Swedish automaker Volvo Cars slashed its margin and revenue ambitions for a second time in a year on Thursday, a day after it abandoned its EV-only target by 2030, citing the impact of tariffs and a decrease in demand for electric vehicles.
Slowing demand for EVs, partly due to a lack of affordable models, as well as the effects of EU, U.S. and Canadian tariffs on electric cars made in China, have made market conditions increasingly difficult for automakers.
Volvo Cars, which is majority-owned by China’s Geely, lowered its target for operating profit margin excluding joint ventures and associates to 7-8% from above 8%.
It also scrapped a sales goal of 550 billion-600 billion Swedish crowns ($53.5 billion-58.4 billion), instead saying it expected to outgrow the premium car market.
This is the second time in a year that Volvo has walked back margin and revenue goals, after stepping away in January from a target for annual EBIT of between 8-10% and sales of 1.2 million cars annually by mid-decade first announced in 2021.
While the EV maker had prided itself on its unwavering confidence in going for full EV sales by 2030, it decided to follow other automakers on Wednesday and instead now aims for 90% of its sales by then to be a mix of plug-in hybrids and EVs.
“We have seen that this transition is going to take a little bit longer than we had first thought when we first made those targets,” CEO Jim Rowan told Reuters.
“As I have said before — business is not a game of perfection, it’s about continuous progress and adaptation,” he said in a statement on Thursday.
Rowan said the removal of some subsidies was contributing to the EV slowdown.
Christina Bu, head of Norway’s EV association, said she was not surprised by Volvo’s decision to dampen its near-term electrification goals.
“They are following after quite a few other automakers who have gone out with similar statements earlier, so it’s not too surprising,” Bu said.
She echoed the need for strong and long-term political support for the EV transition. “Strong policies are still necessary to be able to get this transition to work”, she told Reuters.
In releases ahead of a planned investor event in Gothenburg, Volvo said that starting with its flagship electric EX90 model – which the Swedish automaker will begin delivering to customers this month – it will have a single “technology stack” for all car models.
Volvo Cars said separately it will use a single software system backed by Nvidia chips for all future models and will rely on “megacastings” – massive presses to make large single-piece aluminium vehicle underbodies – to cut costs for electric cars.
It also reported on Thursday a 3% year-on-year increase in car sales in August.