By Mary Manis and Nick Carey
(Reuters) – Swedish carmaker Volvo Cars cut its margin and revenue ambitions for the second time in a year on Thursday, a day after abandoning its electric-only target as tariffs and weak demand for electric vehicles continue to weigh.
Slowing demand for electric vehicles, due in part to a shortage of affordable models, as well as the effects of tariffs imposed by the European Union, the United States and Canada on Chinese-made electric vehicles, have made market conditions increasingly difficult for automakers.
Volvo Cars, mainly owned by China’s Geely, has cut its target for operating profit margin excluding joint ventures and associates to 7-8% from above 8%.
The company also scrapped a sales target of between 550 billion and 600 billion Swedish crowns ($53.5 billion and $58.4 billion), saying instead it expects to outperform the luxury car market.
She pointed to “the increasing complexity, especially with regard to global trade and tariffs.”
This is the second time in a year that Volvo has backed off on its margin and revenue targets, having in January moved away from a target of 8-10% annual EBITDA and 1.2 million annual sales by the middle of the decade that was first announced in 2021.
“The increased commercial ambitions we are announcing today reinforce our commitment to driving value as a company, while remaining true to our purpose,” CEO Jim Rowan said in a statement.
“As I said before, business is not a game of perfection, it is about continuous progress and adaptation,” he added.
Volvo Cars said separately it will use a single software system powered by powerful Nvidia (NASDAQ:NVDA) chips for all future models and will rely on “megacastings” — huge presses to make large, one-piece aluminum undercarriages for cars — to cut costs for electric cars.
In statements released ahead of a planned investor event in Gothenburg, Volvo said that starting with its flagship electric model, the EX90 – which the Swedish carmaker will start delivering to customers this month – it will have a single “technology suite” for all car models.
Nvidia’s Drive Oren system will help Volvo build better safety systems for its cars and continually improve vehicles in circulation through over-the-air updates, Anders Bell, chief engineering and technology officer, told Reuters.
By using the mass casting technology, Volvo will be able to increase its use of recycled aluminium and reduce emissions throughout its supply chain, Bell said.
(1 dollar = 10.2815 Swedish krona)