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Once the most aggressive luxury brand in electrification, Volvo is now shifting gears.

Recently, Volvo announced the latest organizational changes, with the departure of Chief Commercial Officer and Deputy CEO Bjorn Annwall, and the company will no longer have the position of Deputy CEO.

Like Javier Várela, the former Chief Operating Officer and Deputy CEO who left in May, Bjorn Annwall was appointed as Volvo's Deputy CEO in 2022, along with the newly appointed Volvo CEO, Jim Rowan, to serve Volvo's electrification goals.

Bjorn Annwall's departure is part of Volvo's strategy to hit the brakes on its electrification efforts.

Over the past few years, for overseas luxury car brands that have been deeply involved in the Chinese market but have not kept up with China's electrification progress, promoting their own electrification progress seems to be a very correct thing to do.

Among this group, as a brand under Geely's control and with deep roots in the Chinese market, Volvo naturally became one of the earliest brands to aggressively transform into electrification.

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As early as 2021, they set their electrification goals: by 2025, the proportion of pure electric models will reach 50%, with the rest being hybrid models; by 2030, they will only sell luxury pure electric models; by 2040, they will achieve carbon neutrality; all pure electric models will be sold exclusively online.

To support this transformation strategy, Volvo has been very active.

In 2022 alone, Volvo announced a cooperation with Swedish battery company Northvolt to invest 30 billion Swedish kronor in building a new battery manufacturing plant; it later announced the construction of its third European manufacturing plant in Košice, Slovakia, and also announced the transformation of its manufacturing plant in Torslanda, Sweden, to serve the production of electrified models, such as the introduction of a new battery assembly plant and a complete renovation of the painting and final assembly workshops.

Moreover, in the years starting from 2022, Volvo has also launched some pure electric models, such as the first pure electric SUV EX90; last year in China, it also made a high-profile launch of its first pure electric MPV EM90.Despite a flurry of actions as fierce as a tiger, the market's recognition of these models is limited. At present, not only Volvo, but also other car manufacturers that have been transitioning from traditional fuel vehicles to new energy vehicles, still have a significant share of fuel vehicles. Years have passed, and it now appears that Volvo's goals at the time were indeed overly aggressive, and adjustments had to be made.

On September 4th, Volvo announced a new electrification strategy, stating that by 2025, plug-in hybrid and pure electric models will account for 50%-60% of global sales; by 2030, this proportion will be increased to 90%-100%, while mild hybrid models will occupy the remaining 0-10% market share.

Subsequently, Volvo also adjusted its operating profit margin expectations, from "above 8%" to "7%-8%". This is already the second time this year that Volvo has adjusted its profit margin and revenue expectations.

It can be seen that Volvo's adjustment of its electrification strategy is also one of the measures to combat the decline in operating profit margins. Once an advocate for electrification, Volvo is now stepping on the brakes, reflecting its helplessness in the field of electrification. After all, 2025 is approaching, and if it insists on the original goal, it means giving up a large part of the current market.

Looking at the global market, in the first three quarters, Volvo's total sales were 509,158 units, with mild hybrid/fuel models selling 315,930 units, and pure electric and plug-in hybrid models selling 193,228 units. This means that new energy currently accounts for only 38%.

2025 is approaching, but Volvo obviously cannot abandon the mild hybrid/fuel models that account for 60% of sales just to complete the goal, and only sell pure electric and hybrid models.

As an international brand, Volvo's strategies at that time and now are all based on the current and future business needs for a period of time. After all, electrification is clearly not as fast as imagined, but is slowly transitioning.

After the electrification story became unconvincing, Volvo's stock price was also deeply affected. Over the past 12 months, Volvo's stock price has fallen by about 40%.Volvo's electrification strategy has not been as effective, particularly in the Chinese market where the transition to electric vehicles is in full swing.

Data shows that the cumulative sales for the first three quarters reached 113,037 units, a year-on-year decline of 9%; of these, new energy vehicle sales were 9,982 units, a year-on-year decrease of 10%.

Previously, Volvo was a second-tier luxury brand with considerable recognition in the Chinese market, but with the failure of its electrification strategy, this advantageous position is also diminishing.

In the Chinese market, it can be seen from the promotional logic of various brands that in the era of electrification, consumers' purchasing logic is different from that of the fuel car era.

In the fuel car era, the brand has always been the first factor for consumers when buying a car, even accounting for a very high proportion; however, in the new energy era, consumers look at factors such as configuration and technology, and the proportion of the brand has decreased. Naturally, this is not good news for these luxury brands with high premiums.

However, the good news is that Volvo's pure electric/hybrid models still have good growth in the European market. This also means that Volvo will also need to make differentiated adjustments according to the performance of different markets in the future, just like adjusting its current electrification strategy.

For global automakers, the current competitive landscape has also become more complex. On the one hand, the fuel car market is shrinking, but the transformation has not been recognized; on the other hand, Chinese new energy automakers are accelerating their expansion overseas to seize the market, especially in the European market, which has once again been proven at the current Paris Auto Show.

When the melee begins, each company will need to adopt more flexible strategies to cope with market changes.