Volvo raises €500M through Green bond to accelerate the transformation to become fully electric

Written by Cláudio Afonso | | LinkedIn | Twitter

Volvo announced on Tuesday that successfully placed its second green bond to raise €500 million from global investors in order to accelerate the transformation towards becoming a fully electric carmaker by 2030.

Over two thirds of the proceeds will fund the research and development of electric powertrains for next generation pure electric Volvo cars as well as related new platform technology, while the rest will be invested in boosting the company’s production capacity of fully electric cars, Volvo stated.

The bond matures on 31st May 2028, pays a fixed coupon of 4.25%, equivalent to 291 basis points above mid-swap, and will be listed on the Luxembourg Stock Exchange.

“The successful placement shows that there is still a demand for sustainable investment opportunities. Above all, a three-time oversubscription illustrates the strong trust that investors put not only in Volvo Cars, but also in the company’s climate plans and electrification strategy”, the company said.

“Sustainability is central to our purpose and business, and key to our future success,” said Björn Annwall, chief financial officer at Volvo Cars. “The high interest for our green bond is encouraging and a clear sign that the market believes in Volvo Cars and the investment plans we’ve developed to deliver on our climate ambitions. It also reaffirms our commitment to the Paris Climate Agreement and to become a climate neutral company.”

The company delivered 47,150 vehicles in April, down 24.8 percent year-over-year. When it comes to the recharge models (Plug-in Hybrid + Fully EV), the Swedish automaker delivered 18,097 units, growing 18.7 percent from April 2021. Volvo’s Recharge models accounted for 38.4 per cent of total sales growing for the fourth consecutive month.

In 2021, Volvo sold 698,700 vehicles of which 188,649 were recharge models. When compared to 2020, the automaker increased sales of these vehicles by 63.9 percent. For the January-April period, Volvo Cars’ sales reached 195,445 cars, down 21.3 per cent compared with the same period last year.

In April, Covid-19 lockdowns in eastern China impacted retail deliveries in China and added more challenges to already weakened global supply chains, resulting in additional loss of production. As previously communicated at the end of the first quarter, Volvo Cars informed of a supplier shortage of a specific type of semi-conductor, which will impact production during the second quarter. The company considers this a temporary setback and expects the supply chain restraints related to semi-conductors to improve during the second half of the year, Volvo stated.

Written by Cláudio Afonso | | LinkedIn | Twitter