Volvo's profitability hinges on the success of its signature models to boost earnings
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Volvo, a brand owned by Zhejiang Geely Holding Group, is focusing on electrification and expanding its core SUV lineup to achieve profitability. The company aims to transition fully to electric vehicles by 2030, as part of its commitment to sustainability and climate goals.
The XC60 SUV remains a popular core model and is widely available across dealerships, with financing and leasing support to facilitate customer purchases. Volvo is also offering competitive financing options for newer models like the EX40 and EX30, indicating active market promotion and sales efforts.
The EX30 is expected to be Volvo's lead-selling EV, with sales expected to slide to 45,000 for 2025 but potentially surging in 2026 due to production in Ghent. The EX40, with an electric motor of 252 hp, 420 Nm of torque, a 78 kWh battery, rear-wheel drive, an acceleration of 0-60 mph in 7.1 seconds, a top speed of 112 mph, and a price of £58,410 ($79,000 after tax), is another important model for Volvo.
However, the company is facing challenges in reaching its sales target of 1 million vehicles due to a 20% decrease in sales in Europe in the first half of 2025 compared to the previous year. Moving the EX30 to Belgium may increase costs, raising questions about Volvo's competitive pricing ability.
The analyst also expressed concerns about the high cost and potential pricing issues of the big and expensive EX90 electric SUV. The U.S. plant, which produces the EX90 SUV, Polestar 3 SUV, and has a capacity of 150,000 cars, has been underused, producing only 16,000 cars in 2024.
Despite these challenges, solid sales from Volvo's top performers, the EX30, EX40, and XC60, are essential for profitability. Geely, which owns various brands including Polestar, Lotus, Lynk & Co, Zeekr, London Electric Vehicle Co, Farizon Auto, and half of Proton carmaker, supports Volvo's strategic efforts.
Frank Schwope, an automotive industry lecturer, describes Geely as a complex brand conglomerate with Volvo standing out to a certain extent. Geely owner Li Shufu is a 10% shareholder in Mercedes-Benz, further expanding Geely's influence in the automotive industry.
Volvo has replaced its all-electric-only pledge by 2030 with a goal of 90 to 100% of sales to be "electrified" by that date. The company's financial services and strategic support extend to promoting electric models effectively to gain market share in the EV segment, reflecting a proactive, financially supported strategy to electrify its lineup.
In conclusion, Volvo's strategy revolves around strong growth in the electric SUV segment (including EX30 and EX40), steady sales of core models like the XC60, and a comprehensive electrification plan to be fully electric by 2030. Financial services and sales incentives are aligned to support this transition and encourage customer adoption of these vehicles.
- The automotive industry is witnessing Volvo's focus on electrification and expansion of its core SUV lineup, including the EX30 and EX40, as part of its aim to transition fully to electric vehicles by 2030.
- Financing and leasing support, coupled with competitive financing options, is being utilized by Volvo to facilitate customer purchases and market promotion of its top performers, such as the XC60, EX30, and EX40.
- In the face of challenges like decreased sales in Europe and potential pricing issues with its larger electric models, Volvo relies on the support and strategic efforts of its parent company, Geely, for continued success in the transportation, finance, technology, and automotive sectors.
