The company forecasts a 15-20 percent gross profit margin on the EX30, which will be its smallest and most affordable model at $36,415.
The Volvo EX30, the brand’s fourth and smallest EV to date, is designed to be its most profitable, as paradoxical as it may sound.
Volvo Cars executives said at an investor presentation last week that the company is expecting a 15 to 20 percent gross profit margin on the EX30, despite the fact the subcompact crossover will be the most affordable model in the carmaker’s lineup.
“It’s the overall product balancing that we’ve done — cost reductions, shared platform and sourcing that gets us there,” Akhil Krishnan, head of Volvo’s small car programs, told Automotive News.
When it arrives in the US next summer, the Volvo EX30 will become the brand’s most affordable model overall with a starting MSRP of $36,415 (including shipping). Currently, that title belongs to the gas-powered XC40, which starts at $37,645 (including shipping) in entry-level guise.
There are some key factors that allowed Volvo to offer a brand-new EV built on a dedicated architecture at such a low price. The main one is that it rides on parent company Geely’s Sustainable Experience Architecture (SEA) platform for small and compact vehicles, which underpins other EVs including the Smart #1, Zeekr X, and Smart #3.
As a result of sharing costs, Volvo expects the EX30 to help lift its operating profit margin to 8 to 10 percent by mid-decade from about 6 percent currently.
Gallery: 2024 Volvo EX30
“We’ll make better margins on this car than we do on … the XC40 BEV and the C40. We’re not doing this just for fun,” Volvo’s Chief Commercial Officer Björn Annwall said at the EX30 launch event in Milan last week. For comparison, the XC40 and C40 Recharge EVs delivered 7 percent profitability in the first quarter.
The EX30’s high profitability will not be an exclusive result of the shared platform, though. To cut costs, Volvo also applied creative design and engineering principles. For example, the core theme around the EX30 is centralization, according to Volvo Head of Commercial Francesco Speciale.
“We have centralized a lot of elements that would normally drive cost in a higher-segment car,” he noted. As opposed to the Volvo EX90 flagship, customers have lower content expectations on an entry model, which helps the EX30’s profitability.
The subcompact crossover’s low price will bring Volvo closer to price parity with combustion engine vehicles, as the EX30 will undercut similarly sized gasoline-powered crossovers from Mercedes-Benz, BMW, and Audi. In addition, it will also compete with offerings from the mass-market’s top end.
“You can get a fully electric car for the same price as an internal combustion engine car in the same segment,” Speciale said, adding that the EX30 “creates an opportunity to democratize electrification across our markets.”
For all these reasons, Volvo believes the EX30 has the potential to become its best-selling vehicle, especially since it will play in a market segment largely ignored by premium automakers.
Source: Automotive News
Comment!
Keyword: Volvo Expects EX30 To Approach Price Parity, Become Its Best-Seller