Growing BEV Sales Drive Jump in Volvo Cars’ Q3 Profits

Volvo Cars reports an almost 75% increase in operating profits, citing rising battery-electric vehicle sales which still only comprise 13% of its global volume.

The profit boost, excluding joint ventures and associates, rose to SEK6.1 billion ($548 million) for the third quarter of 2023. The EBIT (operating) margin excluding joint ventures and associates came in at 6.7%, compared to a margin of 4.4% in the same period last year. Strong vehicle sales and revenue growth during the quarter, combined with lower costs for raw materials and logistics, aided underlying operating profit.

Retail sales saw double-digit growth in all three months of the quarter and sales growth of 22% for the period, compared to third-quarter 2022. That means the company has now reported 13 consecutive months of retail sales growth.

Its BEV sales share of 13% for the quarter is almost double what it was in the same period in 2022, increasing 111% year-on-year. Volvo adds that customer response to models such as the entry-level EX30 has been strong, with the small CUV generating higher-than-expected pre-orders.

Vehicle production volumes in the third quarter were up 16% versus the same period last year as availability and visibility continued to improve in the supply chain. The company booked revenue for the quarter of SEK92 billion ($8.3 billion), up 16% year-on-year.

At the same time, the gross margin continued to improve and came in at 19.6%, helped by improving margins on electric cars, which came in at 9% and was significantly up compared to the previous quarter. This shows that lower lithium prices are starting to have an effect, as are higher prices on model-year 2024 BEVs. In addition to lower raw material prices, costs for freight and other logistics have also eased. Spot buy costs for key components such as semiconductors have fallen as well.

Jim Rowan, president and CEO of Volvo Cars, says: “Our operating performance is gathering momentum while we continue to make steady progress on our transformation objectives. As such, the quarter developed as we planned and communicated, putting us in a good position to close out the year with solid double-digit growth in retail volumes and a considerably higher share of fully electric cars for the full year.”