Sweden’s Volvo Automobiles on Thursday reported a 12% rise in full-year working revenue and report income, however warned of extreme market challenges forward from intensifying electrical car competitors and international tariffs.
The automaker, which is majority-owned by China’s Geely Holding, mentioned working revenue got here in at 22.3 billion Swedish kronor ($2.04 billion) in 2024 amid an 8% gross sales enhance.
Nonetheless, revenue slid 28% within the closing three months of the yr, which the corporate mentioned was affected by a one-off 1.7 billion kronor impairment associated to its three way partnership with Swedish battery developer Northvolt, Novo Vitality. 12 months-on-year gross sales for the fourth quarter nudged 1% increased, 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 mentioned 2025 can be a “difficult and transition yr” towards Volvo Automobiles’ long-term development ambitions, because it anticipated slower market development and “elevated reductions” throughout the trade.
This can make it troublesome to match the corporate’s 2024 volumes and profitability, it added.
A Volvo EX30 totally electrical automobile is displayed throughout Every thing Electrical London 2024 at ExCel in London, March 28, 2024.
John Keeble | Getty Photos Information | Getty Photos
Many automakers are combating elevated competitors and excessive expenditure within the electrical car house, together with main gamers comparable to Tesla.
Volvo Automobiles 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% throughout the earlier yr.
“I believe it is a cheap efficiency given the quantity of turbulence that we noticed even in [20]24,” Volvo Automobiles CEO Jim Rowan informed CNBC’s “Squawk Field Europe” of the leads to a Thursday interview.
“In [20]25 I believe we’ll see that turbulence enhance. 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 Automobiles, as a result of we’ve delicate 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 car imports into the U.S. Many have regained floor since implementation of the duties was paused for 30 days.
Rowan mentioned Volvo Automobiles was now assessing whether or not it must shift its manufacturing traces 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 in consequence, he mentioned.
“Final yr, we noticed batteries enhance from 7.5% to 25% once you import them to the usA, in the event that they’re originating from exterior the usA from a rustic with out a free commerce settlement,” he informed CNBC.
“So we’ll see extra of that, and we have to wait to see the way it performs out, after all, however we’re getting ready ourselves to see whether or not we have to begin manufacturing relocation and even provider relocation to totally different components of the world. So it should be turbulent.”
“Then we’ll see this massive shift to know-how past electrification, in order that software program, silicon, connectivity and knowledge, that is going to turn into much more profound,” Rowan added.
The excessive value of growing new automotive know-how comparable to partially self-driving autos is anticipated to spur trade consolidation, most not too long ago resulting in risky merger talks at Japan’s Honda and Nissan.
On competitors from Chinese language gamers comparable to BYD, Rowan informed CNBC: “The low cost is concentrated primarily on the entry, the mass market EVs.”
He added that his firm does not “actually play in that sector” and primarily sells delicate and plug-in electrical hybrids in China, tapping into demand for a premium providing.
“That mentioned, I believe we’ll begin to see perhaps in 2025 some extra reductions which will begin to encroach on the premium market, in addition to among the Western manufacturers lose market share in China. Then, after all, they will retrench into their home markets and the opposite international markets and try to decide up market share there so as to hold the income streams on the similar stage,” Rowan mentioned.
“So I believe the hyper-competitiveness and the value and self-discipline begins in China. However I do assume that can permeate by means of Europe and into North America as properly, by means of 2025.”
