Swedish automaker Volvo Cars (VOLCAR-B.ST) has been underperforming recently.
Volvo, owned by China's Geely, reported a surge in deliveries to 708,000 vehicles in 2023 and sales of SEK 399.3 billion ($38.37 billion), an increase of 21% from the previous year. Profits also rose 43% in the year to SEK 25.6 billion ($2.46 billion), resulting in an operating margin of 6.4%, up from 5.4% a year earlier.
Volvo also said it was “evaluating a possible adjustment” to Polestar's shares, which could mean that Geely Swedish Holdings could become a new shareholder in Polestar, and that Volvo would have no further investment in Polestar in the future. This means no funding will be provided.
Returning to Volvo's financial performance, one of the areas driving performance was a surprise. Volvo announced that its EV deliveries will increase by 70% in 2023 to more than 113,000 units. This represents 16% of global sales.
Volvo also said its EV market share increased by 34% compared to 2022. EV growth has been surprising given that some automakers have experienced problems with EV growth, with even Tesla (TSLA) saying its growth rate is slower than Volvo. It's in the past.
“One of the things we do differently than many other companies is that we are focused solely on becoming a fully power utility by 2030. In an interview with Yahoo Finance, Björn Anwall, Volvo's deputy CEO and chief commercial officer, said: “This number is now increasing because we grew 70% year-on-year and that also increases our gross profit.” (See video above.)
Anwar emphasized that one factor working in Volvo's favor is the company's focus on the luxury segment, which is a stronger segment of the EV market. “A lot of the discussion is focused on softening EV margins and softening EV demand, but we don't see that,” he added.
Another advantage is Volvo's flexibility in its product offering. Although the company is fully focused on EV conversion by 2030, it still offers hybrid models for most of its vehicles. In fact, his popular C40 Recharge and XC40 Recharge are available in both hybrid or full EV trim.
“That's really Volvo's strength: being able to play to different audiences in different states.What's happening in the US right now is that we're really seeing how plug-in hybrids are taking off. “We're doing that,” Anwal said. “Many consumers see this as a bridge to a fully electric future.”
As for pure EVs, the company is planning a smaller EX30 SUV and a larger three-row EX90 SUV that will actually be built in Charleston, South Carolina and qualify for the federal EV tax credit.
Volvo and Polestar split
The other big news announced on Thursday is that Volvo Cars will reduce its stake in Polestar, a pure EV brand in which Volvo has a majority stake. Volvo's shares could eventually be transferred to Geely Sweden Holding, a Geely subsidiary that owns some shares. European companies like Volvo, Polestar, and even Mercedes-Benz.
“Volvo Cars is undergoing a major transformation, moving towards an all-electric future, but also a completely different car architecture based on core computing architecture and software-defined vehicles. must focus on that transformation,” Anwal said. “So what we have now announced is that we will look at ways to reduce our ownership in Polestar in some way, perhaps through dividends, perhaps through other means, and instead sell the Geely shares.” [Sweden] The holding will take over the responsibilities of Polestar's main owners. ”
The deal will allow Volvo to keep more capital on hand to fund its transformation, while allowing Polestar to raise funds through Geely Sweden Holding. Geely will also extend the repayment period of existing convertible bonds by 18 months until the end of 2028, increasing Polestar's financial flexibility.
Unwell said that despite the change in ownership, Volvo and Polestar will continue to collaborate on the engineering of next-generation vehicles, and that both companies will produce cars at Volvo's South Carolina plant. Some retail store networks will also be shared.
Correction: A previous version of this article misspelled the Volvo model name. XC40. We apologize for the error.
Pras Subramanian is a reporter for Yahoo Finance.you can follow him twitter And even more Instagram.
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