Volvo sees no need for Tesla-like price cuts on EVs

STOCKHOLM -- Volvo Cars said it saw no need to cut prices despite reporting a fall in first-quarter operating earnings because there is healthy demand for its vehicles.

Operating earnings fell to 5.1 billion Swedish crowns ($494.63 million) in the quarter from a year-ago 6 billion crowns, the Swedish automaker said on Thursday.

While Tesla has launched a price war to spur demand and fend off rising competition, Volvo CEO Jim Rowan said that as long as demand continues to be high for the automaker, he saw no reason to cut its EV prices.

Full-electric vehicles accounted for 11 percent of Volvo's retail sales last year.

Volvo has just launched EX90 crossover, its battery-electric flagship model.

Rowan said lithium prices, a major source of cost for EVs, had started to decline. This was despite Chile, the world's second largest producer of the metal, saying it would nationalize its lithium industry.

He added that more lithium sources were starting to be available from other parts of the world making him comfortable that the cost would continue to decline.

Volvo reaffirmed its outlook for "solid double-digit growth" in retail sales this year, provided there were no major supply disruptions. Volvo's unit sales were up 10 percent in the first quarter.

Automakers such as Volvo have begun slowly emerging from an extended period of supply chain pain, not least chip shortages and production disturbances in China, which have hit output and driven up costs.

Volvo aims to be all-electric by the end of the decade.