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Volvo stays in fast lane despite China dip

Swedish automaker Volvo Cars, owned by China's Geely, reported Wednesday a rise in first half profits even as sales tumbled in its biggest market, China.

Published: 19 August 2015 15:04 CEST

Volvo stays in fast lane despite China dip

Volvo Cars' Swedish chief executive, Håkan Samuelsson. Photo: Bertil Ericson/TT

Note: An earlier version of this story said that first-half profits fell. While net profit attributable to shareholders indeed fell, overall net profits were up. The story has been amended to reflect this.

Net profit more than tripled to 877 million kronor (92 million euros, $56 million), while turnover climbed by 12 percent to 75.2 billion kronor.

Operating profit surged by more than 70 percent to 1.66 billion kronor, thanks to a strong US currency and robust sales of Volvo's SUV model XC60.

But net income attributable to owners of the parent company dropped by 60 percent to 173 million kronor (18 million euros, $20 million).

Volvo's overall car sales in terms of units rose by 1.4 percent to 232,284 during the first half.

The strongest sales growth was registered in Sweden and western Europe, while they remained stable in the United States and declined in China, by 1.2 percent, and the rest of the world, including Russia.

Volvo went through several dark years before returning to profit in 2013. In 2014, it beat its sales record from 2007, selling almost 466,000 vehicles. CEO Hakan Samuelsson told Swedish news agency TT the company expects to sell 500,000 cars this year.

The number of Volvo employees has risen by 10 percent in the past year, to 28,000 worldwide.

Despite its economic slowdown, Volvo plans to boost its presence in China and has acquired 50 percent of three joint ventures from parent company Geely: two assembly plants and one research and development centre.

Geely paid $1.8 billion to buy Volvo from US carmaker Ford in 2010.

From lizards to water, eco-bumps snag Tesla's giant Berlin car factory

Tesla's gigafactory outside the doors of Berlin. dpa-Zentralbild | Patrick Pleul

“When I saw on TV that the Tesla factory was going to be built here, I couldn’t believe it,” said Steffen Schorch, driving his trusty German-made car.

The 60-year-old from Erkner village in the Berlin commuter belt has become one of the faces of the fight against the US auto giant’s first European factory, due to open in the Brandenburg region near Berlin in July.

“Tesla needs far too much water, and the region does not have this water,” said the environmental activist, a local representative of the Nabu ecologist campaign group.

Announced in November 2019, Tesla’s gigafactory project was warmly welcomed as an endorsement of the “Made in Germany” quality mark – but was immediately met with opposition from local residents.

Demonstrations, legal action, open letters – residents have done everything in their power to delay the project, supported by powerful
environmental campaign groups Nabu and Gruene Liga.

Tesla was forced to temporarily suspend forest clearing last year after campaigners won an injunction over threats to the habitats of resident lizards and snakes during their winter slumber.

READ MORE: Is Germany’s Volkswagen becoming ‘the new Tesla’ as it ramps up e-vehicle production?

And now they have focused their attention on water consumption – which could reach up to 3.6 million cubic metres a year, or around 30 percent of the region’s available supply, according to the ZDF public broadcaster.

The extra demand could place a huge burden on a region already affected by water shortages and hit by summer droughts for the past three years.

Local residents and environmentalists are also concerned about the impact on the wetlands, an important source of biodiversity in the region.

Tesla Street

“The water situation is bad, and will get worse,” Heiko Baschin, a spokesman for the neighbourhood association IG Freienbrink, told AFP.

Brandenburg’s environment minister Axel Vogel sought to play down the issue, saying in March that “capacity has not been exceeded for now”.

But the authorities admit that “the impact of droughts is significant” and have set up a working group to examine the issue in the long term.

The gigafactory is set to sprawl over 300 hectares – equivalent to approximately 560 football fields – southwest of the German capital.

Tesla is aiming to produce 500,000 electric vehicles a year at the plant, which will also be home to “the largest battery factory in the world”,
according to group boss Elon Musk.

In a little over a year and a half, swathes of coniferous forest have already been cleared to make way for vast concrete rectangles on a red earth base, accessed via the already iconic Tesla Strasse (Tesla Street).

German bureaucracy

The new site still has only provisional construction permits, but Tesla has been authorised by local officials to begin work at its own risk.

Final approval depends on an assessment of the project’s environmental impact – including the issue of water.

In theory, if approval is not granted, Tesla will have to dismantle the entire complex at its own expense.

But “pressure is being exerted (on the regulatory authorities), linked to Tesla’s significant investment”, Gruene Liga’s Michael Greschow told AFP.

In early April, Tesla said it was “irritated” by the slow pace of German bureaucracy, calling for exceptions to the rules for projects that help the environment.

Economy Minister Peter Altmaier agreed in April that his government “had not done enough” to reduce bureaucracy, lauding the gigafactory as a “very important project”.

Despite Germany’s reputation for efficiency, major infrastructure projects are often held up by bureaucracy criticised as excessive by the business community.

Among the most embarrassing examples are Berlin’s new airport which opened last October after an eight-year delay and Stuttgart’s new train station, which has been under construction since 2010.

Brandenburg’s economy minister, Joerg Steinbach, raised the possibility in February that the Tesla factory could be delayed beyond its July planned opening for the same reason.

SEE ALSO: Tesla advertises over 300 jobs for new Gigafactory near Berlin

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