Swedish carmaker Volvo has abandoned its plan to sell only electric cars by 2030 due to waning demand for purely battery-powered cars.
After the announcement on September 4, the company's shares fell by more than 4%, and in the last six months they have fallen in price by 12%, Euronews reported.
Volvo reported disappointing first-quarter earnings and provided weak guidance on its second-quarter earnings call.
Instead of aiming to become an all-electric carmaker, Volvo now aims for "90 to 100% of global sales volume by 2030 to consist of electrified cars." This includes a mix of all-electric and plug-in hybrid models.
The remaining 0-10% will allow the creation of a limited number of mild hybrid models if necessary.
The company still expects to produce 50-60% electrified cars by the middle of this decade, which would allow it to become an all-electric car maker when "the conditions are right."
Volvo noted that 26% of its products are fully electric cars, the highest share among its premium rivals.
The total share of the company's electrified cars, including electric cars and plug-in hybrids, amounted to 48% in the second quarter of this year.
Growing customer demand for hybrid cars
The growing demand for hybrid vehicles and the declining availability of pure electric cars are putting pressure on the profit margins of electric car manufacturers.
The famous electric car manufacturer Tesla has seen a continuous decline in profit margins and a slowdown in growth since 2023.
CEO Elon Musk has indicated that consumers prefer to shift from 100% electric cars to hybrid vehicles.
Amid sluggish consumer demand and a price war in China, automakers are facing macroeconomic headwinds.
The industry is also feeling uncertainty due to new import tariffs on Chinese-made electric vehicles imposed by the EU and the US, with China promising reciprocal measures.
The appeal of owning an electric car is 'diminishing'
"It is clear that the transition to electrification will not be linear, and customers and markets move at different rates of adoption," Volvo said.
"We are pragmatic and flexible while maintaining our industry leading position in terms of electrification and sustainability," added the manufacturer.
Government subsidies for vehicles using renewable energy sources previously incentivized consumers to buy fully electric cars.
However, with the expiration of those incentives and falling crude oil prices, the appeal of owning a fully electrified car has waned.
"The slower than expected roll-out of charging infrastructure, the withdrawal of government incentives in some markets and the additional uncertainty created by recent EV tariffs in various markets. With this in mind, Volvo continues to see the need for stronger and more robust government policies to support the transition to electrification," the company said.
Volvo, owned by China's Geely, is the latest major carmaker to scale back its ambitious plans to transition to all-electric vehicles, although it remains committed to achieving net zero greenhouse gas emissions by 2040.
In July, Luca De Meo, chief executive of French carmaker Renault, warned that customers were not yet ready to switch to battery-powered vehicles.
He called for more flexibility in the timetable, citing Europe's transition to green energy and the goal of switching to electric vehicles by 2035.
German luxury carmaker Porsche has also lowered its target to sell 80% all-electric vehicles.
Other mainstream automakers, including Ford and Fiat, have also expressed concerns that plans to produce only electric cars by 2030 may be too ambitious. | BGNES
