Europe was a relative bright spot, with the company recording a record quarter in the U.K. In the U.S. and China, conditions remained difficult
Volvo Cars reported first-quarter operating income of SEK 1.6 billion, with an EBIT margin of 2.2%, as growth in fully electric vehicle sales and progress on cost reductions offset a challenging global environment, the company said.
Revenue for the quarter fell to SEK 72.6 billion from SEK 82.9 billion in the same period a year earlier. Basic earnings per share rose to SEK 0.54 from SEK 0.40 in the first quarter of 2025.
Sales of fully electric vehicles climbed 12% in the quarter, lifting Volvo Cars' battery-electric share of total sales to 24%, up from 19% a year earlier — the highest such share among its premium legacy competitors, the company said. Including March, BEV sales have grown for six consecutive months. The broader electrified car share, which includes plug-in hybrids, reached 47%, up from 43%.
Europe was a relative bright spot, with the company recording a record quarter in the U.K. and describing the region as showing solid commercial momentum. In the U.S. and China, conditions remained difficult. U.S. consumer confidence is under pressure and the market has been slow to recover from the removal of incentives, with sales of electrified cars declining. In China, Volvo Cars faces pricing competition and new product launches from rivals, though it held its overall market share and improved its plug-in hybrid share.
Volvo Cars also flagged progress on a cost-reduction plan, saying it is on track to cut an additional SEK 5 billion beyond the savings achieved last year. Free cash flow came in at SEK -10.0 billion, compared with SEK -6.3 billion in the first quarter of 2025, which the company attributed to seasonality and inventory buildup tied to the introduction of the new EX60 electric SUV. Production of the EX60 has begun, with customer deliveries set to start this summer. Orders for the model have exceeded the company's expectations, and margins on those orders have also surpassed internal targets.
"The first quarter of 2026 shows a divide between what we can control and a very challenging external environment," CEO Håkan Samuelsson said in a statement. "The areas we can control continued to improve in Q1."
For the full year, Volvo Cars said it expects volume growth, supported by the EX60. It cautioned that second-quarter profitability will be affected by continued headwinds and the ramp-up of EX60 production.
