision to scale back its electrification targets in the short term.
“They are following the lead of other automakers who have made similar statements before, so it is not that surprising,” Bu said.
She reiterated the need for strong and long-term political support for the EV transition. “Strong policies are still needed to make this transition a success,” she told Reuters.
In press releases ahead of a planned investor meeting in Gothenburg, Volvo said it will begin production of its flagship electric vehicle EX90 model – which the Swedish carmaker will start delivering to customers this month – will have a single “technology stack” for all auto models.
Volvo Autos said separately that it will use a single software system powered by Nvidia chips for all future models and that it will rely on “megacastings” — huge presses to create large, one-piece aluminum vehicle floors — to help reduce costs for electric cars autoS.
A 3% year-on-year increase was also reported on Thursday auto sale in August.