Sweden’s Volvo Vehicles on Thursday reported a 12% rise in full-year working revenue and report income, however warned of extreme market challenges forward from intensifying electrical automobile competitors and world tariffs.
The automaker, which is majority-owned by China’s Geely Holding, stated working revenue got here in at 22.3 billion Swedish kronor ($2.04 billion) in 2024 amid an 8% gross sales improve.
Nonetheless, revenue slid 28% within the closing three months of the 12 months, which the corporate stated was affected by a one-off 1.7 billion kronor impairment associated to its three way partnership with Swedish battery developer Northvolt, Novo Power. Yr-on-year gross sales for the fourth quarter nudged 1% greater, however shed 6% in China and a pair of% within the U.S.
The corporate reiterated 2026 steerage to ship a core earnings earlier than curiosity and taxes (EBIT) margin of 7-8%, however stated 2025 could be a “difficult and transition 12 months” towards Volvo Vehicles’ long-term development ambitions, because it anticipated slower market development and “elevated reductions” throughout the trade.
This can make it tough to match the corporate’s 2024 volumes and profitability, it added.
A Volvo EX30 absolutely electrical automobile is displayed throughout Every part Electrical London 2024 at ExCel in London, March 28, 2024.
John Keeble | Getty Photographs Information | Getty Photographs
Many automakers are combating elevated competitors and excessive expenditure within the electrical automobile area, together with main gamers equivalent to Tesla.
Volvo Vehicles in September scrapped its plan to promote solely EVs by 2030, citing “totally different speeds of adoption” by clients. In its 2024 outcomes, the share of battery EV gross sales rose to 23% from 16% in the course of the earlier 12 months.
“I believe it is a cheap efficiency given the quantity of turbulence that we noticed even in [20]24,” Volvo Vehicles CEO Jim Rowan advised CNBC’s “Squawk Field Europe” of the ends in a Thursday interview.
“In [20]25 I believe we’ll see that turbulence improve. And the best way I body it’s, I believe we’ll see turbulence when it comes to commerce tariffs, perhaps some geopolitics, and we’ll see some coverage modifications. I additionally assume we’ll see the transition to EV decelerate a little bit bit, which is okay for Volvo Vehicles, as a result of we’ve gentle hybrid know-how in addition to plug in hybrid know-how.”
International automotive shares have been hammered on Monday after U.S. President Donald Trump introduced 25% tariffs on Canada and Mexico, key manufacturing and provide bases for automobile imports into the U.S. Many have regained floor since implementation of the duties was paused for 30 days.
Rowan stated Volvo Vehicles was now assessing whether or not it must shift its manufacturing strains to guard itself.
The corporate has already needed to navigate elevated tariffs for EVs coming from China into the European Union and was relocating manufacturing from China into Belgium consequently, he stated.
“Final 12 months, we noticed batteries improve from 7.5% to 25% if you import them to the usA, in the event that they’re originating from exterior the usA from a rustic and not using a free commerce settlement,” he advised CNBC.
“So we’ll see extra of that, and we have to wait to see the way it performs out, in fact, however we’re making ready ourselves to see whether or not we have to begin taking a look at manufacturing relocation and even provider relocation to totally different elements of the world. So it may be turbulent.”
“Then we’ll see this huge shift to know-how past electrification, in order that software program, silicon, connectivity and information, that is going to turn out to be much more profound,” Rowan added.
The excessive price of creating new automotive know-how equivalent to partially self-driving automobiles is predicted to spur trade consolidation, most lately resulting in risky merger talks at Japan’s Honda and Nissan.
On competitors from Chinese language gamers equivalent to BYD, Rowan advised CNBC: “The low cost is targeted primarily on the entry, the mass market EVs.”
He added that his firm would not “actually play in that sector” and primarily sells gentle and plug-in electrical hybrids in China, tapping into demand for a premium providing.
“That stated, I believe we’ll begin to see perhaps in 2025 some further reductions which will begin to encroach on the premium market, in addition to a number of the Western manufacturers lose market share in China. Then, in fact, they are going to retrench into their home markets and the opposite world markets and try to choose up market share there as a way to preserve the income streams on the identical stage,” Rowan stated.
“So I believe the hyper-competitiveness and the value and self-discipline begins in China. However I do assume that may permeate via Europe and into North America as properly, via 2025.”