Volvo Cars is predicting its key "affordable" battery-electric vehicle, the EX30, will fall short of sales projections this year, blaming the European Union’s proposed tariffs on Chinese-made cars.
That’s because the compact SUV is currently only constructed in China, the domestic market for Volvo Cars owner Geely, and a proposed European manufacturing plant in Belgium is yet to be completed early next year.
The EX30 is the brand’s “entry-level” BEV but will be hit by 19.9% tariffs following an investigation into the model’s origins of source of its main components by the European Commission, the trading bloc’s trade regulator. The tariffs can be avoided when the model, among other key Volvo BEVs, begins being constructed within the EU.
However, the company expects BEV sales growth to slow by between 12% to 15% because of the tariffs.
During the revealing of global second-quarter financial results for 2024, a Volvo Cars statement says: “In the short term, potential tariffs from the EU Commission affecting EVs from China will affect the EX30. However, as the company previously announced, it will start producing the EX30 in its Ghent, Belgium plant next year, as part of its ‘Build where we sell’ strategy.
"The company aims to start production of the EX30 in Ghent during the first half of 2025, with volumes ramping up during the second half of that year.”
Nonetheless, the automaker’s results for the first half of the year are positive, with Volvo Cars reporting a greater-than-expected operating profit. Volvo Cars produced 211,900 vehicles of all powertrains in the second quarter despite the European decline in BEV sales.
Its operating income, which includes its stake in loss-making Polestar, rose to SEK 8 billion ($758 million) from up from SEK 5 billion ($469 million) a year earlier, beating the market’s forecast of SEK 6.7 billion ($628 million).
The company's BEV gross margins rose to 20% from 16% in the previous quarter, underpinning CEO Jim Rowan's assertion that margins would continue to rise.
Rowan says: “We delivered a strong second-quarter performance in 2024 with record underlying profitability, demonstrating our ability to create value despite a complex geopolitical and economic environment.
“During the year we increased our market share in Europe to the highest level ever and grew our share in the U.S. as well, while managing our market position in China. I am pleased that we did so with pricing discipline.”
