Volvo Cars has decided to retract its goal of becoming a fully electric vehicle manufacturer by 2030, citing a decline in consumer interest in all-electric cars. This decision reflects a broader trend among leading automotive companies.

The Swedish carmaker has shifted its focus from exclusively offering electric vehicles by 2030 to aiming for 90 to 100 percent of its global sales to comprise electrified vehicles, which will include both fully electric and plug-in hybrid options.

Following the announcement on Wednesday, Volvo's stock experienced a drop of over 4%, contributing to a total decline of 12% over the past six months.

The company also reported unsatisfactory earnings for the first quarter and provided a cautious outlook during its second-quarter earnings call.

Volvo anticipates that 50 to 60 percent of its production will consist of electrified vehicles by the middle of this decade, positioning itself to transition to a fully electric lineup when market conditions are favorable.

Currently, 26 percent of Volvo's offerings are fully electric, the highest proportion among its premium rivals, while the overall share of electrified vehicles, including both EVs and plug-in hybrids, reached 48% in the second quarter of this year.

Increasing customer interest in hybrid vehicles.

The increasing interest in hybrid vehicles, coupled with the rising costs of fully electric cars, is exerting pressure on the profit margins of electric vehicle manufacturers.

Tesla, a leading player in the electric vehicle market, has reported a persistent decline in its profit margins and a slowdown in growth since 2023.

CEO Elon Musk has acknowledged a notable shift in consumer preferences, moving away from entirely electric vehicles towards hybrids.

In the face of weak consumer demand and a competitive pricing environment in China, automakers are grappling with broader economic challenges.

The industry is also navigating uncertainties stemming from new import tariffs on Chinese-manufactured electric vehicles imposed by both the EU and the US, with China responding with its own measures.

The allure of owning an electric vehicle has waned.

Volvo has remarked, “The transition to electrification is not a straightforward process, and consumer and market adoption rates vary significantly.”

The company emphasizes its commitment to maintaining a leading role in electrification and sustainability while remaining adaptable.

Previously, government incentives for renewable energy vehicles encouraged consumers to purchase fully electric cars.

However, as these incentives expire and crude oil prices decline, the attractiveness of fully electric vehicles has lessened.

Volvo pointed out that the slower-than-anticipated development of charging infrastructure, the withdrawal of government incentives in certain regions, and the added uncertainties from recent tariffs on electric vehicles have contributed to this trend.

In light of these challenges, Volvo Cars advocates for more robust and consistent government policies to facilitate the transition to electrification.

Volvo Cars, which is owned by China's Geely, has recently adjusted its ambitious plans for a complete transition to electric vehicles, although it continues to aim for net zero greenhouse gas emissions by 2040.

In July, Luca De Meo, the CEO of Renault, a French automotive company, cautioned that consumers are not yet prepared to fully embrace battery-powered vehicles. He advocated for a more flexible timeline regarding Europe’s green energy transition and the goal of moving to electric vehicles by 2035.

Porsche, the German luxury automaker, has also revised its goal of achieving 80% sales of fully electric vehicles.

Additionally, other mainstream manufacturers such as Ford and Fiat have voiced concerns that the target of transitioning to an all-electric lineup by 2030 may be overly ambitious.