Volvo Cars announced that by the way of electrification, it intends to increase car sales to 1.2 million globally (compared to over 700,000 in 2019) by the middle of this decade.

At least half of them will be fully electric, which means 600,000 units annually just about five years from now. A year ago, Volvo was selling zero battery-electric cars (plug-in hybrids were below 20% or around 100,000 a year), which illustrates to us how high the pace of electrification is.

Moreover, by 2030, the company would like to be 100% electric, which suggests at least 1.2 million electric cars annually (more if the company will manage to further expand its business).

Profitability

Not only the sales volume is interesting, but also the profitability target. Volvo Cars hopes to achieve 8-10% of annual operating margin (net income will probably be less) by mid-decade, which is quite good.

"Financially, Volvo Cars targets an annual operating margin of 8-10 per cent by mid-decade, driven by increased sales and revenues across all three global sales regions, more effective sales and distribution channels, synergies with its affiliates and a broader range of fully electric cars."

That's what is possible with the second generation of electric cars. After the company will launch its third generation of EVs in the middle of this decade, the profitability is expected to increase to even higher level:

"Profitability is expected to be further boosted by achieving gross margin parity between electrified and combustion engine-powered cars by mid-decade."

We guess that a higher level of vertical integration is one of the key elements to improve profitability.

Other elements that should allow Volvo to expand and be profitable is the use of synergies with Polestar, as well as with the entire Geely group.

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