Volvo Cars reports a healthy 7% increase in operating profits for the first quarter of this year with battery-electric vehicle sales surging 10% year-on-year to now comprise 18% of its new-model sales.
Profits, excluding joint ventures and associates, rose to SEK 6.3 billion ($611 million) up from SEK 5.9 billion ($572 million) the previous year. Total revenues for the first three months grew 29% compared to the same period last year to SEK 96 billion ($9.3 billion).
However, the automaker acknowledges ongoing trading challenges including raw material prices, especially for BEVs, remain at elevated levels amid continued geopolitical turbulence around the world.
During Q1, Volvo Cars’ sales increased 10% compared to the same period last year, with BEV sales growing 157% and achieved with only two fully electric models, the XC40 and the C40. The automaker says it will introduce at least one more BEV model per year until mid-decade, built on next-generation electrical architectures and core computing technology.
Viewers of the online results presentation were given a brief outline peek at the next model to be launched, a compact SUV aimed at the mid-market consumer.
Volvo Cars is hoping the new model will match the level of demand being seen for its new BEV flagship SUV, the EX90 coming to market in early 2024. This has surpassed the company’s internal projections. As a result, the automaker has closed the order book for the time being because the first scheduled production run is sold out, but it will re-open again soon.
On its sustainability mission, Volvo’s efforts to reduce CO2 footprint per car are on track, it says. In the first quarter, CO2 emissions were 20% lower compared with the 2018 benchmark, supporting the company’s mid-decade ambitions of 40% CO2 reduction per car.
Addressing the presentation, President and CEO Jim Rowan (pictured, left) says: “In summary, our order book remains strong, production has improved, (and) raw material costs, while still elevated, are trending in the right direction. Cost efficiencies and retail optimization has started to materialize and add value. With this performance, we’ve laid a strong foundation for the rest of 2023, but we remain ever-vigilant amidst the continued turbulence around the world. Our focus is on execution.”
During a Q&A session, Rowan defends Volvo’s objections to the European Union’s reversal of its previously announced ban on all ICE-powered new vehicle sales from 2035. He suggests this was not a proper reading of the future market, adding: “Starting with e-fuels (synthetic alternatives for fossil fuels) I just think it is a distraction. For example, what happens to the older cars? Are all cars going to be able to run on e-fuels as well as current fuels? If so, where will they fill up? Will every single garage have e-fuels?
“This would become massively complex, and I think this is just a distraction factor and the use of investment that could go much more into electrified infrastructure.”
