Volvo Cars CEO Jim Rowan said the softening of electric vehicle demand is a mass-market headache -- not his.
"The mass-market segment maybe has been affected by some companies not getting to price parity with ICE [internal combustion engine]," Rowan said during an earnings call Thursday. "In the premium segment, we don't see that. We see the premium segment growing, and we are taking market share."
If Volvo has second thoughts about its all-in strategy with battery-electric vehicles, the company's execs are not letting on.
"We are the highest premium BEV [battery electric vehicle] share company, and we have the highest published BEV margins in the EV sector other than Tesla," Rowan said.
In 2023, Volvo's gross margin on its BEVs was 9 percent while the margin on non-BEVs was 23 percent.
Rowan expects the BEV figure to improve this year because of the arrival of the EX30 small electric SUV, which Volvo forecasts will deliver gross margins of 15 to 20 percent, pushing the automaker closer to price parity with its non-BEVs.
During the second half of 2023, Volvo's gross profit margins on electric cars increased fourfold to 13 percent.
Electric future
Globally, Volvo sold 113,419 electric cars in 2023, an increase of 70 percent from the prior year. Based on two battery-electric crossovers, Volvo increased its global electric market share by 34 percent from a year earlier.
This year, Volvo will also introduce EX90 flagship crossover and the EM90, which is luxury van aims at China and other Asian markets.
The Swedish automaker's embrace of electric vehicles is among the most ambitious of legacy automakers.
"Volvo will not sell a single car that is not full-electric after 2030, regardless of market," the brand's chief commercial officer, Björn Annwall, told Automotive News last year. "There's no ifs, no buts."
But demand for EVs is cooling in the U.S., the world's second-largest market.
Cox Automotive said the industry's EV inventory increased 92 percent last year, averaging 113 days' supply to end 2023. In comparison, overall inventory stood at 69 days.
Hybrids get love
Volvo executives emphasized that the brand's lineup of mild hybrids and plug-in hybrids will be key to steering the company to its full-electric future.
Plug-in hybrids "constitute an important bridge into the fully electric future," Annwall said on the investor call. "We see many consumers who take plug-in hybrid as the first step into full electrification, and the next car they buy is a fully electric car."
Annwall views Volvo's hybrid and battery-powered portfolio as a near-term hedge against disparate EV adoption rates globally.
"The transition [to EVs] happens at different time scales throughout the world," Annwall said. "We can sell more [internal combustion] XC90s in the central U.S. and more [battery-electric] EX90s on the West Coast."
During the next few years, Volvo's hybrids will receive exterior styling, interior design and infotainment updates.
"They will get further love and care with smart investments," Annwall said. "Exactly which cars and exactly what time we will come back to."
Douglas A. Bolduc contributed
