Good morning. It's been 2 weeks since we revealed the EX60 to the world, and the verdict is loud and emphatic: it is the very best in class, a car that has been designed, engineered, and manufactured right here in Gothenburg, where we are coming to you from this morning.

A warm welcome to our fourth-quarter financial results. My name is Rowan, and as always, I'm joined by our President and Chief Executive Håkan Samuelsson, and our CFO, Fredrik Hansson.

At the top of this earnings call, Håkan and Fredrik will walk us through our performance during this period, and thereafter, we'll throw it open for a question-and-answer round. You can either type in your questions and then I'm going to read them out for you, or simply use the phone lines to call in.

I'll come back with more information closer to the Q&A round. For now, I hand it to you, Håkan.

Good morning.

Good morning. Welcome also from me to this quarterly presentation.

If we go back a bit to the year where we started the year, we had a very challenging starting point. We had sales dropping, we had low profitability and a negative cash flow.

We set out a program really to reset the company and put it on track, and we identified three areas which come back to a bit. The first one was then profitability.

We need to fast bring the company on the track to profitable growth. We defined a 18 billion package, was seen as very challenging.

We thought that internally as well, and we can see now that that has really been done faster than we thought also internally. We had a good cost saving of indirect cost and variable cost of around 8 billion, which we have done.

We have done cost actions to improve our cash flow. We also introduced a more leaner organization where we reduced the headcount with around 3,000 positions, which we also have done with very little disturbances and frustration from people.

It has worked very good. We also have brought down our investments to affordable level.

I think even though this not have brought the bottom line that we would see, internally we have had really improvements faster than we thought. The second area which we set out as very important was to bring back the company on the direction to electrification, and there of course we need new products, and very importantly, in China, we launched the second generation of plug-in hybrids, because this company should be ready to be all-electric 2030, but we are also realistic for those regions and customers still not ready, we need a bridge solution, which we call the second generation plug-in hybrids, really an electric car, but with a backup engine to get longer range.

That has been launched in China. It's a success on the market.

Then very importantly, we have brought out the SPA3 and launched that. You saw in the video here starting a very important car because it shows the future of Volvo as an all-electric, absolutely top player in the all-electric premium segment.

We have nothing to shy away from with this car. We are absolutely leading in performance with that car, it will be a game-changer for Volvo, and it will also increase the addressable market.

Last but not least in electrification, we now have the 90 segment is really complete out with customers. We have the SUV EX90, but we also have a sedan, the ES90, both selling and both are really Volvo flagships.

Third area we defined then in the beginning of the year is we need to be more regional in our business. This is really the necessity for us to maintain a strong global brand, then we need to be regional in our tactical approach to the market.

China is the first where you can see effects from this. I think we have now, even though on a very tough market where our European colleagues are really struggling, we have increased our market share in the premium segment, and we have a more solid volume is kept on this level.

Now we also are introducing the XC70, which is a driver for growth. In the US, we will localize more cars.

XC60 will be the first one, the bestseller in the US. We also said there will be a next-generation hybrid coming there also.

This is of course to build where you sell, avoid tariffs, but also really the best way to avoid the currency fluctuation, which is now a problem for us in the US. We need to have a natural hedging, and that you can do with more local production.

Last but not least, Europe, we have ramped up the EX30. Now it's built in Ghent.

It's not imported from China, and now we will boost the volumes of that car in the next step. A year of a strategic reset.

If you look now into the more financial figures, what did we deliver during the year? Volume was in the quarter down, also down even more for the full year, at least we have a lower trend in the reduction.

More importantly, the BEV sales is up 12%. I think that was also one of the ambitions we had with the year.

Pricing pressure increased, of course. We have lost some incentives in the US for EV cars, also in China.

The EBIT was also down to 2%, which of course is not the level where we want to be, but we have some external factors, tariffs and exchange rate, on top of a very tough price competition, of course. What I think is positive is that we returned to positive cash flow.

That was really internally the number one target for the company. We need to stop earning money, we need to come to positive cash flow, and that we did for the full year.

We came back to 2.5 cash flow for the year, and a very solid in the last quarter with 8.8. Altogether, we had an EBIT margin of 3.5% for the year.

Of course not where we want to be, but if you look at this really severe headwind on the market external factor, I think it's still a reasonable result, and I think it's a good base to build from now and when we're entering into 2026. Look into electrification, I think it's also good signals and showing that we are on the right way.

The percentage of electrified cars up to 46%, close to half of our cars are now chargeable. I think that shows we are on the right way.

Very promising for the future, with the EX60 we are increasing the addressable market segment with 200%, and that's of course with a very strong game-changing technology in that car. It's a good driver for future growth.

If you look into the EX60, very successful launch. This car has an all-new, no-compromise architecture for an all-electric cars, introducing some really game-changing technologies: megacasting aluminum part in the rear, casted part, replacing hundreds of sheet metal parts.

It has cell-to-body technology. I think it's the first one in this class in the market that does that, lower weight and increases the range.

Also for this segment first car with the central compute which we call HuginCore. That is then the carryover from our SPA2 cars.

Now we have the same software pack for all our electric cars, which I think is a really important thing if we want to come up with quality and have a very rapid development of new features. Production starts in April.

Everything is on track, and the first cars will reach customers in the summer. With that, thank you, and I leave it to you, Fredrik, to go into the financials.

Thanks, Håkan. Summarizing Q4, I guess it was strong cash flow in a challenging quarter is the headline, which I think is very true.

Retail sales were down 3%, but in a market that was actually down even more. Our wholesale was down a full 8%, and that's really due to last year's push, which was quite unprecedented.

We did a big one-off inventory reduction, and since then we've kept our car inventory on much more controlled levels. That was more of a non-recurring thing which happened last year.

This translates to lower revenue, of course, with lower wholesales. Revenue was even more impacted by a strong currency in the SEK.

In terms of profit, it's not unexpected, but it is a disappointing 2%. Q4 is typically a tougher margin quarter, but as previously indicated, we also foresaw a challenging markets, which we now saw, and we have quite significant effects both from FX and from tariffs.

On cash, we are very proud of our result, and we have prioritized this. Yes, last year was stronger, but that was due to the one-off inventory reduction, which was basically 18 billion of reduction, and we've kept our inventory low since, we couldn't repeat that this year.

This year instead, we see the cost and cash action plan really kicking in. This cash of 9 billion does include 2 billion of the last tranche of our Lynk & Co sales, but even if you exclude that, it is a very strong performance.

If we turn to revenue, and focusing on revenues excluding contract manufacturing, we were at 109 billion last year. Wholesale volumes being lower naturally takes that down.

We see a hit from sales mix and pricing as well. Then the biggest hit is really from FX and the very strong SEK, which has a negative impact on our revenues.

All in all, this takes us to 92 billion in the quarter, and 94 if we include the contract manufacturing. For EBIT, we started last year at 3.4%, also then on the back of a somewhat suppressed gross margin, which we often have in Q4.

Last year we had a one-off item impacting comparability linked to Novo when we consolidated that. That negative effect is not hitting back this year in the 1.8 billion.

If we look at this year then, the volumes, which are lower, translates of course into a lower EBIT. We have a significantly lower sales mix and pricing coming from overall challenging markets across regions.

We have 45W consumer incentive uncertainties and backlashes in the US. In Europe, we've also repositioned the EX30 a bit on the lower price points, but that is also on the back of the lower cost that we have when we now have Europe for Europe production.

FX year-on-year is negative 1 billion. In Q4, if you look at the dollar, which is the real standout currency, it's a 13% weakening year-on-year, and more than some of the other currencies.

That said, if we look at the underlying flows, that's largely covered by the financial hedges we have, but these are quite large balance sheet revaluation effects we see here. On other, that is a positive, and it's a positive despite that it's significantly pushed down by negative effects from tariffs.

This was a higher in Q4, in part due to higher US sales. Importantly, this is being mitigated by our cost actions.

All in all, this leaves us with a 2% EBIT, or 1.9 billion. Turning to cash, we see a strong cash flow from the cash actions we have, and this has been our priority.

We start the quarter with 51 billion in cash, 8 billion contributed from EBITDA, and then a strong 10 billion from networking capital, both actually being able to squeeze out another 3.5 billion in terms of inventory from an already low level, but also improvements in payables and receivables. Investments takes it down 7 billion.

That also includes a positive effect of 2 billion, the net number is 9 billion if you exclude the Lynk & Co payment. All in all, we end with a very strong liquidity: so 58 billion in cash, 81 billion in total liquidity as a year-end position.

Very quickly on the full year, I think we have a similar story on top line. Retail sales is down, wholesales is down, and that translates to lower revenue.

On EBIT, it is a similar story of FX, of tariffs, of pricing pressure, but also very much counterweighted by the successful delivery of the cost and cash action program. On cash, the Q4 strong cash flow means we had a very strong ending of the year, we are generating cash on a full-year basis, and we are generating more cash than we did last year.

This is really a result of the cost and cash action plan. Talking about the cost and cash action plan, we launched this program in Q1 with intention to save 18 billion in 2026 versus a 2024 baseline, basically a 20-month program, if you will.

We've now achieved this one year earlier, and this is a great testament to really controlling what we can in an uncertain environment: with laser focus, with dedicated follow-ups, with a lot of ideation, with a mindset shift across our company, we can achieve a lot in a very short time. That's also why we want to build on that momentum as we go into this year.

We are now stretching the bow here and taking further actions. If we look at variable cost and indirect spend, we see great momentum and we see more opportunities in the programs we're already running.

We are adding 5 billion bottom-line impact targeted for 2026, which means that versus the original baseline, we will now reduce cost by 13 billion in 2026 versus 2024. Again, controlling what we can in an uncertain near-term market.

On capex and working capital, we talked about this in the strategic update we had in November, and we are now moving down to more affordable levels, which goes well beyond this 18 billion program. This is a recap of what we said in November.

We will now in 2026 move down to affordable levels of investments, and this is really enabled by finalizing a lot of the one-off infrastructure investments like Košice, like megacasting, like cell-to-body. It's about moving towards structurally lower investments in software, benefiting from the fact that we now in all electrified cars coming have the same HuginCore software stack, which means that we can create better quality, better features at lower cost.

Lastly, access to high-tech, low-cost China for China technology through Geely. That said, '26 will not be linear, we have quite high investments planned in the first half.

We've finalized large stages of the Košice plant which we need to pay for, and we are also launching the EX60. Lifting our eyes a bit, we also want to remind you of our long-term strategy for value creation, which clearly remains.

We communicated this in November. We are building a company with above 8% EBIT and strong cash flow generation, and this turnaround is on track.

The near-term market is challenging, but we are executing towards this path. On the highest level, we said we're going to reach this by doing four things: one is to reach affordable investments, and there we are clearly on track.

Second was fixed-cost discipline. There we are delivering and we are now aiming even higher, and we intend to make this a structural culture shift for the long run.

The third was really Geely synergies and variable cost reductions, and there we've seen the first wins, but there's much, much more to come. We're only scratching the surface.

Lastly, it's about electrified growth, and here we are laying the foundation with a best-in-class EX60 and a lot more to come. As stated before, these are long-term building blocks.

Håkan, you want to summarize and share a bit on '26?

What could we say about the next year? Of course, we are working with the things you talked about, Fredrik.

We will see a continued cost and cash actions. The 18 billion program, very successful, encouraged us to set up a new program for this year to reduce our costs with another 5 billion.

I think that is something where we really see that we will be able to do. We can control it ourselves.

We will also bring down our investments to an affordable level. That is also something we can control and know that will happen.

We can also know that we will increase the addressable market for electric cars. In the whole mid-size segment, SUVs for mid-size segment, we have lacked a car, and now with the EX60, we have absolutely the best car on the market for that segment, and we see also huge interest for this market segment, also while there are others attractive competitors also going into that segment.

I think we will see a boost of interest for electric cars coming here during this year, and we are really well-positioned to meet that. We will also, for the full year, return to volume growth, utilizing this momentum we see now in the market and better electric cars.

For the full year, we will be back to growth. For the full year also, with the discipline in investment, discipline in working capital, we will also see that we will get a clearly better cash flow than what we reached in 2025.

That is what we can say about the year. I think to summarize, a reasonable result for '25 looking into the very challenging environment, but also a foundation really now to accelerate and improve in 2026.

With that, I think thank you for listening, and then we go over to question and answers. I give it to you, Rowan, to lead us here.

Thank you very much, Håkan and Fredrik. We are all set now to start the Q&A round.

Looking at some of the chat messages, it seems that some of the viewers face issues following the live link. Apologies for that.

Of course, this video will be available on demand right after. We have many, many callers who are with us and I understand you could follow the earnings presentation clearly.

Without further ado, let's get this Q&A rolling. We're getting a lot of questions online, Håkan, let me take an online question and then I'll bring in our callers.

This one comes in from James: "Given how challenging 2025 has been, how do you intend to return to volume growth and positive free cash flows in '26? Can you describe the building blocks for that?"

I think rather clear. One is to continue the very successful cost and cash action program, and we set up another 5 billion.

That will always be improvement in the right direction. Then of course, to growth, we need to have a stronger offering in the all-electric segment.

We have been missing a big part of that market segment, and of course we also have problem with the localization—not problem, but we moved it from China to Europe, and that takes time. Now we can ramp up the smallest car, and of course we also have the quality now on the level where it should be for the software on the EX90.

Then of course, a very important thing: new cars. I think we have a solid program there for all-electric, and that together with cars where we really have a strong position, and that's plug-in hybrids.

We will of course have them also for the next year. I think we have the cars for growth, absolutely.

Then of course, the last element in our strategy, which is also we need more momentum closer to customers, and that's why we are regionalizing. I think the Chinese organization is now more autonomous.

They can work in a way with marketing and sales as you should do in China, and I think you already see some tendency there of improvements. We are gaining market share in a very tough premium segment where we are competing with other importers.

In the US, I think so far we have been struggling with currency, but we are now moving. We're being more local.

We move over the XC60, will introduce another car. Also there we are ready to really sell cars built in the US, which is also very good for the currency, of course, where we are struggling right now.

It's the only way of solving that long-term. I think the regionalization will also be a factor to really answer the question: be more regional, have a strong electric product offering, and a very disciplined cost control work.

Those are the elements.

Very good. Let me now invite some of our many callers who are with us this morning and who have been patiently waiting.

Let's take Harry Martin from Bernstein. Remember, to be able to ask a question, you need to press *11.

Good morning, Harry, and please go ahead with your question.

Hi, good morning, everyone. Thanks for taking my question.

The first one, I wanted to ask about semiconductor availability and pricing. Are you negotiating directly with your key semi suppliers or this mostly go through the tier 1 supply chain?

Do you have any expectation for the impacts, we've seen headlines about quite meaningful increases in semiconductor pricing into 2026. Do you have any of that baked into the outlook this year?

Then the second question coming back again to the free cash flow growth in '26, the guidance there. 2025 was aided by the Link sale proceeds, 7.8 billion.

How difficult will it be to grow from that number when you have things like the inventory build on new models, some more restructuring, and quite possibly the US dollar headwind ongoing as well? Then the final one, just on liquidity.

Total liquidity was down 8 billion SEK this year despite the positive free cash flow. What is the minimum liquidity that you want to hold going forward, and will that liquidity number grow again next year with the guidance for the positive cash flow?

Thank you.

Maybe I could take the first one, Fredrik. That's semiconductor.

Yes, we learned that really during the pandemic that you cannot just rely on talking to the first level of suppliers. You need to go to the tier 2 suppliers who are really supplying our suppliers and really secure that.

That we learned and started doing. Today we have that, and regarding the cost increase, I would say we don't see that as a major factor in our total cost level for the car.

We have a good control of the supply chain. Cash flow, Fredrik, you?

On cash flow, it's really about reaching affordable levels of investments, which is a really big contributor. Then it is about returning to growth, and it is about delivering on the cost and cash action program.

It's those three building blocks and the outlook we see for that makes us very confident to say that we will have clearly higher cash flows this year.

Investment, we have been investing heavily in the last years. That needs to come to a stop, and it will.

That I would say is the biggest contributor, which we can also control. I would say we should be rather safe in that we will reach totally much better cash flow levels in the future from that.

Importantly, we start to reap the benefits, right? A big part of the EX60's great cost position is the fact that we have done these investments, not to forget.

In terms of liquidity, we don't go into what liquidity targets we have, but I can say that we have a very, very healthy liquidity right now, and with more cash generation, that will grow into next year. Then you reach a point where it's too healthy.

Then we can start talking about that. Would be a nice problem to have.

All right, thanks, Harry. Hope that answers your questions.

Let's stay with the callers. The next one is Jose Asumendi from J.P.

Morgan. Good morning, Jose, and go ahead with your questions, please.

Thank you, Ron.

Good morning. Håkan, a couple of questions, please, and Fredrik.

Can you talk about restructuring cash outflow that you expect in 2026? Capex directionally, are you expecting it to be flat, up, or down?

Second, Håkan, can you talk about product cycle and how do you expect this to help volume and mix in 2026? Then finally, if you could give some color, please, on the profitability of your electric cars at the moment, EBIT margin, gross margin, or any metric you wish to speak about, but a bit more important, which do you think are the key measures to improve the profitability of your electric cars in '26 and '27?

Thank you. We

start with that. You can fill in, Fredrik.

I think the really big difference here that for the first time, we will have an electric car, the EX60, which we can sell and price on the level of a normal corresponding hybrid car and still having an improved margin. There is absolutely no risk that we will lose profitability if customers now go from an hybrid EX60 to an XC60 to an all-electric EX.

That is a game-changer. Otherwise, we have always, when people go electric, the cost were higher.

That is something really positive. I would say also looking forward, our all-electric percentage will be higher.

Today we have 44% chargeable cars, all-electric and plug-ins. I think that mix will go up, and that's really the key to a growth.

You talked about cash flow and investments. I would say investment after years of heavy investments in new products and in new manufacturing Košice, that has come to an end, and they will not be replaced by anything else.

I think we are quite confident we will be on an affordable level. I think you can look into the figures where we were before we started this last big mountain in your curve which you show there, Fredrik, and we need to come back to something like that, and that is affordable level.

Affordable level is defined as where there is free cash flow that has to come, because long-term, of course, a company has an ambition to return money to its owner, not to invest it into constantly new products. Yes, Fredrik, can you fill

in more? Maybe adding on the structure of the cash flow for the year as I heard the question.

I think two things important to note when it comes to cash this year: so one is that as I mentioned, we have a planned investment in the first half which will be quite heavy. We've just finalized critical stages of completing the Košice plant.

We were actually there last week, was it, looking at it. Super impressive plant, by the way.

Now the bills, some of the big bills are coming. Another thing happening especially in Q1 is that we will start to ramp up EX60 in April.

For us to protect our full-year output from the Torslanda plant where it's made, we need to consciously build up some inventory of XC60s and XC90s to be sold later in the year. We have some very planned sort of cash drains in the first half of the year, which naturally means that the second half becomes better as we're ending clearly strong.

No doubt, see man, for the full year, definitely we will be on this affordable level, and we will have a clearly better free cash flow than last year.

Yes.

What I think is very important for people to understand, the seasonality, as you say. First half year, there are things that will just come in.

Last invoices will come in for the factory and so on.

There was one more question on the product cycle volume mix for 2026.

Volume, as for the full year, we will go back to growth, but with a higher percentage of electric cars.

It's really supported by a full year of XC70, it's supported by a full year of European EX30s, it's supported by the EX60 that starts to ramp up in the second half of the year. It is supported by the ES90, which is just starting to reach customers.

We have a lot of sort of product momentum, and importantly, that product momentum is in the parts of the market that is growing, right? The overall premium market is expected to go down.

We are expected to grow, and we're doing that on the back of launching and having very attractive offers in the segments which are growing, which are the future electric segment.

Another thing maybe you can say it also as this: we will have a growth in the year. What gross margin we will get, a lot of external factors, but the impact from the electrification will not be negative to our gross margins totally, because first, we have a very good cost position for the EX60, but then of course, with electric cars, we also will get new customers, new money coming in.

I would say we would not lose profit margins by electrifying now when we have the program we have. Also, of course, that is a driver to growth without jeopardizing our margins, which I think is new, and that's really the game-changing with the EX60.

Traditionally, otherwise, your electric car always had higher cost and then you were

Oh, and I think that's key point, because that is also, looking at our track record and then looking to the future, that is the strategy, right? We are clearly stronger when it comes to PHEVs and BEVs in terms of market share, and continuing that momentum as that market continues to grow across all three regions while ICE products are shrinking across all three regions.

That is the fundament of our strategy. Electrification is always additive to our profits.

Yeah.

Good. Absolute profits.

It's

the word, yeah.

All right. Let's have another caller now.

This one is from HSBC, and that's Pushkar Tendulkar. Good morning, Pushkar, please go ahead with your questions.

I hope you can hear me well. Just on the profitability side, it's a clear deterioration in Q4 versus strong improvement in Q3.

Some of the headwinds that you mentioned, I believe they will also continue in 2026. Even probably get worse in terms of let's say pricing, tariffs will continue.

Just is that Q4 then is the level of margin underlying and then the cost savings on top of that, or there are other levers to pull up the margin as well within 2026? That's my first question.

The second one is about whether you can provide us any update on this US ban on cars with China-made communication software. Are you still in discussions with the Department of Commerce, or where exactly do you stand right now?

Are you in the clear? Yeah.

Then the third one is this last strategy update, it was probably the first time that Volvo talked a lot in detail about Geely synergies. Just yesterday we are seeing news that Geely is going to utilize a factory probably of Ford's to make cars in Europe.

I just wanted to ask you whether there is a possibility that Geely can actually use Volvo factories as well to make their cars if they are localizing in Europe, or what's your view about this in terms of all the synergies that you have guided for the medium term? Thank you.

Fredrik, can you take the first one? Of course, our ambition is to share common architectures, common parts with Geely, especially on the hybrid side.

I think we need to, when it comes to all-electric cars, we have a really good architecture which we should really use for more full electric cars. Of course, to avoid double investment, we should rely more on Geely technology for hybrid cars, and that is what we're looking into.

That of course could open up opportunities also that other label cars could be built in our factories, but that is something we have to look into. You need to know exactly what cars would that be, and the cars built in Volvo factories are decided by Volvo, but it could of course be something interesting for us.

We have to look into when we know what that car is, what platform is it built on, and so on. It's a long shot and a lot of question marks before you can say that will work, but would be of course good for both of us if we could find that.

ICTS is then this requirements in US for connected cars, which is a lot of questions that are asked about us as we are owned by a Chinese shareholder, and that is a process we are having. I think it's with the Department of Commerce in the US, and there is a process going on, and there should be an answer coming up here not in a too distant future.

As we have said many times before, this is not something that keeps me awake during the night. We have been in the US for 70 years, and we will continue being a very strong brand on the American market.

Moving to the first question on headwinds and continuation in '26, I think a few things: first, if you look at Q4, that is typically a seasonally low margin quarter. In part, you have full-year incentive programs to dealers and other things being paid out, which is impacting that, which you don't have in other quarters.

We see heavy tariffs in Q4, and I think we see some potential tariff upsides. If you look at the US Europe to EU tariffs, we are now paying them.

If you look at the lower EU US to EU tariffs where the statement has been that this will be reduced to zero, that is a big positive for us as we're manufacturing the EX90 in the US with a big export to Europe. As that is ratified, that's actually an upside.

We also have quite a lot of product support. We have all the cars and all the EX30 inventory of China-produced cars with the higher tariffs is now basically flushed out of the European sales, it's only European for Europe going forward.

We have upgraded the EX90 with an 800V system. We have the ES90 coming.

We have the XC70 as a big product in China, which is part of the reason why we grew or a big part of the reason why we grew 2% in Q4 and the market was down 12%, right? Then you have the EX60, and I think we've talked about the profitability on that as that hits the streets after summer with a ramp-up.

Then I think it's a lot about commercial excellence as well. We're pushing on cost, and we're taking the next steps in variable cost helping the margins, but we're also looking into how can we better sell the strawberries we have, if you will.

A lot of action there, and a lot of these headwinds which are a bit Q4 unique. It will be a challenging year, and there is a lot of uncertainties.

That's always.

I'll take one more question online from one of them tuning in to us. Question to you then, Håkan: "Now with the successful reveal of the EX60, can you confirm that the timing of the start of production is on time and customer deliveries is on time?

Also, what have been some of the learnings from EX90 into EX60?"

The learnings to start with is that, of course, introducing a core compute system is a huge step, and there are only two types of companies in this business: the ones who have done that, very painful process, and the ones that has that to do in the future. I think we are very happy to be part of the category that has done it.

Everything we learned from the SPA2 and the EX90 is now carried over into the new car. That is really the main carryover is the software pack.

Everything, the quality we have during two years really secured on that software, that is now in the new car. I think that's the main learning.

Can you confirm, I think

the timing,

the EX60, start of production and customer deliveries as we

That is now our planned dates. Production starts in April, and first customer should come to deliver the first cars to customers in the summer.

This is of course a plan and not without challenges, but I would say we are on track with that plan.

We also saw you and Anders driving the car in Stockholm not too many days ago, so.

It is also driveable.

It's already driving.

I would say it's the best car to drive of any Volvo in terms of handling.

Yep. More callers then.

Let's go to Deutsche Bank now, and it's Nikita Papatheodorou who's dialing in for us this morning. Good morning, Nikita, and go ahead with your questions, please.

Good morning, I hope you can hear me well. I would have two questions.

The first one is on the tariff impact you expect for 2026. Let's leave the US-EU tariff rate coming to zero to the side because it's not ratified yet.

Should we expect a run rate of Q4 for 2026, or how do you think about the US tariffs impact in '26? Then my second question is on your cost-saving plan for 2026, the additional 5 billion.

Should we think about this like a linear or more a back-end weighted cash inflow? Maybe some color here would be really helpful.

Thank you.

I think on the tariff impact, we saw a quite high impact in Q4. Some effects they are linked to used car sales and the EX30, for instance, will not repeat.

We do have a big tariff impact. For the full year in '25, we basically said that the net impact of this was about 1 billion after taking mitigating actions.

As we look into next year, I think we'll have more opportunities for mitigating actions. Tariffs are impacting the entire market, and therefore over time, the market will need to price for it, all else equal, and I think we expect to see some of that movements during the year.

We are now, especially in the US, in a sort of hard-to-forecast environment also as the 45W was taken away with the consumer incentives. What typically happens then is that as we've seen play out in Sweden and in Germany, there's a big sort of pre-buy, which also happened in the US.

There's a period of uncertainty both in terms of customers—they've already bought the car—and in terms of pricing. That tends to normalize over 6 to 12 to 18 months in terms of volumes coming back up, in terms of pricing and profitability coming back up.

We would expect to see the same in the US, but let's see how it plays out. In terms of the 5 billion plan, we're constantly implementing actions there.

I think the indirect cost part is relatively linear. There is quite some seasonality also in our indirect cost, in terms of summer vacations, then we spend less on engineering, of course, etc.

As I said, the indirect cost quite linear. On variable cost, that is depending on commercial negotiations and introductions of new engineering concepts in the plants, which typically happen in conjunction with model years, for instance.

You typically have a big step in when May production starts and November production. That's a bit more step-change when it comes to the variable cost.

Good. Hope that answers your questions, Nikita.

This question comes in from Sam Perry, auto analyst: "A short-term data point, but from your January sales release yesterday, deliveries were down 16%. Is it expected that these sorts of rates of decline will continue through to H1 before the new models drive up volume in the H2?"

I would say of course it will not continue, because for the full year during the year, we will come back to growth figures. Of course January is often a low volume.

We we push out a lot of cars in December. It takes some time till dealers start ordering again.

You have any better comment, Fredrik?

I think an important point there is also to play back the tape on what happened last year, right? If you remember in Q4 2024, we had this unprecedented inventory flush out, if you will, where we reduced total inventory by 18 billion.

That was a big part of wholesaling cars to dealers, and then in Q1, they need to retail those to customers. There was a lot of pressure, if you will.

When we now look at Q1 and January being down, that is the comparison month and quarter we're comparing to. For Q1 now, we expect retail deliveries and wholesales to be pretty much more in balance, right?

The wholesales is really what's driving the financials.

That's a good explanation. We had a really sort of very good January because we have pushed out a lot of cars, and now we're comparing with not really a normal level.

When we compare with more normal months, this figure will not occur.

Exactly.

Good.

All right, another caller then from Handelsbanken. Good morning, Hampus.

Please go ahead with your questions.

Thank you very much. Just two questions from me.

Just some expectations on the cost take-out program. Are there any one-offs that is coming with this take-out program?

Then the second question is more on if you could add some flavor on being a couple of weeks into the EX60 launch in terms of order activity. I'm not expecting you to put out in the numbers, but more comparable with the EX30 launch, that was a very successful one.

Also, given that EX60 is such a competitive product against the plug-in hybrids, how do you see XC60, one of the most successful plug-in hybrids, trading against the EX60 in terms of customers maybe taking the step into battery electric? How should we think about that, potential cannibalization risk?

Those are my questions. Thank you.

The last one, I think is really important, and for the first time, we really could say it's not so important for us. We will have a very strong offer.

The ones who wants a hybrid will buy an hybrid; if they want an electric, they buy that. We price these cars on a similar level, and the margins or the profit with the electric one is equal or better.

These two cars together is a really strong offering, and I I

think importantly there also is, it doesn't matter if it cannibalizes, but we also see a great growth opportunity, right, because this is the biggest premium electric segment. It has also been dominated by one big player.

A lot of customers coming out of those US cars that they bought 3 years or 4 years ago now, they bought at the premium price points. Today, it's a different price point, but those consumers, I think, should get into a Volvo instead, simple as that.

The two cars together is a huge strong driver for growth, and the mix we can be open to. Exactly.

Then I think also an important part of your question, are there any one-timers? I think what's really important to say, we are not planning any layoff packages.

This will be done by scrutinizing indirect cost in all areas, and it will also be done with a very restrictive view on rehiring when we have people leaving the company. Then it's the time to think, okay, could we organize this in another way?

Is there an internal solution? With that, we will have tough targets to reduce our headcounts, but without any type of packages and extra money that needs to be reserved.

Oh, and

also in terms of the savings, this is really when we now did the big redundancy program, we structurally reorganized the company. We took away hundreds of management layers.

We are set up to be able to be more efficient over time. We are investing a lot into data, into AI, into automation.

On the car side, we are moving towards one software stack. All of that fosters not only better cars and deep insight, it also comes at lower cost, right?

It's really scale in a lot of the things we do back-end.

I think Hampus had one more question: EX60, can you give us some flavor of the response and

It's very difficult to talk about orders. From dealers, you could say a very high number, you could say a lower one, but I think the production this year will definitely be delivered, and compared with others, I have the feeling this is probably the most successful launch I have seen.

I've been with, I think, 14 launches. The response has been really positive, and also because we are targeting now an area where it's a lot of interest from journalists and consumers and retailers.

Very positive. Now we have to bring it out to the customers till the summer and really meet this high expectations.

I think all systems are in green and go. Of course challenges.

That's why we are here to work hard.

Good. We have time for some few more questions.

This comes in from James Attwood at Autocar. Maybe more for you, Håkan: "You've talked about the premium car market shrinking in the coming year.

Do you see this as a temporary blip, or the start of something deep and long-term?"

No, I wouldn't say it's something long-term. I think there will always be a sort of division on the market.

There's a sort of mass-market segment, and then there is people who want something special and paying more. We call that premium cars.

That will continue existing also when the cars will be electric. There will be other features and horsepowers or chrome and leather that brings that value, but there is a lot of things.

Think in direction of software features, infotainment, and autonomous drive, and so on. We will have the premium cars.

I think it's always interesting to understand, last time we really did the restructuring in our company, introduced the so-called SPA platform, the ambition was now we have to catch up and be premium. We need to join the premium guys here: Audi and BMW and Mercedes in the top.

I think we are in that league now. The ambition now with the next is new beginning with the SPA3 platform, that is to be the leader in all-electric premium cars.

The EX60, when you look at the data on paper, I think it's absolute best car on the market. Now we have to build it and show that to our customers.

I think we'll be significant game-changer for this company.

I think another comment on premium: with the EX60, we don't need more affluent customers, right? You don't need to pay more to get into an electric car.

That hasn't been the case before. Otherwise, there could be a risk when even the premium customers need to be richer to move electric.

With the EX60, we're basically saying that is not the case.

Yeah. Staying with you, probably, Håkan, this is a long question, but let me try to paraphrase this.

I think what he's asking essentially is that we've seen a lot of our competitors over the years scaling back their BEV ambitions, write-offs, big write-offs that's happening. Now recently, you have a big BEV player in the world, Tesla in this case, sort of clearly indicating that they're sort of looking at a future beyond just physical cars, driven much more humanoids, AI, and robotaxis.

You and Volvo has been very clear, unambiguous about your electrification direction. Just help us again understand why that is, what is Volvo seeing that the others are not seeing?

Probably we are seeing that any brand cannot be electric. It's not the propulsion option here.

You can have diesel, petrol, electric, everything else equal. I think people looking for an electric cars looking for something totally new.

I think that's why Tesla really are successful and an electric GM product less successful, maybe. You need a brand that is suitable for being electric.

I would say one of the ones absolutely most suitable to be electric is a brand that is known for being safe, being functional, being a human-centric car. I think those customers would appreciate electrification.

If you're looking for something which has a special engine sound or roaring acceleration, you are probably not so impressed with an electric car. We have the right brand for being electric, and if others scale back, it's good for us.

Now we see the electric market is growing, and we see that we have a higher market share with electrified or electric cars than with conventional. It is a sort of step-change for our company.

We need to follow the transformation, we need to lead it, we need to be fast, but then we will come out as a bigger company with a bigger market share in the new electric premium segment, which will not be characterized with leather seatings and chrome and horsepower. It will be characterized by other things that we are of course developing to put in the car.

Primarily we see software and digital development as a possibility to make better cars, and I think we will stay in the car business.

It's

nothing wrong with that, and we will be leader in the all-electric premium segment. That's our ambition, and I think we have the technology and the platform for it, but a lot of work to be there.

Maybe adding one thing on the horsepower, because to some it is important, right? For us, we don't have the 680 hp V8 twin-turbo engine super high-margin car that which we are afraid of cannibalizing on.

If you buy an EX60 and you want four-wheel drive, you get 680 hp for free basically, and we don't mind because we're not losing out on sales from something else which is very, very profitable, right? I think it's not the main brand proposition, but we toss it in a bit on the side,

and

I think others have a harder time doing that.

Also, our customer probably appreciate acceleration. You could change lane easy and so on.

You are not interested in driving 250 for hours on the highway. That our cars are also limited to 180, but all of this horsepower is good, but it's really the agility you get with it that our customers appreciate, not the high-speed performance.

Right. Maybe we have time for one last caller for the day, and that's Agnieszka Vilela from Nordea.

Good morning, Agnieszka. Go ahead with your question.

Good morning. Thank you.

I hope you can hear me. I have two questions, maybe starting with Håkan on EX60.

What a successful launch would mean for you in terms of volumes year one and year two, if you could share with us? Then another question on the negative price mix impact in Q4 specifically: was the pricing or mix the bigger headwind for you?

Also, if you could share your pricing strategy. I think that earlier in 2025, you are very much determined to defend your pricing.

Now you talk a bit more about the pricing pressure. Thanks.

A successful launch, we could reveal a bit about volumes. We should roll out a bit more than 40,000 cars is what we can do this year.

I'm quite sure that that will happen. Then I think looking into the next year, I think you can look into the volumes we have with the EX60 and assume that a part of that will be electric, but add on top also that having a plug-in and electric should also be of course possibility to grow.

Then I think when you see where we land after this year, I think you can do a forecast for '27 by looking into the mix we will have at the end of the year. Now we are still at the beginning of the year, let's say our ambition now is to bring that car out and produce the first year, and that will bring growth in the 60 segment.

Let's see what the mix will be, and as we said, we are rather agnostic. Customers choose what is, but the sum of the XC and EX will be higher than we have with the XC today.

Maybe it's worth saying also in this year's production, right, we are doing a very controlled ramp-up, learning a lot also from the EX90 and some of the challenges we had there. This is about getting a product out also with high quality, which is key.

Then longer-term growth opportunities I think are endless.

One more question on pricing in general, pricing pressure in the market, and.

We do see pricing being a big element in Q4. I think especially in the uncertainty both in the US and in part in China with these consumer incentives going away.

As that normalizes, I think that will also support us on the pricing side. In terms of defending margins, to me, the key optimization is really creating absolute profit and absolute cash flows.

It's finding that balance, right, in an uncertain market.

Good, I said Agnieszka would be the last caller, but let me take one more caller since he's been waiting for a while: Ross MacDonald from Citi. Good morning, Ross, and please go ahead with your question.

Mindful of time, I'll keep this to one question, but I think important to ask Volvo given your leadership in the EV space. Obviously, I think since we've heard from you last, there's been some changes in the proposed 2035 CO2 rules in Europe, and also discussions now around minimum pricing for Chinese cars coming to Europe.

Very interested on the CO2 side if you think that this is now a potential final ruling, if you think the Commission's on the right track with these proposed changes. Then linked to that, on the minimum pricing from Chinese cars into Europe, is there any way Volvo can benefit from that?

I know you want to be local for local, but obviously you have some compelling models in China that you potentially can now bring in tariff-free into the bloc. Very interested if you would intend to do that over the medium term.

Thank you.

Don't see, beginning with that and a big potential. The cars that we could be interesting looking into taking in our hybrids and are not penalized with these high tariffs.

All-electric cars, only the one is really ES90 that we are bringing in from China. That is of course something we could look into, but it's not something really important right now.

Then I think it's also not that easy to agree on such a minimum price, which is favorable for us as well as the one in exporting the car. It's a very difficult question.

I think there is no simple solutions on that. I think it's at the end, if you want to avoid the tariffs, I think you need to produce locally.

That's the purpose of the tariffs, and I don't think it's any possibility to negotiate yourself around that. That I don't think will work.

When it comes to the legislation, we have always said if you want to push electrification in Europe and stabilize or create a strong auto industry in Europe, I think it's good with clear signals that we will be electric to a certain period. We have never argued against the 2035.

What has happened now, if you analyze, it seems like a very very mild deviation. You could have some percentages of petrol cars if you use CO2-free steel, and I think that's not an option that we are looking into to use.

For us, it really hasn't changed anything. From 2035, we need to be able to sell only electric cars in Europe, we, to be frank, don't see any big difference.

It's probably for some niche sport cars producers might see it's an option to use this 10% or whatever it will be.

Good. Now to bring this call to a close.

This question has come up in different ways, but I'll try to summarize three or four questions that we've received back to you, Håkan, to also maybe a good question to bring this to a close, a little bit back to long-term value creation, right? We unveiled the long-term value creation strategy during the strategy update in November, but of course, the world remains turbulent and will probably remain for the foreseeable future.

If you were to sort of summarize how do we get from the run rate in Q4 to 8% plus and strong free cash flows?

Now we really don't have a really good answer to the challenge coming to us from outside. You have the climate is a big challenge.

We should electrify, not only to contribute to better climate, but also bring our customers good products. That threat might be seen as a threat by other.

For us, an opportunity. We will come out as a stronger company electric.

I think all indicators we can see now indicates that that is what is happening. We have higher market share in electrics and so on.

Now with new technology, we bring down costs, we will have profitability. Second thing is, which is unique, we want to be on the market with a strong global brand also in the future.

Then you need to regionalize your activities. You cannot have one one product for all.

It has to be more adapted variants. There has to be adapted and different approaches to marketing and how you communicate with customers.

I think we have really defined that and are on our way to a more regionalized operations maintaining one strong global brand. The third thing is our connection with Geely and the Chinese very strong supplier industry will be seen more and more as an advantage.

We can have more common parts and bring down our cost structures. We can avoid double investments in Chinese software as well as in Western software.

We can rely on cars sold in China. We can rely on Geely-developed software and we can save a lot of money.

I think we have a good answer to these three external challenges. If we just continue and have a bit patience doing that, we will come out as a much stronger company in some years' time.

Thank you, Håkan. Thank you, Fredrik, and thank you, everybody.

As I said, the link to this live webcast, in case you missed parts of it, will be available, make sure to tune in. For now, we need to bring this to a wrap.

Of course, you can reach out to us through our PR channels or the investor relations team for more questions. We are here to support you.

From all of us here, thank you, and have a great day ahead. Goodbye.

Thank you.