(Bloomberg) -- Volvo Car AB slightly scaled back its outlook as rising tariffs hurt some of its models made in China, a day after abandoning a target to only sell electric cars by 2030.
The company now expects returns of between 7% to 8% in 2026 on earnings before interest and tax, it said Thursday ahead of an investor briefing. Previously, the maker of the electric EX90 SUV, owned by China’s Geely, saw a margin of at least 8%.
The decision follows an “uncertain macroeconomic context and increased tariffs on electrified cars, both in US and Europe,” Chief Commercial Officer Bjorn Annwall said in an interview in Gothenburg.
Volvo Cars’ new outlook looks achievable, according to UBS analysts led by Patrick Hummel, having already reached targeted levels during the second quarter. The company’s shares rose as much as 4% in Stockholm trading, paring losses this year to 9%.
On Wednesday, Volvo Cars also scrapped a plan to only sell fully electric cars by 2030 after disappointing demand for battery cars, joining a growing roster of carmakers walking back EV ambitions. The company had outlined its goal in 2021, making it among the most aggressive in the industry. But the EV transition particularly in Europe has veered off course in recent months, among governments scrapping incentives, with their market share in the region declining this year instead of rising quickly.
The automaker now aims for plug-in hybrid and battery-only models to account for at least 90% of its sales in 2030 with the remainder made up of mild hybrids that rely mostly on combustion engines. To underline its ongoing electric ambitions, Volvo Cars on Thursday revealed the mid-size EX60 SUV. The model, complementing the popular combustion-engine XC60, will be built on a new vehicle platform.
The EV slowdown adds to the pressures for Volvo, which looks back on a successful turnaround under Chinese billionaire Li Shufu who bought the Swedish brand from Ford Motor Co. in 2010. The manufacturer is also caught in the crossfire of trade conflicts with Beijing over EV subsidies.
In July, Volvo slightly lowered its vehicle-sales forecast for this year, due to additional duties imposed by the European Union. In June, the company postponed US shipments of the EX30 SUV to next year, after Washington announced plans to impose a tariff of more than 100% on Chinese EV imports. It’s also been cutting jobs in Sweden to reduce costs.
Volvo Cars needs to “optimize” where it makes vehicles in light of rapid tariff changes, said Annwall. “You can move a car from one factory to another, but there’s a lead time of almost two years.”
--With assistance from Charles Daly.
(Updates with COO comment in third, analyst comment in fourth paragraph)
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