Swedish automaker Volvo Cars, scrapped its target of going all electric by 2030 on Wednesday, saying it now expected to still be offering some hybrid models in its lineup at that time, Reuters reported.
Major automakers have seen slowing demand for EVs partly due to a lack of affordable models and the slow roll-out of charging points, while also bracing for the effects of European tariffs on electric cars made in China.
Shares in the company were down 7.5% at 1416 GMT, after hovering around 4% lower ahead of the announcement of scaled-back targets.
Volvo Cars said in the statement that by 2030 it now aimed for between 90% and 100% of cars sold to be fully electric or plug-in hybrid models, while up to 10% would be so-called mild hybrids, where electric power only supplements the combustion engine.
Volvo Cars said in a separate statement that plug-in hybrids would be a critical part of its future profit growth, and that it would revamp its hybrid XC90, with first customers receiving the SUV by the end of the year.
Volvo Cars sells a mix of electric and hybrid cars, and had until now remained steadfastly committed to its plans to only sell fully electric cars by 2030 even as its rivals began scaling back their ambitions. Some of Volvo's flagship fully electric cars are the EX90 and the EX30, both SUVs.
Growing demand for hybrid cars has prompted a strategic shift across a sector that had initially aimed to phase out hybrids in favour of fully electric vehicles.
Toyota, one of the slowest major automakers to develop EVs, continues to bet strongly on hybrids with an increased number of models. French automaker Renault (RENA.PA), said that it would continue to launch hybrid model.
Drivers' concerns about EVs driving ranges are among the reasons buyers have gravitated towards the often more affordable and convenient hybrids.
Volvo Cars, which is majority-owned by China's Geely, said it was responding to changing market conditions and customer demands.
"It's a pragmatic approach...to help our customers go on the journey to full electrification. For many customers in many markets it will be a stepwise journey," Erik Severinsson, Head of Strategy and Chief Product Officer told Reuters.
By 2025, Volvo Cars now expects electrified cars - both full EVs and hybrids - to account for between 50% and 60% of sales volumes. The previous 2025 target was for at least 50% fully electric cars, with the rest hybrids.
"We are resolute in our belief that our future is electric," CEO Jim Rowan said. "However, it is clear that the transition to electrification will not be linear, and customers and markets are moving at different speeds."
The company, which has prided itself as an early mover when it comes to EV, also called on politicians for "stronger and more stable" government policies to support the electrification.
The pivot toward hybrids comes despite years of efforts by several countries to push automakers to phase out CO2-emitting internal combustion engines as quickly as possible.
At an event to showcase its EX90 a day ahead of the company's capital markets day, Volvo also showed a video teasing a future electric sedan called ES90, Severinsson declined to say when customers could expect to order the new sedan but said that it was part of five fully electric cars the company had in development.
