Stable Demand, Volvo Will Not Cut Prices

JAKARTA - Swedish automaker Volvo Cars, which is majority-owned by China's Geely, said in its first quarterly report this year that it doesn't need to cut prices like Tesla did, given healthy demand and revenue that exceeded estimates.

In its report, it is said that Volvo is starting to emerge from a difficult supply period from a chip shortage which resulted in increased costs affecting output. The company's shares were also up 8 percent at the market opening before retreating to the same level.

Volvo says its product has improved, but still suffers from some deficiencies, which will continue to affect production in the second quarter.

Volvo stressed strong demand for its models, with unit sales up 10 percent in the first quarter. And last year, electric vehicles (EVs) made up 11 percent of the company's portfolio and aims to produce fully electric vehicles by the end of this decade.

Jim Rowan, CEO of Volvo, said that as long as demand continues to be high for the automaker, he sees no reason for a price cut. Reuters, Thursday, April 27.

Rowan also said that the price of lithium, the main source of cost for Volvo's electric cars, has fallen. Although Chile, one of the world's largest producers of the metal, has said that it will nationalize its lithium industry.

He added that other sources of lithium are becoming available in other areas, so Rowan believes those costs will continue to decrease.

Volvo Cars also said its first-quarter operating income was 5.1 billion Swedish crowns ($7.2 billion), exceeding forecasts of 3.6 billion kronor ($5.1 billion).

Despite this, their operating income has fallen compared to a year ago reaching 6 billion krona (around IDR 8.5 trillion).