The first quarter of the year brought good news to Sweden, sparking a sense of cautious optimism for the remainder of 2023.
In a report on the company’s Q1 performance, President and CEO Jim Rowan stated:
“We have started 2023 on a positive note, delivering on our ongoing transformation with increased revenues and core profits in the first quarter.”
Overall sales for the quarter increased by 10% compared to Q1 2022, with electric car sales (currently limited to the XC40 Recharge and C40 Recharge) rising by 157% and accounting for 18% of total sales. With supply chain issues easing, Volvo’s plants were able to produce 9% more cars in Q1 than in Q4 of the previous year. Additionally, the automaker’s upcoming EX90 crossover has already sold out its first production run due to high demand, prompting Volvo to close reservation books.
The exact timeframe and production quantity of the EX90 reservation book closure remain unknown. However, it is estimated that the order window may have been open for a maximum of four months, starting from the vehicle’s debut at the beginning of November. Nonetheless, it is believed that the reservation period may have been shorter. According to the company’s report, the EX90 received an overwhelmingly positive response from customers that exceeded Volvo’s most ambitious internal sales expectations.
One aspect of the Q1 report that drew attention was the cautionary note from Volvo about the rising costs of lithium, which have increased by 800% over the last two years. However, the report also mentioned that prices are beginning to decline, which is expected to improve the profitability of electric cars. Nonetheless, it is evident that mining operations and R&D labs will be under significant pressure in the coming years. The former will need to gather the necessary minerals for the electric revolution, while the latter will be exploring battery chemistries that can eliminate or reduce the need for the current minerals required in the process.
Volvo is set to debut the EX30 crossover in June, which is the next step in the automaker’s electric vehicle revolution. The urban crossover is aimed at attracting younger buyers and will complement the larger EX90 crossover. Following that, Volvo plans to convert the XC60, S60, and S90 to electric vehicles, with a global goal of selling only EVs by 2030. Some markets, such as Australia, may see this transition as early as 2026. Meanwhile, Volvo parent company Geely has created a new company with Renault that will focus solely on internal combustion engine products, including hybrids, after carving out Volvo’s ICE development division.
According to the Q1 report, Volvo Cars is optimistic about the remainder of the year and anticipates “solid double-digit growth” in retail sales for 2023, assuming there are no unforeseen disruptions in the supply chain. Furthermore, the report projects that the share of fully electric car sales will continue to rise, surpassing last year’s 11% share.