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Volvo's New Business Plan Includes a Major Shift to Electric and Autonomous Vehicles

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【Summary】Volvo Cars, the premium car maker, has announced new financial and operational goals that will position the company as a leading player in the changing global automotive landscape by 2025. A large part of the plans include autonomous and electric vehicles, with autonomous vehicles comprising one third of all Volvo models sold.

Paul Young    Jul 14, 2018 4:46 PM PT
Volvo's New Business Plan Includes a Major Shift to Electric and Autonomous Vehicles

Volvo Cars, the premium car maker, has announced new financial and operational goals that will position the company as a leading player in the changing global automotive landscape by 2025. A large part of the plans include autonomous and electric vehicles, with autonomous vehicles comprising one third of all Volvo models sold.

Volvo expects to generate 50 percent of all sales annually from fully-electric cars, one third of all cars sold to be autonomous driving cars and half of all cars it offers to customers from vehicle subscription services. Volvo launched its first subscription service called Care by Volvo in March.

Volvo Cars expects these initiatives to transform its connection to its customer base, with the aim to build a total of over 5 million direct consumer relationships by the middle of the next decade, creating new sources of recurring revenue by providing mobility as a service (MaaS). This will also offer the company far greater potential to develop connected and other services for customers.

"Our customers' expectations are changing rapidly. This means that Volvo Cars is also changing rapidly. These initiatives will help transform Volvo from being purely a car company to being a direct consumer services provider," said Hakan Samuelsson, president and chief executive.

On the financial side, Volvo Cars aims to generate premium level profitability in line with other premium car makers, driven by increased sales and revenues across all three global sales regions, and a broader range of cars including sales to the new segment of autonomous ride-hailing companies.

Volvo announced plans in later 2017 to supply up to 24,000 of its XC90 SUVs to the ride-hailing companies for use in Uber's planned robo-taxi service.

Volvo Cars expects to benefit from lower procurement costs, shared development costs and economies of scale alongside Polestar, its premium high-performance electric car brand, and LYNK & CO, the new global car brand in which Volvo Cars owns a 30 percent stake.

"This paves the way for Volvo Cars to continue growing fast into the middle of the next decade," said Mr Samuelsson. "The company has been transformed since 2010 into a global premium car company. Now it is time for this transformation to be turned into a period of sustained profitability in line with other premium brands."

Volvo Cars achieved record profits and sales in 2017, with a 27.7 percent increase in operating profit and global sales of 571,577 vehicles. The results marked the company's fourth consecutive year of record growth, underlining the transformation of Volvo's finances and operations since being acquired by China-based Geely Holdings in 2010.

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