What's going on?
Volvo posted its highest yearly revenue ever on Friday, even as other carmakers struggled with shortages. So what’s the Swede’s secret?
What does this mean?
Volvo wasn’t about to let supply issues spoil its quintessentially upbeat Nordic mood last quarter, even if the company did sell 20% fewer cars and bring in 6% less revenue than the same time in 2020. The company is, after all, a poster child for adapting to survive: it brought in 7% more revenue in 2021 than the year before, and it sold 6% more cars too – many of which were its more expensive, more profitable models. Here’s hoping even higher prices don’t hamstring its fortunes this year: the carmaker said it’ll probably have to raise them on the back of higher raw materials costs.
Why should I care?
Zooming in: The clock is ticking.
6% of all the cars Volvo sold last quarter were battery electric vehicles (EVs), but that’s still – *does the math* – 94% less than its goal of exclusively selling EVs by 2030 (tweet this). So no more playing around: the company announced earlier this month that it’d be investing $1 billion in updating its Swedish manufacturing plant, as well as a joint $3 billion with battery-maker Northvolt to design and manufacture cheaper, more efficient batteries.
Zooming out: Lot of lithium stans out there.
Volvo isn’t the only carmaker going hard on EVs, and all that extra demand is sending prices of battery materials soaring. Take lithium carbonate, whose price was 569% higher last month than it was in January 2020. And since it can take as long as 10 years to open a new mine and boost supply, it could climb for a long time yet. So if carmakers don’t want EVs to become totally unaffordable, partnerships like the Volvo-Northvolt deal could be essential to finding new materials to use, along with new ways to use fewer of them.