Why Volvo will stop sharing EV margin figures

Volvo will stop disclosing the gross margins it makes for its different drivetrains, starting in the third quarter.

As the automaker launches more full-electric models it will be "more secretive with that competitive, sensitive information," CEO Jim Rowan told Automotive News Europe.

Volvo started showing the gross margins generated by its battery-electric vehicles (BEVs) and its cars with internal combustion engines (ICEs) in 2022.

Gross margin is gross income as a percentage of revenue. The figure represents the percent of revenue that Volvo retains after incurring direct costs associated with producing the vehicle.

The catalyst for breaking down its figures to that granular level, which is something none of its legacy premium rivals do, was to make a point.

"When the price of lithium spiked and everybody was saying, 'There is no way you can get price parity with BEVs and ICEs. There's no way you can get to those gross margins to be comparable.' We felt it was possible," Rowan said July 18.

Volvo felt the price of materials such as lithium, nickel and cobalt would stabilize and that it would benefit from adding less expensive lithium iron phosphate (LFP) batteries to models such as the EX30.

"We decided to be transparent with the market and show that we could get to a comparable margin. Even in a small car like the EX30 we felt we could get to between 15 and 20 percent gross margin," Rowan said. "We've done that. We've proved the point."  

In the second quarter the gross margin on Volvo's full-electric cars reached its highest level ever of 20 percent, compared with a margin of 2.6 percent during the same period last year. The gross margin on its ICE models was 23 percent, up from 21 percent during the second quarter of 2023.

Driving that gross margin increase was the arrival of the EX30. The small SUV, which started to reach European customers in January, is already Europe's No. 3-selling EV after the Tesla Model Y and Model 3, according to figures from market researcher Dataforce.
 

"The issue now is that we are bringing out more and more EVs and our competitors can start to triangulate that information," Rowan said. "Now it's the time for us to take another tack."

Volvo will continue to break down its BEV and ICE sales figures, which is something rivals including BMW, Mercedes-Benz and Audi also do.

With the arrival of the EX30, EX90 flagship large SUV and EM90 luxury van, Volvo's BEV lineup will grow to five models (the others are the EX40 and EC40).

Volvo has seven models with ICEs, all of which are offered with hybrid powertrains, led by its global top-seller, the XC60.