Swedish automaker Volvo (VOLCAR-B.ST, VLVLY) reported electric vehicle sales to have jumped by 70% year-over-year in 2023. Volvo Cars Deputy CEO and Chief Commercial Officer Björn Annwall joins Yahoo Finance Live and Senior Reporter Pras Subramanian to talk about Volvo's doubling down in the EV space, its ability to convert consumers from hybrid models, and its partnership with Polestar (PSNY).
"We can play a different audience in different states, so that's really the strength of Volvo. What we see happening now in the US is really how plug-in hybrids are taking off," Annwall says. "Many consumers see that as a bridge into a fully electric future."
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BRAD SMITH: Despite a seemingly bumpy road ahead for EVs, electric vehicles, Volvo is plugging into the space doubling down on its goal to go completely electric by 2030. The automaker saw its EV sales jump 70% in 2023 from a year ago, representing 16% of its total global sales volume. Volvo also announcing it is evaluating a potential adjustment of its shareholding in Polestar.
For more on the space and the company's performance, we've got Bjorn Annwall who is the Volvo Cars chief commercial officer and deputy CEO joining us now alongside Yahoo Finance's Pras Subramanian. OK, Bjorn, we got to get into this. What are you guys doing differently, seeing differently in how you're showing up to the EV space versus some of your competitors that are trying to break the mold here?
BJORN ANNWALL: One thing that we're doing differently than many others is that we have a sole focus of becoming a fully-electric company in 2030 and that means that we have done a lot of structural investment into that space for many years now. And that's what you see in our numbers now where we grow, as you said, 70% year over year and increased the gross margin in doing so. And I think one thing that's important, Volvo is a premium brand. We're focusing on the premium end of the EV markets and that's where I think you can see quite strong margins. A lot of the discussions on softening EV margins and softening EV demand we don't see for Volvo.
PRAS SUBRAMANIAN: Hey, Bjorn. Pras here. So you guys are introducing two more EVs to the portfolio this year. What do you think is making that situation work for you, especially in the US? Why is there traction here for EVs where other companies have not been able to do the same?
BJORN ANNWALL: Well, clearly, the move into a fully electric world will happen with different timescales in different parts of the world. And I think even within the US, different states are moving in different paces. Clearly, the West Coast in the US is moving faster than maybe the interior.
And we have a portfolio of both fully-electric cars, but we also have great plug-in hybrids and mild hybrids. So we can play a different audience in different states and that's really the strength of Volvo. And what we see happening now in the US is really how plug-in hybrids are taking off. Many consumers see that as an bridge into full-electric future.
I mean, maybe you don't trust to have a full-electric car as a full step. So they try with a plug-in hybrid as a first step and the next car is a fully-electric car. We can see from the charging data on our cars that more than half of the energy consumption in the car comes from charged electricity meaning that plug-in hybrids are actually charged very frequently and are more used as a fully-electric car than an ICE car. So also, in America, we clearly see that there are many, many consumers who want to go into fully-electric future.
PRAS SUBRAMANIAN: So Bjorn, I know you offer cars like the XC40 that are both hybrid and fully electric. Are you seeing that in Q4 that there's being a shift from buyers going from EVs to hybrids? Is that actually happening for Volvo as well? We were seeing with other brands too.
BJORN ANNWALL: No, we continue to see a strong growth on electrification, both on the plug-in hybrid side and the full-electric side. As we said, 70% growth this year. And we are now having 16% of our sales globally being fully electric, a number that will significantly grow over the next year and coming to 50% already in 2025 on the back of launching the new EX30, which is a small premium SUV, and the EX90 which we will produce for global consumption out of Charleston, South Carolina.
SEANA SMITH: Bjorn, let's talk about the news also that came out in terms of the plans here to stop funding Polestar. And of course, this comes and it kind of sparked some chatter amongst the Street just in terms of the timing of this if there's any read through about what this signals in terms of demand for EVs. Walk us through that strategy and why this makes sense for Volvo.
BJORN ANNWALL: Polestar, firstly, we are extremely proud to have founded Polestar. It has been a very strong brand. And they now going into a new phase of their development where they're going from being a one-car brand into becoming a three-car brand, launching the Polestar 3 and the Polestar 4 during this year and starting to ship that to consumers.
Volvo Cars is going through a major transformation into a fully-electric future, but also moving into a quite different car architecture based on core-compute architecture and software-defined vehicles. We, as Volvo, need to focus on that transformation. And we are-- we're really an operating company, not an owner company. So what we announced now that we're going to evaluate is a way in which we, through some method, maybe a dividend, maybe not method, will take down our ownership share in Polestar.
And instead, Geely Holding will assume the main owner responsibility for Polestar. They're set up to be a holding company, an owner company. And they're better equipped to be an owner company as Polestar move in to the next phase. But important to stress is that Volvo and Polestar continue to have a lot of valuable collaboration be it in engineering for the next generation vehicles, be it in production-- we are both producing in our production facilities in Charleston, South Carolina-- or be it in commercially to have synergies in our retailer networks and so forth. So we are very much looking into how we can continue those synergies moving forward.
