Volvo's EX60 arrives as a profit engine — even as China drags the quarter

The midsize-SUV EV is already Volvo's most profitable car in Europe, while the company trades China volume for premium pricing and deepens the Geely handshake.

VOLCAR-B.ST · Earnings Call · 2026-07-17

The EX60 lands, and it's already paying

Volvo Car's second quarter was a study in controlled contradiction. A "very challenging business environment" — Middle East conflict, and in China “a very sharp decline… more severe than we thought a quarter ago” — Håkan Samuelsson, CEO · 2026-07-17 — crushed group EBIT margin to 1.1% from 3.1% (ex-impairment) a year earlier. Yet the same quarter delivered a strategic milestone: 52% of all cars sold were electrified for the first time, BEV share reached 25% (up 14% year-on-year), and the long-awaited EX60 began customer deliveries and immediately became the most profitable car Volvo sells in Europe.

We are outperforming our very ambitious target in terms of sales and orders on the EX60… not only one of our most ordered cars in Europe, it's also the most profitable car we're selling.
Erik Severinson, Chief Commercial Officer or similar senior commercial role · 2026-07-17

The EX60 fills Volvo's biggest blind spot — the midsize SUV, where the majority of BEV sales happen. CCO Erik Severinson stressed that net order intake for the EX60/XC60 pair "is still very positive. At least 50%-60% of that is pure growth," and management holds to a 40,000-unit 2026 ambition, with CEO Håkan Samuelsson adding it would be "very strange" if 2027 didn't roughly double that. This was telegraphed a year ago: “the EX60 is, of course, definitely a growth factor for us.” — Hakan Samuelsson, President and CEO · 2025-07-17 Now it is real, and it is the core of the confidence that H2 will be "significantly stronger."

China: protecting premium, racing to Geely

China is the whole drag. Retail sales fell 6% group-wide, "pretty much all driven by China," and the commercial strategy there has shifted decisively: protect the price position rather than chase volume in a market down 20%. Erik was blunt:

It's very difficult to judge right now where the Chinese market is going. We are not expecting any immediate strengthening of the underlyings in the market… our remedy to that is to protect our price position, because to have a premium price position, a strong brand, and a legacy is an asset in that market.
Erik Severinson, Chief Commercial Officer or similar senior commercial role · 2026-07-17

Refusing the "discount wars" trades volume for brand integrity, and management is leaning on Geely's cost base to make the math work. The XC70, co-developed with Geely as a long-range, electric-first PHEV for China, is "taking a very strong market share way beyond our other Western competition." That is the payoff of a bet laid a year ago, when the company framed the XC70 as a “play into the new energy vehicle segment. That is the 25% CAGR growth segment we're going into.” — Fredrik Hansson, CFO · 2025-07-17 Now it is described as the "key enabler in the short term" in China.

Ghent, AI, and the new industrial-policy math

Two quieter but genuinely new threads emerged. First, the MOU with the Belgian government to keep the Ghent plant competitive — crucially opening the door to contract-assembly of other (likely Geely) brands: “Realistically, of course, the most realistic probably the assembling other Geely brands product in this factory.” — Håkan Samuelsson, CEO · 2026-07-17 That is a structural change: Volvo explicitly positioning the plant as a competitive contract manufacturer for the group, contingent on meeting all ICTS regulatory requirements. Second, the ICTS approval from the U.S. Department of Commerce (data-security compliance for connected cars) and the rollout of Google's Gemini AI assistant as standard in new cars, pushed retroactively to 2 million existing vehicles — “a good example on how we can upgrade cars also after delivery.” — Håkan Samuelsson, CEO · 2026-07-17 The hardware car framing is the strategic spine of a company repositioning itself as a software-defined mobility company, not just a factory.

A macro tide Volvo can only lean into

The cost discipline is real: “We see a strong year-on-year improvement in variable cost, and also on indirect spend, where we are significantly down,” — Fredrik Hansson, CFO · 2026-07-17 with SEK 8 billion in savings already booked in the first half, well past the SEK 5 billion full-year target. But the second half brings fresh headwinds — "costs are increasing, especially from raw material and oil prices, and this is really starting to kick through in the second half," per CFO Fredrik Hansson. That is a shared market tide, not a Volvo-only story: the global tape shows raw-material and tariff-related themes as persistent decliners across 30/90-day windows, and this week's reporters — including Husqvarna's tariff refunds and KEMIRA's "war in Iran" — flagged the same input-cost and geopolitical pressures in the same breath. Volvo rides that same wave, yet still guides to full-year cash break-even with "very strong positive cash flow in the late second half" as the EX60 inventory buildup unwinds. What changed, in one line: Volvo is no longer waiting for the EX60 — the EX60 is here, and it is profitable. The open questions are whether China's premium-price defense holds, and whether the Geely-synergy machine can outrun raw-material inflation in H2.