Volvo Cars’ smallest EV is also designed to be its most profitable.
Volvo is expecting a 15 to 20 percent gross profit margin on the upcoming EX30 electric crossover, executives said during an investor presentation last week.
It will be the most affordable model in the Swedish automaker’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.
The China-made EX30 arrives in the U.S. next summer and starts at $36,145, including shipping. It rides on the Sustainable Experience Architecture platform, which underpins vehicles from other Geely group brands.
Volvo expects the EX30 to help lift the brand’s operating profit margin to 8 to 10 percent by mid-decade from about 6 percent currently.
“We’ll make better margins on this car than we do on … the XC40 BEV and the C40,” Volvo’s Chief Commercial Officer Björn Annwall said at the EX30 launch event in Milan last week. “We’re not doing this just for fun.”
The company said its two EVs delivered 7 percent profitability in the first quarter.
“Our BEV profitability is currently hampering our margins,” said Fredrik Hansson, Volvo head of global controlling.
Volvo’s ability to squeeze any profit out of a new model — let alone a double-digit percentage — raises industry eyebrows.
“When it comes to EVs, the answer’s always ‘we’re not making a dime,’ ” Ivan Drury, Edmunds’ director of insights, told Automotive News. “It’s shocking for Volvo to be profitable [on the EX30] when they stamp the first one.”
To hit the EX30’s price point, Volvo leaned on creative design and engineering to squeeze cost.
“The core theme around this product is centralization,” Volvo Head of Commercial Francesco Speciale said. “We have centralized a lot of elements that would normally drive cost in a higher-segment car.”
Lower content expectations on an entry model versus a flagship, such as the EX90, also help EX30’s profitability.
“The EX90 customer is going to want leather from a specific region, lit-up switches, soft-touch materials,” Drury said. “All these additional things that add complexity and cost.”
The EX30 is critical to Volvo’s ambition to nearly double last year’s global sales volume to 1.2 million units by mid-decade.
The crossover has the “opportunity to become our best-selling car,” Annwall said.
The EX30 brings Volvo closer to the Holy Grail of EV price parity with combustion engine vehicles. The roughly $35,000 crossover undercuts similarly sized gasoline-powered Mercedes, BMW and Audi crossovers.
The EX30 “creates an opportunity to democratize electrification across our markets,” Speciale said. “You can get a fully electric car for the same price as an internal combustion engine car in the same segment.”
Volvo hopes to corner a market segment largely ignored by premium automakers.
EX30 “represents one of the biggest business opportunities in the coming years,” Speciale said. “We are going to be, in most markets, the first car in the segment.”
Volvo can also tap into the mass-market segment’s top end with its premium crossover.
“It’s got mainstream competitors who can’t deliver a similar product at that price point,” Drury said.
Beyond the EX30, Volvo will pursue affordability with its next generation of electric models by adopting new manufacturing and packaging technologies.
Hansson said the automaker will switch to cell-to-body battery packaging in its “Generation 3” BEVs to reduce cost by 30 percent and slash weight by 154 pounds.
Instead of combining individual battery cells into modules assembled into packs and installed in an enclosure on the EV floor, the battery in future Volvos will become a structural component doubling as the vehicle floor.
The upcoming Generation 3 models will feature a more compact drivetrain that combines the inverter, e-motor and transmission into a single housing, sawing the cost by 40 percent, Volvo said.
And Volvo will simplify manufacturing by casting the rear underbody in a single piece. The megacasting technique results in a 75 percent time savings compared with the stamping and welding process traditionally used to create large aluminum body parts.
“The rear floor is a hugely complex structure with hundreds of weld points and a lot of small pieces fitting together in a complex supply chain,” Hansson said. Megacasting, he said, “gives us design flexibility, is more sustainable, and drastically reduces supply chain [and factory] complexity.”
