Volvo Backtracks on All-Electric Lineup as EV Market Challenges Pile Up — Update

By Mauro Orru

Volvo Car abandoned its target of having a fully electric lineup by the end of the decade, saying it was still likely to sell some hybrid models as the market faces an increasingly bumpy transition to electric vehicles.

The Swedish auto maker said Wednesday that 90% to 100% of its global sales volume by the end of the decade would consist of electrified cars--a mix of fully electric and plug-in hybrid models. That compares with a previous goal for its lineup to be fully electric by 2030. The company said that potential 10% gap would allow for a limited number of mild hybrid models to be sold if needed.

The decision comes as the EV market is slowing amid a host of challenges, ranging from the imposition of tariffs and the withdrawal of government incentives in some countries to a slower-than-expected rollout of charging infrastructure. Meanwhile, European auto makers face increasingly stiff competition from Chinese rivals with their aggressive pricing strategies.

Volvo Car's announcement comes two days after rival Volkswagen said it couldn't rule out shutting vehicle production and component factories in Germany to cut costs amid tight competition and a slowing EV market.

"It is clear that the transition to electrification will not be linear, and customers and markets are moving at different speeds of adoption," Volvo Car Chief Executive Jim Rowan said in a statement.

Volvo Car counts five fully electric models in its stable--the EX40, the EC40, the EX30, the EM90 and the EX90--and has another five in development. The group said its long-term aim remains to become a fully electric car company and reach net zero greenhouse gas emissions by 2040.

However, the group cut its CO2 reduction targets for the short term: The company is now aiming for a 30% to 35% reduction in emissions per car in 2025 compared with 2018, below a previous target of a 40% reduction. Meanwhile, emissions by 2030 are expected to fall by 65% to 75% compared to 2018, below a firm target of a 75% reduction previously.

Write to Mauro Orru at mauro.orru@wsj.com