STOCKHOLM — Shares of automaker Volvo Automobiles fell as a lot as 12% on Thursday as its chief govt’s promise of improved margins on battery electrical automobiles (EVs) stood in stark distinction to warnings from friends.
As the corporate reported third-quarter earnings, Chief Government Jim Rowan advised Reuters that he noticed wholesome demand for its automobiles, and was optimistic the margins would improve additional within the fourth quarter.
“I count on to see us improve our BEV margins as we go into the fourth quarter, and that’s as a result of costs of uncooked materials are coming down,” he mentioned, including {that a} robust order guide had enabled the corporate to maintain its premium pricing.
The remarks ran counter to feedback by luxurious automobile rival Mercedes-Benz, which warned of a “brutal” EV market of heavy worth cuts and provide chain points, with margins on its BEVs, or battery electrical automobiles, ending decrease than anticipated.
Different firms, corresponding to Normal Motors, Ford, Tesla and Volkswagen had additionally warned that the demand for EVs was not growing as anticipated.
Volvo’s BEV margins have been 9% within the quarter, a pointy improve from the earlier quarter’s determine of three%.
Rowan mentioned he anticipated the pattern of falling costs of uncooked supplies to proceed, serving to the corporate improve margins additional for the fourth quarter.
Buyers proved unconvinced, as Volvo shares, down 10% by 1014 GMT, after having fallen as a lot as 12%, seemed set for his or her largest ever one-day drop.
The overall market seen EVs as underperforming, mentioned Jefferies analyst Philippe Houchois.
“That might put a query mark round (Volvo’s) development in the event that they wish to push extra into EVs simply at a time when the market is anxious that EV demand is slowing,” Houchois added.
Volvo’s earnings earlier than curiosity and tax (EBIT) got here to 4.5 billion Swedish crowns ($402.75 million) within the third quarter, lacking consensus by greater than 10%, in accordance with Handelsbanken.
EV makers have engaged in stiff competitors this 12 months, after Tesla ignited a worth conflict intensified by new Chinese language gamers.
Volvo, majority-owned by China’s Geely Holding, has repeatedly mentioned that it might avoid a worth conflict, a place Rowan repeated on Thursday.
“We do not play within the mass market, which is nice,” he added.
