Volvo Walks Back Electric-Only Goal as Global EV Demand Falters
Volvo has revised its plan to exclusively sell electric vehicles by 2030, reflecting broader industry concerns over waning demand for battery-powered vehicles. The Swedish automaker, owned by China’s Geely, announced that it now expects 90% of its sales by the end of the decade to come from a mix of plug-in hybrids and fully electric models. The remaining 10% will be accounted for by mild hybrids, which still rely primarily on internal combustion engines.
This adjustment reflects the growing uncertainty within the automotive industry as demand for electric cars slows, particularly in Europe, where governments like those in Germany and Sweden have scaled back or eliminated subsidies that once fueled EV adoption.
Volvo’s decision comes on the heels of similar moves by other major car manufacturers, such as Mercedes-Benz Group AG and Volkswagen AG. Both companies have reassessed their EV strategies, with Volkswagen reportedly even considering factory closures to manage costs amid softening demand.
The carmaker has been a strong proponent of EVs, making an early commitment to phase out combustion engines entirely. Yet, like other manufacturers, it has encountered hurdles, including market resistance and trade complications.
“We are resolute in our belief that our future is electric,” Volvo’s CEO, Jim Rowan said in a statement. “However, it is clear that the transition to electrification will not be linear, and customers and markets are moving at different speeds of adoption.”
Cuts, cuts, cuts
The situation in Europe is particularly challenging for EV makers. In recent months, several European nations have scaled back financial incentives for EV buyers, dampening demand. Germany, once a leader in EV promotion, has significantly reduced its subsidies, making electric cars less financially attractive to consumers. In Sweden, Volvo’s home country, similar cuts have been introduced, further complicating the company’s ability to meet its electrification targets.
These cuts come as the European Union has also implemented a series of new tariffs on electric vehicles imported from China, where Volvo manufactures some of its EV models. In July, Volvo reduced its full-year vehicle sales forecast, partly in response to these new duties. The company has also had to delay the U.S. launch of its EX30 electric sport utility vehicle, initially planned for this year, due to proposed U.S. tariffs that could exceed 100% on Chinese-made EV imports. These tariffs have effectively raised the cost of Volvo’s EVs in key markets, further squeezing demand.
Despite scaling back its electric-only goals, Volvo maintains that it will continue investing in electric vehicle technology. However, the company has acknowledged that this shift may result in a smaller reduction in carbon emissions than originally planned. Volvo had previously aimed to reduce carbon dioxide emissions per car by 75% by 2030. With the new hybrid-inclusive target, that figure has been revised to a reduction of between 65% and 75%.
This move has raised concerns among environmental advocates, who argue that hybrid vehicles, while more efficient than traditional gasoline cars, still contribute significantly to carbon emissions. The delay in achieving full electrification may slow Volvo’s progress toward its broader climate goals, but the company insists that hybrids are a necessary bridge in the transition to a fully electric future.
“We recognize that this is not the ideal scenario, but we must adapt to the current market realities while continuing to work towards our long-term sustainability goals,” a Volvo spokesperson said.
Caught in conflict
Volvo’s operations have also been caught in the crossfire of trade disputes between the West and China, further complicating its EV ambitions. The European Union’s recently imposed tariffs on Chinese-made electric cars, aimed at countering what the EU describes as unfair subsidies by Beijing, have directly impacted Volvo, which manufactures several electric models in China. These tariffs could make Chinese-made EVs significantly more expensive in Europe, a key market for Volvo.
In the United States, trade tensions with China have led to similar barriers. Washington’s plan to impose heavy tariffs on Chinese EV imports prompted Volvo to postpone shipments of its EX30 SUV, a much-anticipated model in its electric lineup. Volvo had hoped the EX30 would capture market share in the growing U.S. EV market, but the punitive tariffs have thrown those plans into disarray. The EX30, which was supposed to arrive in U.S. showrooms this year, will now be delayed until 2024.
The company is also undergoing cost-cutting measures in Sweden, including job reductions, as part of a broader strategy to cope with rising costs and market uncertainty. These moves are not limited to Volvo, as several automakers around the world, including its competitors, are restructuring to mitigate the financial impacts of slowing EV sales and trade disputes.
EX90 bet
In the midst of these challenges, Volvo is betting on its new flagship electric SUV, the EX90, to revitalize its EV sales. The company has started shipping the EX90 to retailers in Europe and the U.S., with customers expected to receive their cars by the end of this month. The EX90 is seen as crucial to Volvo’s strategy of maintaining momentum in the electric market while adapting to the realities of slower-than-expected adoption.
The automaker hopes that the EX90 will draw consumers who are ready to make the switch to electric but are looking for a larger, family-friendly SUV that competes with offerings from Tesla and other luxury brands.
Volvo remains hopeful that, despite the headwinds, consumer interest in electric cars will rebound as infrastructure improves and more affordable options become available.
Information for this story was found via Bloomberg, Financial Times, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
