Volvo Car AB fell the most in three months after high lithium costs dragged down its electric-vehicle returns during the second quarter and broader pricing concerns sparked by industry leader Tesla Inc.
(Bloomberg) — Volvo Car AB fell the most in three months after high lithium costs dragged down its electric-vehicle returns during the second quarter and broader pricing concerns sparked by industry leader Tesla Inc.
The manufacturer expects returns to improve in the coming months because of lower raw-material expenses and new models. Tesla sparked further profitability worries after Elon Musk said late Wednesday the biggest EV seller probably will keep lowering the prices of its cars if interest rates continue to climb.
Volvo Car’s operating income fell to 5 billion kronor ($486 million) in the three months through June after buying the key battery material lithium at peak prices, it said Thursday, worse than analysts expected. The shares declined as much as 7.4% in Stockholm, the steepest intraday drop since early April.
Volvo Car currently doesn’t see the need to lower prices of its EVs because demand for them has remained robust, Chief Executive Officer Jim Rowan said in an interview with Bloomberg Television.
Read more: Tesla Sinks as Investors Brace for New Hits to Profitability
The automaker also forecast “solid” double-digit retail sales growth for the full year on rising demand for EVs, assuming there are no further supply-chain disruptions.
Volvo, controlled by China’s Zhejiang Geely Holding Group Co., plans to sell only fully electric cars by the end of this decade — a push that requires major investments. Its ambitions hit a speed bump earlier this year when Volvo Car postponed production of its flagship electric SUV, the EX90, to the first half of next year from the fourth quarter due to issues with software development.
The company has high hopes for the EX30, a compact battery-powered sport utility vehicle it unveiled last month.
The EX30 “should be a high-volume SUV for us and that should take us to the next level,” Rowan told Bloomberg TV.
Volvo Car’s sales in the period beat expectations after EV shipments surged 178% and output improved because of better access to parts.
(Updates with details on Tesla weighing price cuts in second paragraph.)
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