Volvo Cars has abandoned its plan to become a fully electric car maker by 2030 due to weakening consumer demand for pure electric vehicles. This change is the most recent among major automakers.
The Swedish manufacturer of Volvo Cars automobiles has abandoned its plan to sell exclusively electric vehicles between now and 2030, due to decline in demand for cars powered exclusively by batteries.
Following Wednesday’s announcement, Volvo shares They fell more than 4% and are down 12% in the last six months. The company also reported disappointing results in the first quarter and offered weak forecasts during its second quarter earnings call.
Instead of aspiring to become a all-electric car manufacturerVolvo now aims for “between 90% and 100% of its turnover world in 2030 will consist of electrified cars”, which includes a mix of fully electric and hybrid models pluggable.
The remaining 0-10% will allow a limited number of mild hybrid models, if necessary. Volvo is still waiting produce between 50% and 60% of vehicles electrified by the middle of this decade, which would allow it to become a fully electric car manufacturer when “conditions are right.”
The company noted that 26% of its products are fully electric cars, the highest fee between his high-end competitors. Its total share of electrified, including electric vehicles and plug-in hybridsrepresented 48% in the second quarter of this year.
Increase in demand for hybrid vehicles
The growing demand for hybrid vehicles and the increasingly lower affordability of electric cars Cigarettes have been putting pressure on electric car makers’ profit margins.
Tesla, the famous electric vehicle manufacturer, has experienced a continued decline in profit margins and a slowdown in its growth from 2023. Its CEO, Elon Muskhas pointed out a change in consumer preferences, which are moving from 100% electric cars to hybrid ones.
Amid consumer demand and a price war in Chinaautomakers face macroeconomic headwinds. The industry is also experiencing uncertainties due to new tariffs on imports of electric vehicles manufactured in China imposed by the EU and the US, with China promising reciprocal measures.
The attractiveness of owning an electric vehicle has “waned”
“It is clear that the transition to electrification will not be linear, and customers and markets move at different speeds of adoption“, declared Volvo. “We are pragmatic and flexible while maintaining a leadership position in the electrification and sustainability industry.
Las government subsidies Renewable energy vehicles have previously encouraged consumers to buy fully electric cars. However, with the expiration of these incentives and the fall in crude oil pricesthe attraction of owning a fully electrified vehicle has decreased.
Volvo noted: “The slower-than-expected rollout of charging infrastructure, the withdrawal of government incentives in some markets and the additional uncertainties created by recent tariffs on electric vehicles in several markets. With this in mind, Volvo Cars continues to see the need for stronger government policies and stable to support the transition to electrification.
Volvo Cars, owned by China’s Geely, is the latest major automaker to reduce its ambitious transition plans towards a purely electric vehicle, although it maintains its commitment to achieve zero emissions net greenhouse gases by 2040.
In July, Luca De Meo, CEO of French carmaker Renault, warned that customers are not yet ready to switch to battery vehicles. He asked for more flexibility in the calendar, in reference to Europe’s energy transition and the goal of moving to electric vehicles in 2035.
German luxury car maker Porsche also reduced its goal of selling 80% fully electric vehicles. Others conventional car manufacturerslike Ford and Fiat, have also expressed concern that electric vehicle plans for 2030 are too ambitious.
