Volvo expects rise in investment levels going forward

The company said, “Volvo Cars is now entering a decisive phase in its transformation journey. Not only will it continue to roll out and ramp up production of the EX30, EX90 and EM90 in 2024, but the company is also significantly ramping up other investments that will help it become a leader in next-generation mobility. In the period up until 2025 Volvo Cars will make the necessary structural and strategic investments that lay the technical foundation for its future success: electrification, software, core computing architectures, advanced connectivity, data capture and analytics, mega casting, next generation e-motor and battery technology, smart cabin technology, and a new advanced manufacturing facility. This will mean a temporary rise in investment levels, yet these strategically crucial investments will drive significant cost efficiencies in Volvo Cars’ next generation of fully electric cars. They lay the foundation for further profitable growth and increased EV margins. The company has a strong balance sheet supporting the transformative investments, with a liquidity position of SEK 75 bn as of year-end 2023, and during the investment phase in 2024-25 it expects the free cash flow generation to be relatively neutral. From 2026 and onwards, Volvo Cars not only expects the level of investments to decline but to reap the benefits of this strategy with higher growth and profitability. It will also at this point generate a strong positive free cash flow. As the company accelerates its transformation, it will put even more emphasis on driving profitable growth over time and prioritising value over volume. It will double down on internal efficiency, ensure robust capital allocation across our business and capitalise on its phase one investments.”