Volvo drops 2030 all-electric target amid slow EV demand

STOCKHOLM -- Volvo has abandoned is ambition of selling only full-electric cars in 2030 and will instead allow plug-in hybrid vehicles as well as some mild hybrid engine cars as part of its lineup.

The automaker now aims for plug-in hybrids and battery-only models to account for at least 90 percent of its sales in 2030, it said in a statement. The remainder will allow for mild hybrids that rely mostly on a combustion engine.

"We are resolute in our belief that our future is electric," CEO Jim Rowan said in the statement on Sept. 4. "However, it is clear that the transition to electrification will not be linear, and customers and markets are moving at different speeds of adoption."

Demand for electric cars is cooling in Europe after countries including Germany and Sweden ceased or reduced subsidies.

That has prompted manufacturers such as Mercedes-Benz Group and Volkswagen to lower their EV ambitions, with VW mulling unprecedented factory closures in Germany to cut costs.

Geely-owned Volvo Car has also been caught in the crossfire of a trade conflict with Beijing over aid for its EV industry. The company builds electric models in China that are hit by tariffs in the U.S. and the European Union.

Volvo in July slightly lowered its auto-sales forecast for this year due to the EU duties. In June, it had postponed U.S. shipments of its EX30 SUV to next year after Washington imposed a tariff of more than 100 percent on Chinese EV imports. Volvo has been cutting jobs in Sweden to reduce costs.

Volvo is betting on its flagship electric SUV, the EX90, to bolster demand in the coming months. The company has started shipping the model to retailers in the U.S. and Europe, with first customers expected to get their cars before the end of this month.

Reuters contributed to this report