Volvo Cars is a stand-out in the crowded automotive industry. Over the decades, the Swedish car manufacturer has established itself as a household name in the premium segment for its reliability, safety and design. Today, Volvo Cars has fresh ambitions: it plans to fully electrify its production base by 2030 and lead the industry’s sustainability push. 

The company, which has been controlled by China’s Geely since 2010, is cruising towards a fully electric future with plenty of wind in its sails. It achieved record sales in 2023 and is in the midst of an ambitious investment campaign to support its transformation. 

“We are in the middle of a major growth phase in our company,” CEO Jim Rowan tells fDi. “Our new EVs need additional manufacturing capacity to bring them to market.”

Record sales 

Volvo Cars sold a record high of 708,716 cars in 2023, according to its latest annual report. That represents a 15% increase from 2022, and a 0.5% increase from the previous record set in 2019. In particular, Volvo Cars’ battery electric vehicles (BEVs) models saw a 70% annual increase in sales, company figures show. Overall, they made up 16% of the total units sold in 2023. 

Despite a challenging outlook for EV carmakers, Volvo Cars forecast sales for its premium model to continue to grow in 2024 too, “provided there are no major disruptions”, the company said in its latest quarterly earnings release. “We are expecting to considerably increase the share of fully electric cars versus 2023.” It plans to sell 1.2 million cars by 2025.

With soaring BEVs sales, Volvo Cars is investing to electrify its production base in Europe and the US, which represent its first- and third-largest market, respectively (China is the second-largest).

“Volvo Cars’ manufacturing strategy has been to produce where you sell, and source where you produce. To that extent, we continue to look for ways to optimise local sourcing,” Mr Rowan says.

The company is building a third European manufacturing facility in Kosice, Slovakia. The facility will cost €1.2bn, will have a capacity of 250,000 new cars a year and provide “several thousand” new jobs, the company said when it announced the project in 2022. Meanwhile, the development of its flagship fully electric EX90 model is taking place at an existing manufacturing facility in Charleston, South Carolina. 

In-house gigafactory  

The company’s new investment goes beyond car manufacturing itself. The high cost of batteries is shifting profits from original equipment manufacturers (OEMs) to battery producers, prompting some OEMs to set up their own gigafactories. Volvo Cars has thus teamed up with another Swedish household brand, Northvolt, to build its own battery facility in Goteborg. 

“The plan is to have the first battery production up and running [by] 2026, harnessing the latest battery technologies,” Mr Rowan says. 

Volvo Cars’s EVs bet is also driving major investment in the development of software that powers up its model, with a number of in-house software development sites set to open in Poland, Singapore and Sweden.

“It’s important to remember that Volvo Cars is not just building electric cars for the premium segment, we are also bringing new technologies in our new generation of EVs that represent a paradigm shift for us and the industry. Starting with the EX90, all our cars built on our next-generation fully electric platform will for example be powered by AI-enabled core computers,” Mr Rowan says. 

However, these are uncharted waters for most legacy OEMs, and Volvo Cars is no exception. The delivery of the EX90 model has been plagued by software problems, with the company announcing a one-year delay in July 2023. The delivery of another model, the EX30, has also been beset by software complications. 

Volvo Cars is exploring other growth avenues too. It launched a new division, Volvo Cars Energy Solutions, in late 2023 to support entry to the battery energy storage system space and offer home and industrial energy solutions, including energy management and storage, Mr Rowan says.

Previous CEO interviews: 

• Carlsberg eyes Asia to forget €2.3bn Russian write-off
• Ryanair CEO charts flight path to continued growth</p>
• Sothema brings AI to African pharma
• Revolut CEO: Tech scene facing ‘hangover'

Bumpy road

But the road towards electrification remains a bumpy one.

Volvo Cars has reportedly been downsizing its white-collar workforce in North America as it switches to EV production. 

Besides, the company has decided to divest from EV challenger Polestar. It announced in February 2024 that it would distribute 62.7% of its shareholding in Polestar to its own shareholders. The timetable and final details for distributing this shareholding have now been formalised. 

The latest developments seem to have re-energised the company’s stock listed on Nasdaq Stockholm, which has been on a recovery trajectory since touching a record low in January. Yet the management has more to do to win over the hearts and minds of investors, which have seen the stock plummet since the IPO in 2021: it currently trades at about half the price it listed only three years ago.

Do you want more FDI stories delivered directly to your inbox? Subscribe to our newsletters.