Sweden’s Volvo Cars on Thursday reported a 12% rise in full-year operating income and record revenue, but warned of severe market challenges ahead from intensifying electric vehicle competition and global tariffs.
The automaker, which is majority-owned by China’s Geely Holding, said operating income came in at 22.3 billion Swedish kronor ($2.04 billion) in 2024 amid an 8% sales increase.
However, profit slid 28% in the final three months of the year, which the company said was affected by a one-off 1.7 billion kronor impairment related to its joint venture with Swedish battery developer Northvolt, Novo Energy. Year-on-year sales for the fourth quarter nudged 1% higher, but shed 6% in China and 2% in the U.S.
The company reiterated 2026 guidance to deliver a core earnings before interest and taxes (EBIT) margin of 7-8%, but said 2025 would be a “challenging and transition year” toward Volvo Cars’ long-term growth ambitions, as it expected slower market growth and “increased discounts” across the industry.
This will make it difficult to match the company’s 2024 volumes and profitability, it added.
Shares slid 6% at the European market open Thursday.
A Volvo EX30 fully electric car is displayed during Everything Electric London 2024 at ExCel in London, March 28, 2024.
John Keeble | Getty Images News | Getty Images
Many automakers are struggling with increased competition and high expenditure in the electric vehicle space, including leading players such as Tesla.
Volvo Cars in September scrapped its plan to sell only EVs by 2030, citing “different speeds of adoption” by customers. In its 2024 results, the share of battery EV sales rose to 23% from 16% during the previous year.
“I think it’s a reasonable performance given the amount of turbulence that we saw even in [20]24,” Volvo Cars CEO Jim Rowan told CNBC’s “Squawk Box Europe” of the results in a Thursday interview.
“In [20]25 I think we’re going to see that turbulence increase. And the way I frame it is, I think we’re going to see turbulence in terms of trade tariffs, maybe some geopolitics, and we’re going to see some policy changes. I also think we’re going to see the transition to EV slow down a little bit, which is okay for Volvo Cars, because we have mild hybrid technology as well as plug in hybrid technology.”
Global automotive stocks were hammered on Monday after U.S. President Donald Trump announced 25% tariffs on Canada and Mexico, key production and supply bases for vehicle imports into the U.S. Many have regained ground since implementation of the duties was paused for 30 days.
Rowan said Volvo Cars was now assessing whether it needs to shift its production lines to protect itself.
The company has already had to navigate increased tariffs for EVs coming from China into the European Union and was relocating production from China into Belgium as a result, he said.
“Last year, we saw batteries increase from 7.5% to 25% when you import them to the U.S.A, if they’re originating from outside the U.S.A from a country without a free trade agreement,” he told CNBC.
“So we’re going to see more of that, and we need to wait to see how it plays out, of course, but we’re preparing ourselves to see whether we need to start looking at production relocation or even supplier relocation to different parts of the world. So it’s going to be turbulent.”
“Then we’re going to see this big shift to technology beyond electrification, so that software, silicon, connectivity and data, that’s going to become a lot more profound,” Rowan added.
The high cost of developing new automotive technology such as partially self-driving vehicles is expected to spur industry consolidation, most recently leading to volatile merger talks at Japan’s Honda and Nissan.
On competition from Chinese players such as BYD, Rowan told CNBC: “The discount is focused mainly on the entry, the mass market EVs.”
He added that his company doesn’t “really play in that sector” and mainly sells mild and plug-in electric hybrids in China, tapping into demand for a premium offering.
“That said, I think we’ll start to see maybe in 2025 some additional discounts that may start to encroach on the premium market, as well as some of the Western brands lose market share in China. Then, of course, they’re going to retrench into their domestic markets and the other global markets and try and pick up market share there in order to keep the revenue streams at the same level,” Rowan said.
“So I think the hyper-competitiveness and the price and discipline starts in China. But I do think that will permeate through Europe and into North America as well, through 2025.”
