One area of concern is the fall in profit margins of BEVs versus Volvo’s ICE-powered vehicles: down to just 3% compared to 21% for the ICE cars and also down on the 8% margins recorded for BEVs for the full-year 2022. Volvo’s chief financial officer Johan Ekdahl says this was due to a temporary increase in lithium costs for batteries purchased when prices peaked in 2022, and this will see a marked reduction later this year.
During the quarter, sales of BEVs increased 178% year-on-year and accounted for 16% of the automaker’s total share. Here, Rowan highlights the successful launches of the brand’s first purely BEV-designed vehicles, the Volvo EX90 and EX30. He feels the SUV models, when in full production, will be more profitable than the existing XC40 Recharge and C40 Recharge BEVs that were built on hybrid-designed platforms.
Specifically mentioning the EX30, Rowan says: “We’re really excited about this car and will offer it with two different battery types to allow us to bring down the cost base for the customer. We think the difference in options, from what is coming back to us from consumers, suggests that we have got this just right and this will be a high-volume model for us.”
He also believes the EX30 will address Volvo’s low BEV profit margins. The automaker expects gross margins on the car in the range of 15% to 20%. Rowan adds: “Although the car is small, we think it represents a huge opportunity for us. With this car, we will enter a new segment and a new demographic for the company, one that will help us grow rapidly in the coming years.