Volvo Moves Closer to All-Electric Goal
Volvo Car
VOLCAR.B -3.66%
AB’s transformation into an electric-vehicle maker accelerated in the second quarter, reflecting a broader trend in the auto industry, which has seen sales of EVs and hybrids outperform conventional vehicles in many markets as gas prices rise around the world.
The share of pure electric and hybrid vehicles rose sharply to 31% of Volvo’s total sales in the second quarter of the year, even as overall unit sales fell by more than a quarter as a result of production and supply-chain woes in the wake of pandemic lockdowns in China.
The Swedish car maker majority owned by China’s Zhejiang Geely Holding Group aims to become a pure electric car maker by 2030.
The European Automobile Manufacturers’ Association said Wednesday that the share of battery electric vehicles and plug-in hybrids rose to around 19% of total sales in the second quarter in the European Union, as the share of diesel and gasoline powered vehicles fell to 56% from 62% a year ago.
Sales of battery electric vehicles in the EU totaled 457,608 vehicles in the first half of the year, up 28% from the year before, compared with a 22% drop in sales of gasoline powered vehicles and a 31% drop in diesel vehicles. Overall, sales of new passenger cars in the EU fell 14% to 4.6 million vehicles in the first half of the year, the association said.
Volvo easily beat analysts’ expectations in the second quarter, chalking up higher earnings, despite a 2% decline in sales to 71.3 billion Swedish krona, equivalent to nearly $7 billion. Operating income was 10.8 billion krona in the second quarter, up from 4.8 billion krona a year earlier.
Daniel Roeska,
auto analyst with Bernstein Research, attributed the strong earnings performance to a one-off gain from the listing of the electric luxury car maker Polestar. Volvo owns about 48% of Polestar.
Volvo said it was now seeing a marked improvement in the supply-chain situation, with production making a strong comeback in June. If this normalization continues, it expects production to progressively increase in the coming months.
“As a result Volvo Cars expects its wholesale volumes for 2022 to be better than in 2021,” Chief Executive
Jim Rowan
said. “However, due to the time lag between production and retail deliveries, those improvements are not expected to result in an increase in retail sales during the calendar year.”
For the full-year 2022, the company expects retail sales to be flat or slightly lower compared with volumes in 2021.
Volvo said that pure battery electric cars accounted for 7% of total sales, and that they sold at a 12% price premium compared with Volvo’s conventional vehicles. Profit margins for Volvo’s battery electric vehicles were 15%, up from 13% in the previous quarter, but still less profitable than their combustion engine vehicles, which posted 22% profit margins in the second quarter.
Volvo is the first car maker to disclose profitability of its electric vehicles compared with its conventional vehicles with internal combustion engines, Mr. Roeska said.
“We take the sequential improvement of BEV as a positive sign,” he said.
Write to William Boston at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Volvo Car
VOLCAR.B -3.66%
AB’s transformation into an electric-vehicle maker accelerated in the second quarter, reflecting a broader trend in the auto industry, which has seen sales of EVs and hybrids outperform conventional vehicles in many markets as gas prices rise around the world.
The share of pure electric and hybrid vehicles rose sharply to 31% of Volvo’s total sales in the second quarter of the year, even as overall unit sales fell by more than a quarter as a result of production and supply-chain woes in the wake of pandemic lockdowns in China.
The Swedish car maker majority owned by China’s Zhejiang Geely Holding Group aims to become a pure electric car maker by 2030.
The European Automobile Manufacturers’ Association said Wednesday that the share of battery electric vehicles and plug-in hybrids rose to around 19% of total sales in the second quarter in the European Union, as the share of diesel and gasoline powered vehicles fell to 56% from 62% a year ago.
Sales of battery electric vehicles in the EU totaled 457,608 vehicles in the first half of the year, up 28% from the year before, compared with a 22% drop in sales of gasoline powered vehicles and a 31% drop in diesel vehicles. Overall, sales of new passenger cars in the EU fell 14% to 4.6 million vehicles in the first half of the year, the association said.
Volvo easily beat analysts’ expectations in the second quarter, chalking up higher earnings, despite a 2% decline in sales to 71.3 billion Swedish krona, equivalent to nearly $7 billion. Operating income was 10.8 billion krona in the second quarter, up from 4.8 billion krona a year earlier.
Daniel Roeska,
auto analyst with Bernstein Research, attributed the strong earnings performance to a one-off gain from the listing of the electric luxury car maker Polestar. Volvo owns about 48% of Polestar.
Volvo said it was now seeing a marked improvement in the supply-chain situation, with production making a strong comeback in June. If this normalization continues, it expects production to progressively increase in the coming months.
“As a result Volvo Cars expects its wholesale volumes for 2022 to be better than in 2021,” Chief Executive
Jim Rowan
said. “However, due to the time lag between production and retail deliveries, those improvements are not expected to result in an increase in retail sales during the calendar year.”
For the full-year 2022, the company expects retail sales to be flat or slightly lower compared with volumes in 2021.
Volvo said that pure battery electric cars accounted for 7% of total sales, and that they sold at a 12% price premium compared with Volvo’s conventional vehicles. Profit margins for Volvo’s battery electric vehicles were 15%, up from 13% in the previous quarter, but still less profitable than their combustion engine vehicles, which posted 22% profit margins in the second quarter.
Volvo is the first car maker to disclose profitability of its electric vehicles compared with its conventional vehicles with internal combustion engines, Mr. Roeska said.
“We take the sequential improvement of BEV as a positive sign,” he said.
Write to William Boston at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
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