Volvo struggles to make money

This article was last updated on July 20, 2023

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Volvo’s focus on electric cars is impacting profitability

Higher costs and challenges in achieving a good return on electric car sales

Volvo wants to sell more and more electric cars, but the focus on electric is not directly good for the profit figures. In the second quarter, the car manufacturer made a profit of 3.5 billion kroner (300 million euros), 60 percent less than last year.

Volvo’s turnover did increase sharply: by more than 43 percent to more than 102 billion kroner. But the costs also rose.

Among other things, the Swedish car manufacturer was struggling with higher prices for lithium, an important raw material for electric car batteries. The company said it bought that raw material last year when the lithium price had peaked.

That makes it more difficult to achieve a good return on the sale of electric cars. Volvo CEO Jim Rowan thinks he can improve that by asking higher prices for electric cars. He also hopes that commodity prices will fall in the second half of the year.

Investing heavily in the electric branch

Volvo is investing heavily in the electric branch of the company. It has to be, because from 2030 the car manufacturer only wants to sell fully electric cars. Although the company sold many more electric cars in the second quarter than last year, only 16 percent of the Volvos sold are electrically powered.