Volvo Cars has adjusted its core business ambitions for the coming years, reflecting the company’s relentless focus on value creation while remaining pragmatic amidst fluid market conditions.
The adjusted business ambitions are revealed ahead of Volvo Cars’ Capital Markets Day which takes place in Gothenburg, Sweden today. During the day, Volvo Cars will reveal details of its value creation approach, technology roadmap and product plan for the coming years.
Rather than aiming for an absolute revenue target, Volvo Cars’ ambition is now to continue outgrowing the premium car market until 2026, as it has done in recent years.
Given the increased complexity especially in relation to global trade and tariffs, the company also aims to achieve an EBIT* margin of 7-8 per cent for the full year in 2026.
In terms of free cash flow generation, Volvo Cars continues to aim for cash flow neutrality in 2024 and 2025, followed by a strong free cash flow from 2026 onwards. From 2026 onwards, Volvo Cars expects to benefit further from its current investment phase through higher profitability and stronger free cash flow.
The adjusted revenue and EBIT margin ambitions follow on yesterday’s announcement around Volvo Cars’ revised electrification ambitions. The company now aims for 50-60 per cent of its global sales by 2025 to consist of electrified cars, so both plug-in hybrid and fully electric models.
By 2030, it expects electrified cars to represent between 90-100 per cent of global sales volumes. The remaining 10 per cent will allow for a limited number of mild hybrid models to be sold, if needed.
These adjusted electrification ambitions also lead to new CO2 reduction ambitions, which remain leading for the automotive industry. Volvo Cars now aims to reduce its CO2 footprint per car by 30-35 per cent by 2025 versus a 2018 baseline, which is an important step towards a CO2 reduction per car of 65-75 per cent by 2030.
The company will continue to work together with its suppliers to bring down emissions from materials and from its operations, including its supply chain and logistics networks.
For more information on the company’s adjusted electrification ambitions, read here.
The company continues to retain the potential for shareholder distribution once its current investment phase is concluded. More details will follow closer to that point in time.
“Volvo Cars stands at a pivotal and exciting crossroads in our journey. We have been laying the foundations for the last few years that put us in the strong position we are in today,” says Jim Rowan, chief executive of Volvo Cars. “The sharpened business ambitions we announce today further reinforce our commitment to drive value as a business, while remaining true to our purpose. As I have said before: business is not a game of perfection, it’s about continuous progress and adaptation.”
- Volvo Cars’ EBIT target applies to core EBIT, i.e. *EBIT excl. JVs and associates
SOURCE: Volvo Cars
