Swedish automaker Volvo Cars (VOLCAR-B.ST) has been on tear recently.
Volvo, owned by China’s Geely, reported deliveries surged in 2023 to 708,000 cars, resulting in SEK 399.3 billion ($38.37 billion) in revenue, a 21% jump from a year ago. Profit also surged 43% in the year to SEK 25.6 billion ($2.46 billion), resulting in operating margin that grew to 6.4% from 5.4% a year ago.
Volvo also said it would be “evaluating a potential adjustment” with its Polestar shares, meaning Geely Sweden Holdings may become a new shareholder in Polestar, and Volvo will no longer provide further funding to Polestar.
Turning back to Volvo’s financial performance, one area driving results was something of a surprise: Volvo said EV deliveries jumped 70% in 2023 to more than 113,000 vehicles. That represents 16% of total global sales.
Volvo also said it increased its EV market share by 34% compared to 2022. The EV growth is surprising given some of the hiccups automakers are seeing with EV growth, even Tesla (TSLA), which says it will grow at a slower rate than it has in the past.
“One thing that we’re doing differently than many others is we have sole focus of becoming a fully electric company by 2030 — that means we have done a lot of structured investments in the space for many years now and that’s what you see in our numbers now, as we grow 70% year over year and increase the gross margin in doing so,” Volvo deputy CEO and chief commercial officer Björn Annwall said in an interview with Yahoo Finance. (See video above.)
Annwall stressed that one factor working in Volvo’s favor is that it is focused on the premium end of the EV market, a much stronger segment. “A lot of the discussions center on softening EV margins, and softening EV demand, but we don’t see it,” he added.
Another plus: the flexibility Volvo has in its product offerings. Though it is fully focused on going EV by 2030, it still offers hybrid variants for most of its vehicles. In fact its popular C40 Recharge and XC40 Recharge can be had in both hybrid or full EV trim.
“We can play a different audience in different states, so that’s really the strength of Volvo. What we see happening now in the US is really how plug-in hybrids are taking off,” Annwall says. “Many consumers see that as a bridge into a fully electric future.”
In terms of pure EVs the company has the smaller EX30 SUV coming, as well as the larger three-row EX90 SUV, which will actually be built in Charleston, S.C., and be eligible for federal EV tax credits.
Volvo, Polestar split up
The other big news announced on Thursday is that Volvo Cars will reduce its ownership stake in Polestar, a pure EV brand that Volvo owns a majority stake in. Volvo’s shares may end up going to Geely Sweden Holding, a Geely subsidiary that owns stakes in several European companies including Volvo, Polestar, and even Mercedes-Benz.
“Volvo cars is going through a major transformation, moving into a fully electric future, but also moving into a quite different car architecture based on core compute architecture, and software defined vehicles; we have to focus on that transformation,” Annwall said. “So what we announced now is we are going to evaluate a way in which — through some method, maybe a dividend, maybe another method — we’ll take down our ownership share in Polestar, and instead Geely [Sweden] Holding will assume the main owner responsibility for Polestar.”
The arrangement will allow Volvo to keep more of its capital on hand to fund its transformation, and at the same allow Polestar to seek funding through Geely Sweden Holding. Geely will also extend the repayment term for an existing convertible loan by 18 months to the end of 2028, offering Polestar more financial flexibility.
Annwell noted that despite the ownership change, Volvo and Polestar will continue to collaboration on engineering for their next-generation vehicles, with both companies building cars at Volvo’s factory in South Carolina. They’ll also share some retailer networks.
Correction: A previous version of this article misstated the model name of the Volvo XC40. We regret the error.
Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.
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