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Volvo Cars: From Swedish Safety Pioneer to Chinese-Owned Electric Contender
On a frigid Gothenburg winter day in 1927, two Swedish entrepreneurs stood in a small factory watching their very first automobile—a modest machine named "Jakob"—roll off the production line. Neither Assar Gabrielsson nor Gustaf Larson could have imagined that their creation would one day become synonymous with automotive safety worldwide, pass through the hands of one American giant, find salvation with a Chinese refrigerator-maker-turned-billionaire, and now navigate the treacherous crosscurrents of electric vehicle transformation and global trade wars.
The story of Volvo Cars is one of the most improbable sagas in automotive history: a brand that gave away its most valuable invention to save lives rather than profits, that survived near-death under one of America's largest corporations, and that found its renaissance under Chinese ownership—defying every skeptic who predicted cultural clash and brand dilution. Today, full-year revenues exceeded SEK 400 billion for the first time in the company's history, due to a new all-time sales record of 763,389 cars.
But as 2025 unfolds, Volvo stands at another crossroads. The company anticipates a turbulent 2025 due to challenging market conditions. CEO Jim Rowan stated "2025 will be a year of transition. The global car industry is facing several uncertainties: cyclical, structural, transformational and geopolitical." In a dramatic turn, after serving as Volvo CEO from 2012 to 2022, HĂĄkan Samuelsson returned to his role on April 1, 2025, replacing Jim Rowan, who stepped down and left Volvo's board of directors.
The question facing investors is whether Volvo's century of safety-first thinking can translate into success in an era defined by electric powertrains, software, and geopolitical fragmentation.
I. Founding & Early History: Built for Swedish Winters (1927–1960s)
The genesis of Volvo begins not in an automotive factory, but in a Stockholm restaurant in 1924, where two men shared a meal that would change Swedish industry forever. Assar Gabrielsson was an unlikely car man—a former egg seller who had risen to become head sales manager at SKF, the Swedish ball bearing giant. His dinner companion, Gustaf Larson, was a mechanical engineer with practical experience at British automakers. Both shared a frustration: imported cars simply could not handle the brutal Swedish climate.
Their goal was to create a car that would be safe in a country with rough terrain and temperatures that were colder. Imported vehicles from other countries couldn't handle the conditions in the long term and would break down more often. The roads of Sweden in the 1920s were unpaved, frozen for months, and littered with rocks. American and European cars, designed for gentler conditions, fell apart.
Volvo was born as a subsidiary of SKF, the ball bearing company. The name itself carries meaning: "Volvo" is Latin for "I roll"—appropriately automotive, given the connection to bearings. The trademark had actually been registered by SKF in May 1915 for a special series of ball bearings intended for the American market, though it was never used for that purpose. When Gabrielsson and Larson needed a name for their automotive venture, the dormant trademark was waiting.
On April 14th, 1927, the first Volvo—affectionately named "Jakob"—left the factory in Gothenburg. The founders' philosophy was established from day one: "Cars are driven by people. The guiding principle behind everything we make at Volvo, therefore, is and must remain, safety." This wasn't mere marketing. In an era when automotive fatalities were grimly commonplace, Gabrielsson and Larson saw their harsh operating environment as demanding a fundamentally different approach to vehicle construction.
The early years were difficult. Volvo struggled to gain traction against established imports, and the company nearly failed multiple times. But the Swedish winters that destroyed competitors' products became Volvo's proving ground. Each broken axle, each cracked engine block from a rival became an advertisement for the sturdy Swedish alternative.
The breakthrough came in 1944 when Volvo presented the PV444 passenger car, though production didn't begin until 1947 due to wartime material shortages. The PV444 represented a strategic pivot: it was the smallest Volvo yet, designed to be affordable for middle-class Swedish families. It became Volvo's most produced car and, crucially, spearheaded the company's expansion into the profitable American market.
The first Volvos arrived in the United States in 1955, sold through independent importers. Texas was added in 1956, and that same year, Volvo established its own import operation. North America would become Volvo's primary external market, a relationship that has endured for nearly seven decades. American buyers, particularly on the coasts and in northern states, appreciated Volvo's reputation for durability and safety—qualities that resonated with practical, educated consumers who valued substance over flash.
For investors examining Volvo's historical foundation, the key insight is that the brand's core identity was established not through marketing but through genuine product differentiation. From 1927 onward, "Volvo = Safety" was built into the company's DNA, creating an association that competitors could not simply purchase or copy. This brand equity would prove invaluable decades later when the company faced existential challenges.
II. Safety as Strategy: The Brand-Defining Decades (1960s–1990s)
The 1959 Detroit Auto Show was dominated by chrome-laden land yachts and tail fins that could serve as aircraft rudders. American automakers competed on style, speed, and size. It was in this context that a Swedish engineer named Nils Bohlin unveiled what would become one of the most important inventions of the twentieth century: the three-point seatbelt.
The United States Patent Office issued the Swedish engineer Nils Bohlin a patent for his three-point automobile safety belt on July 10, 1962. Four years earlier, Sweden's Volvo Car Corporation had hired Bohlin, who had previously worked in the Swedish aviation industry, as the company's first chief safety engineer. At the time, safety-belt use in automobiles was limited mostly to race car drivers; the traditional two-point belt, which fastened in a buckle over the abdomen, had been known to cause severe internal injuries in the event of a high-speed crash.
Bohlin's genius was in simplicity. Bohlin designed his three-point system in less than a year, and Volvo introduced it on its cars in 1959. Consisting of two straps that joined at the hip level and fastened into a single anchor point, the three-point belt significantly reduced injuries by effectively holding both the upper and lower body and reducing the impact of the swift deceleration that occurred in a crash.
But the truly remarkable decision came next. Volvo chose not to keep this lifesaving technology proprietary. The modern three-point safety belt was perfected by Volvo engineer Nils Bohlin in 1959—and its patent given for free to the world. The invention has been credited with saving at least a million lives worldwide.
This decision defies conventional business logic. Volvo had invested significantly in R&D, secured a patent, and held a competitive advantage that could have generated substantial licensing revenue for decades. Instead, Volvo chose to open up the patent, allowing any automaker to use its patented design for free. The decision was based on the safety of the patented belt as compared to the safety of the current two-point seatbelt. Volvo knew that these seatbelts would save lives and wanted to make it as easy as possible for them to be incorporated in every car in America. It prioritized the safety of the American public over profitability of its own company. Volvo essentially traded millions of dollars for millions of human lives.
From a branding perspective, this was perhaps the most brilliant decision Volvo ever made. By giving away the patent, Volvo didn't just demonstrate its commitment to safety—it made that commitment undeniable. No amount of advertising could have purchased the credibility that came from sacrificing profits for lives. The three-point seatbelt became standard equipment in vehicles worldwide, with Volvo releasing the new seat belt design to other car manufacturers, and it quickly becoming standard worldwide. The National Traffic and Motor Vehicle Safety Act of 1966 made seat belts a required feature on all new American vehicles from the 1968 model year onward.
The safety innovations continued throughout the 1960s and 1970s. Volvo pioneered crumple zones, rear-facing child seats, collapsible steering columns, side collision protection, and the three-way catalytic converter with Lambdasond. Each innovation reinforced the brand's position as the thinking person's choice—the automobile for buyers who valued engineering over aesthetics.
In 1964, Volvo opened its Torslanda plant in Sweden, which remains one of its largest production sites today. The following year, the Ghent, Belgium plant opened, establishing a European manufacturing footprint that would prove strategically valuable decades later.
The 1970s brought strategic repositioning. As the global oil crisis punished American automakers focused on gas-guzzlers, Volvo began moving away from volume car manufacturing to concentrate more on heavy commercial vehicles in its broader group. The car division pivoted toward models aimed at upper middle-class customers to improve profitability. This upmarket shift was prescient: it positioned Volvo as a premium brand just as European competitors like BMW were discovering the same market opportunity.
The Volvo 850, introduced in 1991, represented another technological leap. It debuted with four world-firsts: a transverse five-cylinder engine, the Side Impact Protection System (SIPS), self-adjusting belt reels for the front seats, and Delta-link rear suspension. It was also the first of Volvo's larger models with front-wheel drive. The 850 was a critical success, demonstrating that Volvo could compete on driving dynamics while maintaining its safety leadership.
By the late 1990s, Volvo had established itself as the definitive choice for safety-conscious consumers willing to pay a premium. Its international reputation was solidified when the US Government purchased 24 Volvo 240s for extensive crash testing, choosing Volvo as the benchmark for establishing safety standards for all new cars. This wasn't marketing; it was validation from the most demanding safety authorities in the world.
The strategic implication for investors is clear: Volvo had constructed a genuine moat through decades of consistent investment and innovation in a single dimension—safety. Unlike luxury brands that compete on status or performance brands that compete on speed, Volvo had staked out territory that aligned with fundamental human values. Parents shopping for family vehicles weren't choosing fashion; they were choosing protection for their children.
III. The Ford Era: Premier Automotive Group & Growing Pains (1999–2010)
By the late 1990s, the global automotive industry had entered a period of frenzied consolidation. General Motors, Toyota, Volkswagen, and DaimlerChrysler were building sprawling empires. The logic seemed irrefutable: scale equals survival. Smaller manufacturers faced a choice—merge, get acquired, or face extinction.
The Premier Automotive Group (PAG) was an organizational division within the Ford Motor Company formed in 1998 to oversee the business operations of Ford's high-end automotive marques. The Premier Automotive Group was formed under then-CEO Jacques Nasser and grew to include the Lincoln, Aston Martin, Jaguar, Land Rover and Volvo brands. Forbes estimated that, by 2004, Ford had spent $17 billion building on acquisitions to form PAG.
In January 1999, AB Volvo sold Volvo Car Corporation to Ford Motor Company for $6.45 billion. The Swedish truck and commercial vehicle company wanted to focus on its core heavy vehicle business, and Volvo Cars needed the scale and capital that only a global giant could provide. Ford, meanwhile, was building its Premier Automotive Group alongside Jaguar, Land Rover, and Aston Martin, envisioning a European luxury portfolio to rival BMW and Mercedes-Benz.
The early years showed promise. Ford invested in new product development and modernized Volvo's manufacturing facilities. With Volvo engineers, Ford was able to adapt Volvo's Haldex AWD to Ford models as well as adapt the Volvo P2 Platform to its D3 and D4 Platforms—used for the Ford Five Hundred, Taurus X, Flex and Explorer as well as the Lincoln MKS, MKT. Volvo engineers incorporated numerous Volvo safety innovations into these vehicles including a bolt-in hydroformed cross-car steel beam between the B-pillars directly below an identical reinforced roof crossbeam above the B-pillars.
The platform sharing worked both ways. The Volvo S40 and V50 were designed on the P1 platform, shared with the Ford Focus and Mazda3—a strategy aimed at reducing production costs while making these models more affordable. Volvo's T5 petrol engine powered Ford Focus ST and RS performance models, spreading development costs across multiple brands.
The standout success of this era was the original Volvo XC90, launched in 2002. The large SUV became an instant global phenomenon, redefining expectations for the segment and becoming Sweden's most important export product within a few years. The XC90 demonstrated that Volvo could compete in the profitable SUV market while maintaining its safety-first identity. American buyers particularly embraced it, providing validation for Volvo's continued relevance in its most important external market.
Ford encouraged the brands to share parts and engineering to reduce costs, but this sometimes resulted in vehicles that were criticized for resembling mass-market Ford models. The Jaguar X-Type, for example, shared its platform with the Ford Mondeo and was seen as insufficiently distinct. Volvo, which had been successful in the United States as an independent entry-level luxury brand, lost market share during its time in PAG to German manufacturers such as BMW and Mercedes-Benz, which had expanded their lower-priced luxury offerings.
The fundamental problem was that Ford's synergy-focused approach conflicted with luxury brand identity. Premium customers pay premiums precisely because they are not driving the same thing as everyone else. When a $40,000 Volvo shared its architecture with a $25,000 Ford, the premium justification eroded. The German competitors, meanwhile, were investing billions in brand differentiation and expanding their product ranges into segments Volvo had vacated.
Then came the financial crisis of 2008. Ford found itself facing potential bankruptcy, and its portfolio of luxury brands—each requiring substantial capital investment—became liabilities rather than assets. When Alan Mulally became president and CEO in September 2006, he oversaw Ford's dismantling of the Premier Automotive Group. In 2007, Ford sold 92% of Aston Martin to a consortium of investors headed by David Richards. In March 2008, Ford sold Jaguar and Land Rover to Indian carmaker Tata Motors.
Volvo was the last to go. Swedish authorities became concerned about the fate of Volvo should Ford file for bankruptcy. These concerns mounted after repeated mass layoffs at Volvo's Swedish facilities. In December 2008, Ford announced it was considering selling Volvo Cars, and began searching for a buyer capable of providing the brand with the investment it desperately needed.
The Ford era offers several lessons for investors. First, synergies in the automotive industry often destroy value at premium brands. The cost savings from shared platforms rarely compensate for brand dilution. Second, ownership matters—particularly for premium brands, where strategic direction must align with brand identity. Third, undercapitalized ownership can be fatal; Volvo entered the 2008 crisis weakened by years of underinvestment relative to competitors.
IV. The Geely Acquisition: The Deal That Changed Everything (2010)
Born on June 25, 1963, in Taizhou, Zhejiang Province, China, Li Shufu grew up in a modest farming family. His early experiences in a rural setting instilled in him a strong work ethic and an entrepreneurial spirit.
When Li Shufu first expressed interest in acquiring Volvo Cars, the reaction ranged from skepticism to outright mockery. At age 19, he used 100 yuan ($16) his father had given him to buy a camera and start a photography business taking photos of tourists. Later, he set up his own studio to sell handmade camera accessories. From photography, he moved to refrigerator parts, then to motorcycles, and finally to automobiles.
Li Shufu started out as a photographer in the early 1980s, but a failure to win state approval forced him to close his business. He then dabbled in electronic waste recycling, manufacturing refrigerator parts and magnesium-aluminum decorative panels used in construction. Eventually, Li saw a great opportunity in producing mopeds as an affordable mode of private transport. He founded Geely in 1994, the first company in mainland China to produce mopeds and later motorcycles.
When being criticized for lack of experience in automobiles, Li dismissed those voices, saying his famous words, "Making a car is not hard. It is just four wheels and two couches." It was a statement that seemed either naive or visionary, depending on the listener.
In 2002, Li Shufu mentioned he wanted to acquire Swedish Volvo from Ford at Geely's internal meeting for the first time. In 2007, Geely sent an official letter to Ford expressing a wish to acquire Volvo. However, it was ignored and never replied to, as Geely was not taken seriously then. It was a harsh reality check for an ambitious Chinese entrepreneur.
Li refused to give up. Then, in 2009, Li Shufu, in full armor and side by side with Yu Liping, Rothschild's China President, revisited Ford's booth during another Detroit Auto Show, expressing their persistent wish to buy the North European automaker. And things were different then—Ford's CEO promised to notify Geely if they decided to sell Volvo. Ford started to feel the total pressure of the 2008 financial crisis as the cash pile they sat on grew thinner.
In March 2010, Zhejiang Geely Holding Group, controlled by Li Shufu, agreed to acquire Volvo Cars from Ford Motor Company for $1.8 billion, with the deal completing on August 2, 2010, marking China's largest overseas automotive purchase at the time. Geely committed to maintaining Volvo's Swedish headquarters, R&D centers, and workforce, avoiding the plant closures Ford had considered.
The price was extraordinary—Ford had paid $6.45 billion eleven years earlier and was selling for less than one-third of that amount. The automotive world predicted disaster: Chinese quality standards were notoriously poor, cultural integration seemed impossible, and surely Geely would strip Volvo's technology and destroy the brand.
Instead, Li Shufu implemented what became known as the "Geely is Geely, Volvo is Volvo" strategy. Although Geely owns Volvo Cars, it operates largely independently, with its own management team, product strategy, and Scandinavian engineering principles. Essentially, Geely acts as a supportive parent company, offering resources while allowing Volvo to stay true to its identity.
Li understood something that Ford had missed: Volvo's value resided entirely in its brand identity and engineering culture. Interfering with either would destroy precisely what he had purchased. Instead of integration, he provided capital. Instead of imposing Chinese management, he recruited Swedish leadership. Instead of demanding technology transfer, he encouraged knowledge sharing that benefited both parties.
The partnership between Geely and Volvo represents one of the most successful East-West collaborations in the automotive industry. Key outcomes include shared development of modular vehicle platforms like SPA (Scalable Product Architecture) and CMA (Compact Modular Architecture), joint ventures for electric mobility including Polestar and Lynk & Co, and expansion of Volvo's global manufacturing to China, the U.S., and Belgium. This synergy has strengthened both brands—Geely gained global credibility, while Volvo received the investment it needed to evolve into a fully electrified premium automaker.
The acquisition's success confounded Western business school assumptions about cross-border M&A. The key insight was that Li Shufu approached Volvo not as a cost-cutting opportunity but as an investment in capability and brand. He was buying Swedish engineering excellence and safety reputation—intangible assets that required preservation, not exploitation.
Post-acquisition, Volvo's global sales doubled to over 700,000 units by 2019, achieving consistent profitability through investments in electric vehicles and shared platforms with Geely, such as the Compact Modular Architecture, which reduced development costs without compromising Volvo's premium positioning.
V. The Transformation: New Platforms, New Products, New Era (2010–2020)
The decade following Geely's acquisition represented one of the most remarkable turnarounds in automotive history. With patient capital and strategic autonomy, Volvo rebuilt itself from an underfunded also-ran into a genuine competitor to the German premium establishment.
The foundation was platform engineering. Volvo developed the Scalable Product Architecture (SPA), a modern platform designed from scratch for larger vehicles and future electrification. Both companies jointly developed the Compact Modular Architecture (CMA) for smaller vehicles, sharing costs while enabling distinct products for Volvo, Geely, and the new Lynk & Co brand.
Under Geely ownership, Volvo also developed a new line of 3- and 4-cylinder diesel and petrol engines to replace larger engines. This "Drive-E" strategy was controversial—replacing inline sixes and V8s with turbo-fours seemed like a retreat for a premium brand. But the engineering was exceptional: the small-displacement engines delivered competitive power while enabling hybridization and reducing emissions. It was a bet on regulatory direction that proved prescient as global emissions standards tightened.
The global expansion was dramatic. For the first time, Volvo operated a complete manufacturing plant outside Europe. The facility in Chengdu, China began producing the Volvo S60L and XC60 for the Chinese market—which had become Volvo's largest single market by volume. A second Chinese plant in Daqing followed, along with a U.S. facility in South Carolina. The company's main car production plants are now located in Gothenburg (Sweden), Ghent (Belgium), South Carolina (US), Chengdu and Daqing (China).
For the full year 2015, global sales reached a record 503,127 cars, an increase of 8 per cent versus 2014. Sales reached 500,000 vehicles in 2015 for the first time in the brand's history, then continued climbing to over 700,000 by 2023.
The product that announced Volvo's resurrection was the second-generation XC90, launched in 2014 for the 2015 model year. The second-gen XC90 marked a significant departure from its predecessor. Launched in 2015, it showcased Volvo's new design language, platform, and technologies.
Both generations of the XC90 have won Motor Trend's SUV of the Year award in their debuts. The vehicle was a comprehensive statement of intent: new platform, new design language, new technology, and new interior philosophy. The new Volvo XC90—second-generation of Volvo's flagship—was introduced to much fanfare for the 2015 model year. The first 1,927 vehicles sold were available only by special digital order, and were individually numbered and specially badged (vehicle #1 was purchased by the King of Sweden).
Plush, mature and packed full of usable technology, the second-generation Volvo XC90 arrived as a serious statement of intent back in 2015, delivering performance, practicality, style and efficiency in a way that made it the definitive all-rounder in a segment brimming with talent. It landed at a tricky time for Volvo: the firm was still trying to find its feet after a takeover by Chinese car giant Geely, and any successor to the original XC90 needed to hit the ground running.
The XC90's success validated Geely's hands-off approach. The vehicle was designed and engineered in Gothenburg by Swedish engineers, manufactured on Swedish production lines, and sold based on Swedish values—safety, sustainability, and understated elegance. Geely's contribution was capital, not direction.
In October 2016, Geely released the Lynk & Co brand in Berlin, Germany. This brand was intended to bridge the gap between Geely and Volvo, targeting younger urban buyers with a subscription-based ownership model. The brand launched with three production models, all based on the Compact Modular Architecture developed jointly with Volvo.
The following year brought another significant development. In October 2017, Volvo Cars and Geely announced that Polestar, previously a performance and tuning brand owned by Volvo Cars, would become a standalone brand focusing on electric cars. The first Polestar models used Volvo platforms, but the brand carved out distinct positioning in the emerging premium EV space.
"I am delighted to report that 2015 was a year of record sales," said HĂĄkan Samuelsson, chief executive. "Now, with a successful 2015 behind us, Volvo is about to enter the second phase of its global transformation. Once completed, Volvo will have ceased being a minor automotive player and taken its position as a truly global premium car company."
For investors, the transformation decade demonstrated several key principles. First, turnarounds require patient capital—Geely invested for years before seeing returns. Second, preserving brand DNA is more important than imposing corporate synergies. Third, platform strategy can create enormous value when executed correctly; the SPA and CMA investments enabled product proliferation while containing costs. Finally, leadership continuity matters: Håkan Samuelsson served as CEO throughout this critical period, providing consistent strategic direction.
VI. The 2021 IPO: Going Public Again
After more than two decades in private hands—first Ford, then Geely—Volvo Cars returned to public markets in October 2021. The listing of Volvo Cars on Nasdaq Stockholm is the second largest IPO in Sweden ever, and the largest IPO since 2000 in terms of offering size. Also in terms of market value, Volvo Cars is one of the largest companies to list on Nasdaq Stockholm. The landmark transaction means that the iconic Swedish brand Volvo Cars became a listed company after more than 20 years in a private environment.
Volvo Car AB gained in its trading debut in Stockholm after raising 20 billion kronor ($2.3 billion) in an initial public offering, as investors bought into the company's successful turnaround and promise of an electric future.
Trading in the shares of Volvo Cars commenced on October 29, 2021. The price in the IPO was fixed at SEK 53 per share, raising gross proceeds of approximately SEK 20 billion. Based on the IPO price, Volvo Cars' market capitalisation was SEK 158 billion.
The IPO came with notable context. The successful debut followed Volvo Cars' move to cut the size of its offering by a fifth and price it at the bottom of an initial range after investors balked at the prospect of Geely retaining hold of the bulk of the voting rights. The Chinese firm eventually agreed to loosen its grip on the automaker.
The valuation told an interesting story. Ford had purchased Volvo for $6.45 billion in 1999 and sold it for $1.8 billion in 2010. At the IPO, Volvo was valued at approximately $18.5 billion—a tenfold increase from Geely's purchase price in just over a decade. For Li Shufu, the vindication was complete: the acquisition that critics had called foolish had generated one of the most successful returns in automotive M&A history.
Volvo Cars is owned 78.7% by ZGH (post Volvo Cars IPO). Geely retained majority ownership and voting control, ensuring strategic continuity. The IPO served to finance transformation towards electrification, sustainability, and digitalization via access to Swedish and international capital markets while diversifying Volvo Cars' ownership base.
The timing was strategic. Electric vehicle valuations were at historic highs, with Tesla's market capitalization exceeding that of all legacy automakers combined. Investors were eager to buy into electrification narratives, and Volvo's commitment to going fully electric by 2030 positioned it as a direct beneficiary of this enthusiasm.
Volvo's IPO in Sweden will be the country's largest since local telecommunications company Telia Co AB went public in 2000 and raised $8.9 billion. The carmaker wants to use the funds to boost sales to 1.2 million vehicles annually by 2025, roughly double what it sold in 2020.
The IPO also clarified corporate structure. Volvo Cars had maintained separate existence from AB Volvo (the truck and commercial vehicle company) since 1999. The IPO formalized this separation for public investors, though the two entities continue to share the Volvo trademark under agreed arrangements.
For investors, the 2021 IPO established Volvo Cars as an independent investment opportunity with pure exposure to the premium passenger vehicle segment and electrification transformation. The continued Geely majority ownership provided strategic alignment and patient capital, while public listing enabled access to capital markets for future investment needs.
VII. The EV Transformation: Leading the Premium Charge (2019–Present)
Volvo's electrification commitment was among the most ambitious in the automotive industry. The company declared that every new Volvo car launched from 2019 onwards would have an electric motor. Every model in Volvo Cars' line-up is also available as a petrol plug-in hybrid variant, from the small XC40 SUV via the 60 Series cars to the company's flagship, the large XC90 SUV. Volvo Cars is the only car maker to offer a plug-in variant on every model in its line-up.
The initial goal was bold: become a fully electric car company by 2030. However, reality has necessitated adjustments. By 2025, Volvo expects the percentage of electrified products to come in between 50 and 60 per cent. Well before the end of this decade Volvo Cars will have a complete line-up of fully electric cars available. That will allow Volvo Cars to make the move to full electrification as and when the market conditions are suitable.
The luxury carmaker famous for safety and reliability had high hopes of converting to all electric vehicles by 2030. But changes in world politics and slower adoption of EVs has caused the powers that be at Volvo to alter the company's plans… but only a bit. Rather than go "all electric" by 2030, Volvo says it will continue to produce both plug-in hybrids and mild hybrids in the coming years. The new strategy is to be 90 percent electrified, focusing on creating all-electric cars and plug-in hybrids, and 10 percent will be reserved for those interested in mild hybrids.
Despite the moderated timeline, Volvo's EV performance has been sector-leading. The company sold 175,194 fully electric cars in 2024, an increase of 54 per cent versus 2023 and representing 23 per cent of its total global sales volume, which was the highest share among all legacy premium carmakers.
Sales of fully electric and plug-in hybrid models amounted to 46 per cent of all Volvo cars sold in 2024. This strong performance enabled Volvo Cars to exceed its CO2 targets as set by the EU, giving it a surplus of EU carbon credits in 2025.
The EX30 has emerged as a critical success. The company's factory in Belgium started production of the fully electric EX30 small SUV. One of Europe's best-selling electric cars in 2024, the EX30 has been a popular choice among customers from the moment it was introduced in late 2023.
A Volvo spokesperson clarified: "The decision to also build the EX30 in Ghent reflects our ambition to build our cars where we sell them as much as possible." Despite its small size, the EX30 is already a "profitable growth driver" for Volvo.
Manufacturing shifts have become strategically critical amid rising trade tensions. Volvo, the Swedish automaker owned by China's Zhejiang Geely Holding Group, has announced plans to shift the production of its EX30 and EX90 electric vehicle models from China to its facility in Ghent, Belgium.
To make EX30 production possible in Ghent, the company made investments worth around EUR 200 million in its Belgian facility in recent years. Wide-ranging changes to the plant include the addition of a completely new car platform, the installation of almost 600 new or refurbished robots, an extension of the battery hall, a new door production line as well as a new battery pack assembly line.
Thankfully for the U.S. market, the three-row electric EX90 is also made at Volvo's plant in Charleston, South Carolina, so its American sales won't have to deal with any tariff headaches. The EX90 represents Volvo's technology flagship, featuring advanced driver assistance systems and a computing platform designed for software updates throughout the vehicle's life.
Located on the outskirts of Belgium's third-largest city and in the heart of its North Sea port area, Volvo Cars' factory in Ghent opened its doors in 1965 and is the only remaining fully developed car factory in Belgium. Together with the Torslanda plant, it is one of two car manufacturing plants operated by Volvo Cars in Europe, with a third under construction in Slovakia.
The regionalization strategy reflects broader industry trends. As tariffs fragment global trade, automakers must produce where they sell. Volvo's manufacturing footprint—spanning Sweden, Belgium, Slovakia (under construction), the United States, and China—provides flexibility to navigate geopolitical uncertainty.
VIII. Recent Performance and 2025 Outlook
Full-year revenues exceeded SEK 400 billion for the first time in the company's history, due to a new all-time sales record of 763,389 cars.
The automaker's full-year revenue surpassed SKr400bn ($36.50bn) for the first time, driven by record sales of 763,389 vehicles. Its core operating profit, excluding joint ventures and associates, reached SKr27bn, reflecting a 6% increase compared to 2023 and a rise from 6.4% to 6.8% in core operating margin.
However, 2025 has proven challenging. Q1 revenue was SEK 82.9 bn versus SEK 93.9 bn in Q1 2024. Q1 operating income was SEK 1.9 bn versus SEK 6.8 bn in Q1 2024. The result also reflects the current turbulence in the world and a challenging external environment for the automotive industry. To protect profitability and drive structural efficiencies, the company has launched an accelerated cost and cash action plan totalling SEK 18 billion. The majority of the effects from this plan will be realised in 2026.
In a dramatic leadership change, The Board of Directors of Volvo Cars appointed HĂĄkan Samuelsson as Chief Executive Officer and President. HĂĄkan will serve a two-year term, starting April 1, 2025. This ensures stability while preparing to appoint a long-term successor.
Samuelsson, 74, will only serve as CEO for two years while Volvo looks for a long-term successor. The surprising leadership change comes as Volvo and the global auto industry try to navigate tumultuous times, including waning EV demand and disruptive tariffs announced on goods imported into the United States. Volvo's board, which appointed Samuelsson, said it believes he is the right person to guide the ship for the next couple of years.
HĂĄkan Samuelsson served on the Volvo Cars Board from 2010 and as CEO from 2012 to 2022. During his leadership, Volvo Cars was successfully repositioned as a global premium automotive brand and publicly listed. Subsequently, he served as Chairperson of Polestar until 2024.
The Q3 2025 results showed improvement. Q3 revenue was SEK 86.4 bn. Q3 operating income was SEK 6.4 bn versus SEK 5.8 bn in Q3 2024. Q3 EBIT margin was 7.4 per cent versus 6.2 per cent in Q3 2024.
The result was supported by certain one-off items, but a large contributor to the improvement was the effect of the company's ongoing SEK 18 billion cost and cash action plan.
In the US, the company announced that it will add a new hybrid model to its South Carolina manufacturing plant before the end of this decade. This new model comes in addition to plans for local production of the best-selling XC60. Together, these cars will improve capacity utilisation at the South Carolina plant to better serve the US market.
Given external developments and increased uncertainties, Volvo Cars is no longer providing financial guidance for 2025 and 2026.
IX. Playbook: Business & Investing Lessons
Safety as Moat: Volvo's century-long focus on safety created something remarkably rare in the automotive industry: a brand association that cannot be purchased or replicated. When parents shop for family vehicles, Volvo enters consideration sets that exclude direct competitors. This positioning protects pricing power and generates customer loyalty that transcends product cycles.
The Open-Source Decision: The choice to give away the three-point seatbelt patent stands as perhaps the most strategically brilliant decision in automotive history. By sacrificing potential licensing revenue, Volvo gained something far more valuable: undeniable credibility. Every time any car's seatbelt saves a life, Volvo's brand equity compounds. For investors evaluating management decisions, this example illustrates how short-term profit maximization can destroy long-term value—and vice versa.
Ownership Transitions: The SKF→Ford→Geely journey reveals how ownership structure shapes corporate destiny. Under Ford, Volvo languished from underinvestment and brand dilution. Under Geely, it flourished through patient capital and strategic autonomy. The lesson: for premium brands, the quality of ownership matters as much as the quantity of capital.
Patient Capital Wins: Li Shufu's approach contradicted conventional private equity logic. Rather than cutting costs, extracting dividends, and pursuing quick exits, Geely invested for the long term. The decade between acquisition and IPO saw billions flow into product development rather than out to shareholders. The result was a tenfold increase in enterprise value.
Swedish Heritage, Global Operations: Maintaining brand identity while globalizing operations presents a fundamental tension that Volvo has navigated successfully. The company designs in Sweden, manufactures globally, and sells worldwide—but never loses its Scandinavian essence. This template offers lessons for any premium brand facing internationalization.
Platform Strategy: The SPA and CMA platforms represent world-class execution of modular engineering. By sharing architecture across Volvo, Polestar, and Lynk & Co, Geely achieved scale economics that no individual brand could deliver independently. For investors, platform investments are leading indicators of future product competitiveness.
X. Analysis: Competitive Position & Investment Framework
Porter's Five Forces Analysis
Threat of New Entrants (Moderate-High): Tesla disrupted the premium EV space, demonstrating that brand heritage matters less than technological leadership. Chinese EV makers—BYD, NIO, Xpeng—emerge rapidly with aggressive pricing and improving quality. However, brand trust in safety, dealer networks, and manufacturing scale create meaningful barriers. Building "Volvo = Safety" credibility requires decades, not quarters.
Bargaining Power of Suppliers (Moderate): Battery suppliers (CATL, LG Chem) have significant leverage in the EV transition. Semiconductor shortages exposed supply chain vulnerabilities across the industry. However, Geely synergies provide countervailing power through scale across multiple brands and vertical integration initiatives.
Bargaining Power of Buyers (Moderate-High): Premium customers have extensive choices: BMW, Mercedes, Audi, Tesla, and emerging Chinese brands compete fiercely. Pricing transparency through online sales has increased buyer power. However, brand loyalty among safety-conscious families provides some insulation.
Threat of Substitutes (High): Ride-sharing, autonomous vehicles, and improved public transit could reduce private vehicle ownership, particularly in urban markets. Subscription models are changing ownership dynamics—though Volvo has embraced these through Care by Volvo programs.
Competitive Rivalry (Very High): Intense competition from German luxury brands continues unabated. Tesla commands the premium EV narrative. Chinese brands compete aggressively on price and technology. The premium automotive market has never been more contested.
Hamilton's 7 Powers Analysis
Brand (Strong): Volvo = Safety represents one of the strongest brand associations in the automotive industry. Nearly 100 years of consistent messaging, reinforced by genuine innovation (the three-point seatbelt), has created durable positioning. This brand power enables premium pricing and customer loyalty.
Scale Economies (Moderate): Volvo remains smaller than BMW, Mercedes, and VW Group, limiting absolute scale advantages. However, Geely synergies through shared platforms (SPA/CMA), joint powertrain development, and coordinated procurement create relative scale benefits that exceed standalone capability.
Network Economics (Limited): Unlike software businesses, automotive lacks strong network effects. However, Volvo's connectivity services and direct sales model create some customer relationship stickiness.
Switching Costs (Moderate): Premium vehicle purchases involve significant financial commitment and brand relationship. While customers can switch, the emotional and financial friction of changing brands provides some protection.
Counter-Positioning (Moderate): Volvo's early commitment to electrification represents counter-positioning against German competitors who were slower to embrace EVs. However, competitors have now matched these commitments, reducing first-mover advantage.
Cornered Resource (Moderate): Swedish engineering talent and safety expertise represent specialized human capital. However, these resources can be replicated over time by well-capitalized competitors.
Process Power (Moderate): Volvo's safety testing, crash research, and safety-focused design processes represent embedded organizational knowledge. These processes have developed over decades and cannot be quickly replicated.
Myth vs. Reality
| Consensus View | Reality Check |
|---|---|
| "Geely ownership diluted the brand" | Geely's hands-off approach preserved Swedish identity while providing capital for renewal. Sales more than doubled under Chinese ownership. |
| "Volvo is fully committed to EVs" | Strategy has moderated from "100% EV by 2030" to "90% electrified" including hybrids. Pragmatic response to market conditions. |
| "Small scale is fatal in automotive" | Platform sharing with Geely ecosystem creates effective scale without consolidation. Volvo operates with competitive cost structures. |
| "Chinese ownership creates China risk" | Manufacturing diversification to Belgium, US, and Slovakia reduces geographic concentration. China exposure is opportunity and risk. |
Key Performance Indicators to Monitor
1. EV Sales Mix: The percentage of fully electric vehicles in total sales represents the most important strategic metric. Volvo's target trajectory and achievement relative to competitors indicates execution of transformation strategy. In 2024, EV share reached 23%, highest among legacy premium OEMs. Track quarterly progression against the 50-60% target for 2025 and longer-term goals.
2. Operating Margin (Core EBIT Margin): Premium positioning should deliver premium margins. The core EBIT margin (excluding JV effects) reached 6.8% in 2024, with targets of 7-8% by 2026. This metric captures both pricing power and cost control, measuring whether Volvo can maintain premium economics during EV transition.
Material Risks & Regulatory Considerations
Tariff Exposure: Volvo faces significant tariff risk as a Swedish brand with Chinese ownership manufacturing in multiple jurisdictions. US tariffs on European and Chinese vehicles, EU tariffs on Chinese-made EVs, and potential retaliatory measures create ongoing uncertainty. Manufacturing shifts to Belgium and Slovakia mitigate but don't eliminate this risk.
EV Transition Execution: The shift from ICE to EV powertrains requires billions in investment while cannibalizing existing profitable products. Timing mismatch between investment and returns presents execution risk. Consumer adoption rates outside early-adopter segments remain uncertain.
Battery Supply Chain: Dependence on Asian battery suppliers creates supply and cost vulnerability. Battery prices, availability, and technology evolution will materially impact profitability and competitive position.
Chinese Market Dynamics: China represents Volvo's largest market but faces intensifying domestic competition and potential geopolitical complications. Premium foreign brands are losing share to domestic EV makers.
Leadership Transition: The return of HĂĄkan Samuelsson as interim CEO provides stability but highlights uncertainty about long-term leadership direction. The two-year term creates a need for succession planning amid strategic transformation.
Conclusion
Volvo Cars stands at the intersection of proud heritage and uncertain future. The company that invented modern automotive safety, gave away its most valuable patent to save lives, survived Ford's mismanagement, and flourished under Geely's patient capital now faces perhaps its greatest challenge: navigating the EV transition amid trade wars, leadership change, and intensifying competition.
VOLCAR_B reached its all-time high on January 13, 2022 with the price of 85.75 SEK, and its all-time low was 15.94 SEK and was reached on June 23, 2025. This volatility reflects the uncertainty facing the entire automotive industry—and Volvo specifically as it manages multiple simultaneous transformations.
The bull case rests on brand durability, EV leadership among legacy OEMs, manufacturing flexibility, and Geely ecosystem synergies. Safety-conscious families still gravitate toward Volvo, EV mix leads competitors, and geographic diversification provides tariff resilience.
The bear case centers on scale disadvantages versus German giants, Chinese market pressures, tariff uncertainty, and execution risk in the technology transition. The premium segment has never been more competitive, and Volvo's smaller size limits investment capacity.
What remains constant is the brand DNA established nearly a century ago in that Gothenburg factory. "Cars are driven by people. The guiding principle behind everything we make at Volvo, therefore, is and must remain, safety."
Whether that philosophy can translate into sustainable competitive advantage in an era of autonomous driving, software-defined vehicles, and geopolitical fragmentation is the central question facing Volvo—and investors evaluating its future.
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