Volvo expects electric car margins to match conventional cars next decade

Volvo XC60

Volvo expects its margins on electric cars to find similarity with those of vehicles with combustion engines by 2025.

Global automakers are preparing a $300 billion surge in spending on electric vehicle technology for the next five to one decade but have admitted that higher component expenses and limited take-up in initial years will impact margins.

Volvo is investing about 5 percent of its yearly income, equating to a little above $1 billion a year, in building driverless and electric vehicles and has promised to provide five completely electric cars to market in the next few years.

It showcased the first less than a month earlier, made by its luxury performance brand Polestar to compete Tesla’s Model 3. It also prepares to launch a Volvo-branded electric compact SUV in 2019 in the company’s push to derive 50 percent of its sales from completely electric cars by 2025.

“It’s very difficult to say if we’re going to have the same margins in 2025 as we had in 2015 … as electric cars are very costly,” Chief Executive Hakan Samuelsson informed Reuters on the sidelines of a safety showcase by the company in Gothenburg.

“But I would be absolute sure we will have the same margins with electric cars as we will with conventional combustion cars in 2025.”

Samuelsson stated the convergence would be assisted by decreasing costs for components including batteries and decreasing margins on conventional cars.

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