Volvo Car AB (publ.) (VOLCARB) Earnings Call Transcript & Summary

Hello, and welcome to the hometown of Volvo Cars, to the World of Volvo and to Volvo Cars Capital Markets Day for 2024. Now my name is Olivia, and I'm the Chief Communications Officer for Volvo Cars, and I have the honor of being your moderator today. Now 2 years ago, we launched the EX90, marking the beginning of a new era of Volvo Cars. We also held our first Capital Markets Day. Now a lot have happened since then and also then, we have the pleasure of welcoming you to our third Capital Markets Day. Now Volvo Cars is in an exciting crossroads. And during the course of the day, we have the opportunity to delve into the fundamentals of our company. Now you'll hear from our CEO very shortly about the journey that we're on. We'll take a deep dive into our financials, our technology, our safety positions as well as our global manufacturing footprint, a commercial offer and of course our brand. Now throughout the day, you'll have the opportunity to interact with our speakers, both in the Q&A sessions, but also outside in this newly opened World of Volvo. So I'll get back to the details of the agenda in just a little bit. Because now to kick off our Capital Markets Day, I would like to invite you in to the EX90 once more, a car that represents a paradigm shift for us at Volvo Cars and the wider industry. This will be followed by our CEO, Jim Rowan, who will take us into the day. Thank you. [Presentation]

So that's why I work for this company. That's what gets me a bed in the morning. And I wanted to start with that film because the financials, the technology, the fantastic cars, of course, they're all majorly important, and we'll get to those. But this is what makes our company different. This is what our company is about, people and keeping them safe. And with that said, good morning, everyone, and thank you for coming today. Thank you for joining us here at this very special venue, the World of Volvo, which we opened earlier this year. This great building reflects and displays the rich and long history of our brand. And only a few years from now, we'll celebrate our 100th birthday. But we're not resting on our laurels or basking on past glories. We're looking to the next 100 years. We're putting in the work, and we're laying the foundations for that next century and our existence. And today, we stand at a very pivotal point and exciting milestone in that journey, and we've been gearing up for this moment. We've been investing in the future, pushing the boundaries and delivering solid growth. We've grown our sales strongly and taken market share in Europe and the U.S. 2022 and 2023 were a record years in terms of profits and sales growth. And our latest financials in Q2 2024, we reported the best-ever quarterly core EBIT and core EBIT margins. But the competition is intensifying, complexity is increasing. So we're gearing up for the next phase. Growth alone can never be the goal. So our focus is on creating value for you, for our customers, for our employees, for our suppliers, for all our stakeholders and ensuring a long-lasting impact. And you'll hear much more about all of this during the course of the day. The key challenge is how do you create value in a flat market. And more importantly, how can you create value for all of the stakeholders for the long term because that's what really matters in a company like Volvo which is purpose. And as I see it, we face 5 major factors that shape the world today. To make this simple, I've called them the 5 Ds. And these are the things that we need to overcome in order to deliver that value. And they are Disruption, Derisking, Digital & AI, Decarbonization and ultimately, Design. So first of all, let's start with Disruption. We live in a very volatile world. Since we listed the company in 2021, the world has changed tremendously. We went through the COVID-related disruptions followed by semiconductor shortages, and we're still experiencing ongoing conflicts in the Ukraine and the Middle East. We saw a sharp increase in raw materials. We saw the bankruptcy of some suppliers. And all of this has combined to change critical elements in our business. And we've had to change the way in which we operate, not least of all in our supply chains. And that leads us to the second trend, which is Derisking. The traditional growth dynamics of the car industry are under pressure, and we face what many call a derisking or even a decoupling stage. This, of course, is heavily influenced by the complex geopolitics and its impact to supply chains in the global economy. This is where we see the increased tariffs on China built EVs and batteries really come into play. For many years, China was the growth engine of the car industry with many Western brands and the broader economy as a whole. But now for the first time, it has a significant used car market, and this, of course, dampens the demand for new cars. Combined with an ongoing market share towards domestic manufacturers and the introduction of those tariffs on China-built EVs, this change is the narrative around China significantly. The third element is the rise of Digital & AI, more specifically how we benefit from that in the most meaningful ways. I believe that, in many aspects, we've only just started to see the impact of this technology. And therefore, this is an area in which we continue to invest, test and deploy at speed, but also with clear intention. You'll see that later today. The EX90 exemplifies the future of the software-defined car with the help of our super peripheral computers, the in-house developed software, we are now making new strides in world-class infotainment, services, servicing over the upgrade capabilities, increased active safety performance and recently energy management. And then we have Decarbonization. The increased global focus on Decarbonization is, of course, right, and we believe the mobility industry needs to do its part. That's why we have set out to be leaders in the transition to electrification and to continue to reduce our CO2 footprint from our supply chain. But this transition will not be linear. It will move at different speeds in different markets. It's also the reason why we're investing in next-generation electrification technology, which will underpin the upcoming models, whilst at the same time, keeping up our investments in their electric hybrid cars. Before the end of this decade, we will have a complete lineup of fully electric cars, allowing us to make the move to full electrification as and when each market is ready. And all of this leads to the safety, which is design. In order to meet the new world created by these 4 trends, as just described, we'll need a new approach to design, how we design our products and the experience, how we design the cars, how we design the materials, the talent pool that we use an employee, the supply chains that we create? And this really is a paradigm shift that affects the entire value chain. And I think we are making headway on that faster than many of our competitors. Now before I touch on the approach to creating value with this as a backdrop, I want to talk to you about focus and nimbleness. We have a clear strategy. We know where we're going, but we need to be nimble as the world around us will continue to change, and it will continue to change at pace. And this is crucial. As in a new era, size becomes much less important than speed. Speed will be a key currency of the future. And to be successful, we need to be fast, we need the agile, we need to be pragmatic in the face of constant changing business conditions. And as the saying goes, it is not the big that eat the small, it is the fast that eat the slow. Geopolitical uncertainties and economic headwinds are the unescapable business realities of today, and we can't control these. But what we can do is navigate them with speed and purpose and perhaps, more importantly, with a clear focus. We are building a global high-tempo nimble organization that can think fast, adapt quickly and act decisively, all aligned in one direction. Having a laser sharp focus has increased its importance and underpins the choice for investments that we're making and how we will deploy our resources most effectively. It's also helped us to navigate what we will do and perhaps even more importantly, what we won't do. Now we have proven before that we can handle challenges and we will prove it again because business is not a game of perfection, it's a game of progress. And at Volvo Cars, we're making progress. This is shown in our results, it's shown in our technology, it's shown in our wonderful talent. Ultimately, it's shown in our cars. So on the split of pragmatism, nimbleness and focus, we have decided to adjust our business ambitions for the coming years. By so doing, we retain our industry-leading position in electrification and sustainability, while remaining resolute on a long-term direction and safeguarding value in our business. But let me be clear, we are committed to the long-term direction of electrification. Electrical propulsion is the future of electric powertrains. They are superior to combustion engines. There's less noise. There's less parts. They have less vibration. There's less servicing costs for our customers, and there is 0 tailpipe emissions. And eventually, with the investment that is going in, in these technologies, BEV cars will be cheaper than ICE cars. And it also enables a much bigger shift around technology in general. However, as we've said many times, this transition will not be linear. It will take longer in some regions than in others due to variations in customer demand, market incentives and most probably the biggest influence will be infrastructure. So we're building in flexibility, allowing us to keep serving our loyal Volvo customers, who are not ready or able to go fully electric. In practice, these changes come down to the following. By 2025, we aim to be between 50% and 60% of all global sales to be electrified. And by that, I mean both fully electric and plug-in electric hybrid cars, essentially every car with a cord. By 2030, we aim to be between 90% and 100% electrified. And this continues to keep us in ahead position of our peers. And related to this, our CO2 ambitions will also remain industry-leading. Our aim here is to reduce our CO2 emissions by between 30% and 35% by 2025. And by 2030, we aim to CO2 reductions per car to come in between 65% and 75%. Again, that puts us well ahead of the competition and allows us to continue to be pioneers in sustainability. To that end, we will work diligent with the suppliers to bring down those emissions from materials as well as from our core operations. As I said, we will remain firm on creating value as a business. And that's why we will no longer aim for an absolute specific revenue target, but simply to outgrow the premium car market as we have done in recent years. This will allow us to continue to maintain our price discipline and continue to drive value for the long term. In terms of profitability, given the increased complexity, especially in relation to global trade tariffs, we expect the EBIT margins of between 7% and 8% for the full year of 2026. Finally, there's cash flows. We are at our peak investment phase, and we have funded all of those investments without the need to issue more equity, demonstrating the strength of our balance sheet. And we foresee that the neutral cash flow will remain for 2024 and for 2025. But from 2026 onwards, we're in the harvest phase with strong profitability, where we start to see the benefits from these investments, and we'll see that strong free cash flow in that period. These new ambitions are important, but what's equally important is how we deliver in this more complex, competitive and challenging world. At Volvo Cars, we continually work with 5 missions to help drive our business. And these missions clarify the most critical deliverables in the strategic landscape and help us to remain competitive. Our missions are Product, Technology, Customer, Digital and People. They're pretty self-explanatory by their names alone. But within these missions, there have 12 strategic imperatives that enable us to create the value that we desire. You'll hear much more about all of those through the course of the day as we unpack the whole story for you. But very quickly, these are the superset tech stack and SPA platform evolution; a balanced portfolio in an 8x8 manufacturing development cycle; digital, data, connected and federated; batteries in balance; energy matters; a disciplined cost management and capital allocation structure; safety beyond the stars; sustainability beyond CO2; build where we sell, so shall we build; a customer-first ecosystem; the Volvo brand for life, for lives, for living; and finally, talent, teamwork and culture. These 12 points, which I've outlined, will be the thing that allows us to win the decade and set up Volvo Cars for success in the next century to come, but we live in turbulent times. And in the mobility industry of tomorrow, you can either compete on price or you can compete on value. In order to compete on value, you need to make the right investments, you need to invest in the right technology, you need to invest in the right talent. And that is exactly what we are doing. Now we're looking forward to sharing all that with you today, but let me be clear, we will prioritize value. To compete on value, you must build a premium car with great products, great technologies that provide an enhanced customer experience. You need to provide a car that can be produced regionally to drive down costs and navigate tariffs. And we hear a lot about this transformation conversation. The problem with this transformation conversation is, it assumes a starting point, a change phase and an endpoint. Caterpillar, cocoon, butterfly. I don't attest to that. I think the industry is now in a phase of continuous metamorphosis, continuous change. And I think we, more than many of our competitors, are prepared for this. We have the speed, we have the nimbleness, and we have the focus to execute and adapt for the future. We are the only European car company to have successfully harnessed the core compute technology. And in so doing, we have crossed the rubicon to the next phase of that industry. The importance of that single achievement alone should not be underestimated. It will help us in the quest to unlock tremendous value. And this is as much about mindset, it is about action. I think we have the right mindset. But of course, our actions will speak louder than our words. And this is what we'll take you through today, what we have done, what we're doing and what we'll do in the future, protecting people, protecting the planet now and for the next 100 years. That's what gets me up in the morning, and that is why I work for this company. Thanks. And with that, back to you.

Thank you, Jim. Now before kicking off the presentation, let's have a look at the day, and let's have a look at our agenda. So we have 3 main blocks that's going to take us through the day. We have, first, the financials, which our CFO, Johan and Deputy CFO, Fredrik will take us through. After that, we'll get the opportunity to look at our product strategy and the lineup that we have taking us forward with Björn, our Deputy CEO and Chief Commercial Officer; and Erik, our Chief Product and Strategy Officer. We will then finish off the first block with the fireside chat with Vanessa, our new Head of Global Sustainability, on our important sustainability agenda moving forward. We'll then go for a short break. And during the breaks, you're very welcome to visit our event space, which you'll find just outside of here to take a look at our flagship new EX90 SUV and the XC90 that we launched yesterday as well as some energy products that you're going to hear a little bit more about later today from Eric. In our second block, we're going to look at our strategies for technology and for safety, together with Åsa, our Head of the Safety Center, who many of you may have met yesterday; and Anders, our Chief Engineering and Technology Officer. Now as you can see, there's a lot of knowledge in the room. And we want to make sure that this day is as interactive as possible. So during the first of 2 Q&A sessions, you'll be able to connect with some of our speakers that will be with us here on the stage. We'll then head out for a lunch break and then in our third and last look, we're going to welcome Erik back on stage together with Francesca, our new Chief Manufacturing and Supply Chain Officer, to look at our global footprint. Now last, but by no means least, we'll then focus on commercial and the Volvo brand with Susanne, our Head of Global Offer; and Gretchen, our Head of Global Marketing. We'll then end the day with a wrap-up Q&A. And at that point, we welcome all of our speakers back on to the stage. So after the presentation, you're welcome to stay connect, talk to our leaders, have a look at the event space and let us know what you think. But without any further ado, let's get started, let's get into the financials. And with that, I'd like to welcome Johan and Fredrik to the stage.

Thank you, Olivia, and good morning, everyone. My name is Johan Ekdahl. I'm the CFO of Volvo Cars. I'm joined here on stage by Fredrik Hansson, Deputy CFO and Head of Performance Steering. These are exciting times for our company. Over the last few years, we have been laying a strong foundation for profitable growth going forward. As Jim mentioned before, we have done all this with one thing in mind, creating shareholder value. And Fredrik and I now have the honor of walking you through the building blocks on our value creation journey ahead. So let's start with a quick overview of our financial ambitions that Jim walked through here just recently. We should continue to grow as a company. We aim to outgrow the premium car market up until 2026. We have great products with fantastic technologies that will significantly improve customer experience and drive growth. Our ambition and profitability is to reach an EBIT margin of 7% to 8% for the full year '26 pushing for 8%. We also aim to deliver strong free cash flows from 2026 and onwards as we move out of the peak investment period that we're now in as well as reaching our profitability and growth ambitions going forward. For '24 and '25, we aim to have neutral free cash flows and remain fully on track towards that. But before I begin to walk you through our blueprint for a profitable future, let me highlight how we performed in the last couple of years. As Jim alluded to, momentum is clearly on our side. Over the last 2 years, Volvo Cars has grown significantly as a company. We launched great new products across all markets globally. We reported continued and significant growth in terms of sales volumes and revenues during this period, and we reached our highest ever market share in Europe. And this has also been reflected in our operating profits from 2022 up until the first half of 2024. And therefore, we are at a solid starting point now despite multiple headwinds in the form of geopolitics, trade tariffs, macroeconomic challenges, et cetera. But's our retail sales have consistently been on the growth trajectory and we closed 2023 with record growth in vehicle sales and our continued focus on cost also helped us significantly improve gross margins. And in the first -- second quarter of this year, we reported a solid gross margin of almost 23% and 20.7% for the last 12 months. And with record sales and laser focus on cost, we have consistently improved our profitability, leading to an impressive more than 8% EBIT margin in the second quarter Q4, which was also a record. And at the same time, we managed to improve our cash generation and are on track to report neutral free cash flows for '24 and '25, while expecting to report strong positive free cash flows from 2026 and onwards. And although there are challenges ahead and the journey to our '26 ambitions may not be linear, we are at a very solid starting point. So let's focus now on how we aim to reach our EBIT of 8% because that's what we're really pushing for as a company. And there are really 4 areas for us to unpack, which we will do now here today. It's growth. There will be certain market normalization. We'll come back to that. We, of course, need to continue to work with fixed cost efficiencies. And lastly, we also will see benefits from our investments in new tech, which will significantly outweigh headwinds from depreciation and amortization. So Fredrik, why don't you start taking us through these different building blocks?

Sure. Thanks, Johan. Now let's start with the first building block, growth. And a key thing to note there is that growth will be an important lever for us, but it is not the main lever as we push towards 8%. Our focus remains on value creation. But having said that, we will have a lot of growth opportunities because we are very well positioned for continued growth. We have an increasingly balanced portfolio of mild hybrids, PHEVs and BEVs. A great example of this already in the market is the EX30. We entered into new a segment in the strong growing premium BEV market, which not only unleashed growth, but as was very evident in our Q2 financials, it created profitable growth contributing to what was probably the highest BEV margins in the industry. And this in an already challenging market. Now as we'll showcase later today, we're also further expanding our product lineup, which will help us cater to even more customer needs and wants. And we are unleashing this portfolio with our strong global presence. We are a truly global company. We have a good track record and starting point across regions. In Europe, we're at a record market share, helped, of course, by the success of the EX30 and the XC60, which is the best-selling PHEV in the region. We're also very well positioned for growth in the U.S. Already today, we're the premium leader in PHEVs by far. And with the EX90 and EX30 coming in the pipeline, they will expand our portfolio, our addressable market and ignite the growth momentum in the U.S. In China, there's a lot of turbulence. Our main focus there remains to secure value creation and maintain premium pricing as the market unfolds. And then we have APAC and LATAM. We're really today punching above our weight. We have double-digit market share in most markets. And very importantly, we're leading in the electrified markets in countries like Mexico and Brazil. Now the last part of growth I wanted to mention is aftermarket. Often while talking about growth, we don't talk enough about our aftermarket business. But this is a highly profitable, largely noncyclical business, which is growing with our car parc as we grow sales. We also see an opportunity to increase penetration here and expand our service offering as we focus on this, basically making sure that the increasingly large Volvo fleet buys Volvo parts and services, and that we have more services to offer. So with that, we are very well positioned for future growth. But that said, we're also expecting further market normalization, which Johan will talk a bit about.

Yes, that's right. And market normalization is, of course, both a challenge, but also an opportunity for us. I mean, we're coming out of an abnormal market condition following COVID and subsequent supply constraints. And as we move towards a fully electric future, it's important to remember that this journey will not be linear across all markets globally. It will play out differently in different regions, depending on local government policies, infrastructure and a lot of other factors. But despite that, BEVs will continue to be the growth driver for the premium market compared to the non-BEV market, which is essentially flat or even declining. And we already have 5 fully electric cars on the road today and another 5 in active development, which is really a good foundation for benefiting from the strong expected premium BEV market growth. At the same time, for markets that are not yet ready to go fully electric, we will continue to have a strong balanced lineup of premium plug-in hybrids and mild hybrids to cater for everyone's needs. And as we mentioned before, BEVs will be the main growth driver in the premium segments. However, with improvements in battery technology, in drivetrain and other technology, we expect pricing on BEVs across the market to become more affordable for the customers. And this will also be a driver for growth in the broader BEV segment, which is, of course, also an opportunity for us as a company. And we, at Volvo Cars, are confident that we will be better positioned to retain our premium pricing position with a better mix relative to the industry. This is primarily on the back of the significant improvements in the underlying technology that powers these cars and thereby improving the overall value proposition and experience for our customers. And this will counterbalance, let's say, the normalization in BEV pricing and will enable us to further close the pricing gap with premium competitors. With that said, we're not bank on higher net BEV pricing on a like-for-like basis. Our investments in technology will ensure that our next generation of competitively priced and even more affordable BEVs will generate significantly improved margins. And the improvement in BEV, gross margins driven by the EX30, a smaller-sized car with latest technologies is really a proof point that we are on the right track. And in addition to this, interest rates are also expected to come down, which, of course, also will increase affordability for the consumers. So now let's take a look at our third building block, fixed cost efficiencies. Over the last couple of years, we have taken multiple steps to improve our cost competitiveness. We are securing competitiveness through targeted cost actions. And going forward, we need to stay on this path, and we'll remain laser focused on that. Our efforts to improve efficiency have already started to materialize and was one of the drivers of our record profitability in the second quarter of this year. And this cost focus in the business is not a one-off program, but an ongoing and continuous exercise and a core part of how we operate as a company. This will include continued benefits from our global presence. It will, of course, continue to leverage from automation and AI and also a continued sharp focus on productivity and efficiency. Some areas will have to grow cost-wise, others will decline. But in total, our efforts will be focused on keeping our cost base tight relative our revenues, while continuing to grow as a company.

And one of the specific big improvements we expect on fixed cost will come from R&D and specifically the expansion of our superset tech stack that we announced earlier today. Now you're going to hear a lot more about this from Anders and others throughout today. But starting with the EX90, all our future BEVs will be based on the superset tech stack, a common fundamental core of systems and modules with one common software track. Not only will this be a game changer from a technology and customer point of view, but as Jim expressed it, as we've now crossed this rubicon, it will allow for focus and reuse from a development perspective, which drastically reduces development costs for upcoming products in the pipeline. But even though reducing cost for development of the cars is exciting, what's really game-changing is the customer value and importantly, reductions in variable cost that the underlying technology unlocks. And this brings me to our next building block. How our investments in new tech and SPA3 will help us improve our underlying profitability. And in this 2026 time frame, we will start seeing some of the first fruits of SPA3 technology. So why are we so excited about our tech approach with SPA3 and the superset tech stack? Because not only will it drive immense customer benefit with the latest technologies tailored for their needs and lower our fixed costs, but it will also drastically reduce variable costs. We will be able to sell a more affordable car for our customer, which is even more affordable for us to produce, drastically increasing our EV gross margins. In other words, we're now unlocking the magic of tech, better performance for a lower cost. That will drive volumes and help us take share in a flat market, while increasing gross margin. Now that sounds exciting, like so let's unpack a bit how all this hangs together. And starting with variable costs. So what you're seeing on the screen here is a variable cost comparison between a first-generation CMA BEV and the comparable SPA3 successor. And as you can see, we're expecting quite drastic reductions in variable costs. This, as we implement new cell to body technology, our third-generation in-house e-motors, mega costing and build them in BEV-dedicated factories. So let's jump into some of the specifics and starting from the left here. First, we have cell to body technology, where the battery becomes a structural component of the car. That will not only make the car more sustainable and lighter and thereby provide better handling, better handling vehicle for our customers. But combined with more efficient battery cells, it also results in a 25% cost reduction on the battery pack, which is the most expensive part of the car. Secondly, we continue to invest in in-house development and manufacturing of e-motors. And mastering this ourselves helps us to drastically improve efficiency. And a big step in this, we proved already last year as we introduced generation 2 technology into the EX40 and the EC40, where we basically increased range by more than 10%, while also drastically reducing the component cost of the motors. With the third generation, we expect another step with 40% cost reductions and even higher powertrain efficiencies. Thirdly, and as you know, we are investing into mega costing, where we replaced more than 100 components with one single cast. Now this reduces direct cost by 35%. But importantly, it also drastically reduces the complexity in logistics and manufacturing, which unlocks even further benefits. And beyond this, we're also selectively looking at areas where we can save from vertical integration as we reduce complexity with our superset tech stack. One example of such is car seats, where we expect to unlock 15% savings on quite a sizeable chunk of cost. But Johan, to get all these efficiencies, we need to make strategic investments. Can you share a bit on what we're doing?

Yes, that's right, Fredrik. And many of you have seen this slide before, but I still wanted to bring this back. We are now at the peak of the investment curve, which will come down from 2026 and onwards and considering the growth even more so relative to revenue. And this, coupled with high profitability will help us deliver on our ambition on strong free cash flow from 2026. This chart also shows that it's not one big CapEx program, but several building blocks. blocks that will be completed when we launch the SPA3 platform. And so to give you an overview of where we have been making these strategic investments. Most of the investments are going into new product development, which is basically geared towards both expanding the product lineup and bringing in meaningful upgrades of the existing ones. And this will result in expanding the overall pie for Volvo cars. And another 2 areas where we have been investing have been expanding our capacity, Kosice factory being an example of that, and in vertical integration. And finally, we continue to invest in CO2 reducing and sustainability initiatives across the business, increases localization to improve variable costs as well as resilience and in maintenance and upgrades. So Fredrik, what does all this combined means for the profitability of the future BEVs.

Well, to summarize, we see drastic reductions in variable costs, while still building a significantly improved car and wide customer experience. We expect to price this at a premium, but very competitive level. And combined, this will, on a like-for-like basis, bring significantly higher gross margins. Comparing a current CMA car with a comparable SPA3 car, we're talking about an 8 to 10 percentage point increase in gross margins. 8 to 10 percentage points, that's a massive increase. And we can do that because we're one of the very few companies that have truly cracked the code to the software-defined vehicle, unlocking the full potential of our technology with our superset tech stack, better products, lower cost. Now let's do a quick recap of the different building blocks. Growth. We talked about growth being important, but not the key lever of profitability. Market normalization, we clarify that we're not banking on BEV pricing to deliver on our profitability ambitions, even though we remain firm that we will retain our premium pricing position. Fixed cost efficiencies. We continue to work on this across our business, which has already started to deliver results and will continue to do so. And we're investing in new tech that will further position the company to secure better cars at a lower cost. Now we expect these strategic investments to start paying off already in the 26th time frame, pushing us towards 8% EBIT. But it doesn't have to stop there. And to be very clear, we're not guiding beyond 2026 profits. But that said, as more and more of our products starts benefiting from the superset tech stack and SPA3 technology, we will have more efficient R&D and an increasingly larger share of our product portfolio, reaping all these cost benefits we talked about. And as the dark blue section of this graph indicates all else equal, this would mean that our profit opportunities don't stop at 8% as we move past 2026. So Johan, that was profit. Let's zoom in a bit on cash.

Thanks, Fredrik. And yes, in addition to the profitability ambitions and the route to 8%, we also need to generate stronger free cash flows over time. And the most important levers for that can be summarized as in this picture. As we will be able to harvest from our investments in new technologies, the scalable SPA3 architecture and the one software stack, we will be able to reduce R&D spend as we go into a period of more gradual and continuous development of an existing architecture. And that will take down investment levels and be an important lever for increased cash generation. We will increase profitability and absolute profits as we grow, which is another important driver, of course, for cash flow generation, and these new investments will, as we have shown, also drive improvement in gross margins and reduce investments over time in new products. And this should take us from neutral cash flows in '24 and '25 to a strong cash generation in the coming years, as we come out of this peak investment period in 2026 onwards. And important to note that, even though we are in a high-investment phase, all our investments have been funded with our own operational cash flow without any need to issue more equity, demonstrating the strength of our balance sheet. And we also plan to refinance upcoming maturities, but we do not plan to increase gross debt. As we enter the period of strong cash flow generation, on the back of our investments in technology and actions and cost reduction, we will, of course, consider shareholder distributions. However, more information on this will come at the future point in time. So just to summarize. Let me come back to this slide. We are investing to future-proof our business, and it positions us strongly for the coming years. We're now reaching towards the end of that peak investment phase and will be approaching the harvest period from 2026 and onwards. We have done SPA2 and have the core compute technology. We have solved the software-defined vehicle puzzle, which many in the industry are still struggling. And our next-generation BEVs based on SPA3 will not only bring a step change in customer benefits, but will also be competitively priced, and this will help us drive growth, take market share in the premium market. And we will do so while increasing our profit margins, pushing for 8% and with even further opportunities beyond that, although we do not guide beyond '26. And the journey towards our '26 ambitions might not be linear. There is a lot of turbulence around us in the world and uncertainties with tariffs, geopolitics, macroeconomics, which will add short-term challenges, but this is an issue only in the short term. So with that, I will now hand over to Björn, who will speak about our products, and he will be then followed by Eric. Thank you.

Thank you. So thank you Johan and Fredrik. Hello, everyone. I'm Björn Annwall, deputy CEO and Chief Commercial Officer. And as you heard from Johan and Fredrik, this is a very exciting time for our company. Yesterday, we announced that the first batch of EX90 cars is being shipped to dealers in U.S. and Europe, and the first customers will get their cars before the end of this month. Yes, it's been a wait, but it's something worth waiting for. We are now officially kicked off a new era for the company, an era of safety, technology and electrification, an era that the EX90 truly represents. The EX90 is not something small. It's the first of a new type of Volvo, not just electric, so much more. It's designed to be the safest ever Volvo through passive and active safety systems. It's using state-of-the-art sensors connected to the cars core compute that understand you and your surroundings better than ever before. And yes, thanks to the core computing, it can improve over time. EX90 also reflects our focus on sustainability, not only through 0 tailpipe emission, but also through the use of recycled and progressive material. It is a highly comfortable, true 7-seater SUV in fantastic Scandinavian design, unlike anything else on the market today. It plays a vital role in reinforcing Volvo Cars' leadership in the premium electric car segment. I'm convinced that the EX90 will redefine premium electric SUVs in the same way that the XC90 redefined the large SUV segment more than 20 years ago. You no longer have to take only my or our word for it. The EX90 has now, over the last few weeks, been driven by global media and has been very well received, as you can start to see behind me. Lots of quote. The one that stuck in my mind was this journalist coming out of the car with a big smile and just say, "You, at Volvo, have found the magic mute button." And that's the feeling you have when you sit and drive this fantastic car. You should try it. We have very ambitious business expectations on this car. And just as it's designed to improve over time, its sales volume will also grow over time as BEV penetration increases globally. Our market performance has clearly shows that Volvo can sell premium brands, premium BEVs in a profitable way. Our brand strength, coupled with a very strong product, a highly competent electrification focused retail network has been the drivers of these successes. In Europe, Volvo Car grow its absolute BEV volume with more than 100% year-to-year -- year-over-year up until today this year. We have outperformed all competition in Europe. As a result, we have delivered 3.5 percentage point increase in market share in the BEV market, and electric cars are very much our future. You heard Jim say earlier, we aim for 90% to 100% electrified car mix by 2030, and we're well on our way on achieving that. Last quarter, the number for us was 48%. And as we said, this journey is not necessarily linear. BEV adoption in the market has generally slowed, and the longer-term projections have been revised downwards. Challenges remain, range, affordability, charging infrastructure, and it always takes time to change consumer behavior, yet electric cars are the future. They are superior in terms of consumer experience, cost efficiency, sustainability. So it is the longer-term answer. And as the BEV market now matures, it becomes a bit oversimplified to talk about the BEV market. The dynamics vary significantly if you compare car types, car sizes, different regions and not the least, between mass and premium. And as usual, introduction of new technologies comes from the top. The BEV market for traditional premium BEV continues to grow. And here is where we focus the premium BEV segment. That's the fastest growing part of the market. And if you want to be successful as a company, you should focus on the fastest-growing part. We're also a global company. Europe accounting for almost half of our sales and U.S. and China accounting for approximately 20% each. And clearly, our transition to electrification will progress at different paces in the different regions around globe. So that's why we need a balanced and pragmatic approach to our business offering and our product offering. A balanced portfolio of fully electric and hybrid car that creates a strategic flexibility to leverage our strength in each and every region. The new XC90, unveiled yesterday, and now joining me on the stage clearly exemplifies this approach. It demonstrates our commitment to make meaningful updates to our mild and plug-in hybrid lineups, delivering a customer experience and a product we can be proud of in the long run. This is a fantastic car, right? And it's been a fantastic car and a fantastic product for us for a long period of time. We have a very strong position in the large SUV segment around the globe, and we continue to build on that strength. Together with the EX90, the new XC90 strengthens our competitiveness further. We now have a great product in BEV, in plug-in hybrid and in mild hybrid. And that provides the flexibility we need to handle an uncertain environment. Now let's go back to the electric foundation and look at the cars we already have in the market. First, the EX30. That's our smallest ever SUV, and that has been performing exceptionally well in the market. The car has the lowest carbon footprint of any BEVs to date, and it has helped us to conquer a lot of new customers to Volvo. Since deliveries began last year, the EX30 has quickly become a winner. It was among the top 3 best-selling full electric models in Europe during the first half of this year. It has also become a key growth driver in Latin America, particularly in Brazil and Mexico, where we are the leader in premium BEVs. It has also received almost universal acclaim, having won more than 20 awards, and it's still counting. By the end of this year, the EX30 will be available in over 60 markets worldwide. So we have no doubt it will continue to be a success, especially as we plan to start production in Ghent in Belgium in the first half of next year, with volumes ramping up throughout the year, with production in Europe and China, we would be able to handle geopolitical turbulence in an effective way. Importantly, this car also takes us closer to our aspired ICE BEV cost parity, which we're confident that we, as a company, will reach later in this decade. Alongside the EX30, the EX40 and the EC40 have now been delivered to over 250,000 customers since the launch and maintaining a very stable and robust pace. This also demonstrates what Fredrik talks about how we've been effective in improving our products, not just with kind of traditional exterior facelift, but with true improvements in range, Android-embedded infotainment and not the least, cost efficiencies, better product at a lower cost. We also began to deliver the new EM90 in China, bringing our unique safety heritage to the new fully electric premium MPV segment. It represents another expansion of the electric lineup and demonstrates our ability to meet specific market demands. While the premium MPV segment in China is relatively small, it plays a very important role. With EM90 we're reaching more high-end customers in China who are seeking a safe, spacious and comfortable premium experience. It helps us strengthen our position as a premium electric car brand in China. You all know it's a very competitive Chinese market, particularly in the fully electric segment. And we remain realistic in the short term but are highly determined for the long term. That's why we focus on the premium electric part of the market while leveraging the profitable position you already have in mild hybrids and plug-in hybrids as a strong foundation while the electric market unveils its dynamics. So now we have five fully electric cars on the road, all playing important roles and great -- having great performance. And you're going to soon hear from Erik that many more are in development. In our transition to the full electric future, I want to stress again our mild hybrid and plug-in hybrid remains crucial to our business. In fact, the plug-in hybrids are what's driving -- part of what's driving our growth today. They account for more than 20% of our global sales. And many of our customers, they really want transition to electric, but they aren't quite ready, based on range anxiety and lack of infrastructure. And these customers, they truly see plug-in hybrid as a very reassuring choice, allowing them to enjoy electric experience while having a combustion engine as a backup plan where needed. We have increased the mix of plug-in hybrid across many of our models and many of our regions. Recently, plug-in hybrid has grown a lot, especially in the U.S., where we are the leader in premium plug-in hybrids. And in Europe, the XC60 continues to be the best selling plug-in hybrid model in the whole market. All of this proves that our balanced approach is the right one and plays to our strength. So to sum up, we have set our aim and our ambition very clear, and we are moving steadily towards it. We will meet ICE BEV cost parity. We will continue to strengthen our presence in the growing premium BEV segment, leaning in on electrification with a pragmatic and balanced approach that leverage our existing strengths. We all updated our already attractive lineup of hybrid cars, allowing a little bit more time for the charging infrastructure to build up and thereby easing the transition to full electric world. And Erik, what more is to come? Welcome on stage. Thank you.

Thank you, Bjorn. I'm Erik Severinson. I'm Chief Product and Strategy Officer. As both Jim and Bjorn have clearly outlined, we're going electric, and we're updating and complementing our offering of hybrid cars and this is to allow a smooth transition into full electrification. So this decade will therefore see us basically do two things, most importantly, building a complete lineup of full electric cars, which will account for the vast majority of our investments. It's worth noting that in those markets where the customers will be ready to go full electric in 2030, Volvo Cars, will also be ready with a complete lineup of highly attractive fully electric vehicles. We can already today prove that eight of our markets have already achieved 100% electrified car share and 19 markets exceed 80% and that's why the second thing, as you heard earlier, continuing up to upgrade our current lineup of hybrid cars and complementing them with some new models for selected markets where we see strong business opportunities. Let's now take a look at the cars coming up in the future that will enable Volvo Cars to meet our longer-term growth and profitability ambitions. First, I'd like to share with you the upgrades planned for our hybrid electric lineup to ensure that they remain up-to-date and attractive to our consumers. Yesterday, we revealed a major design and UX upgrade to our flagship XC90. And this is the starting point for more. We will soon be making similar upgrades to more cars in our lineup, bringing cutting-edge technology from our latest cars to our existing SPA and CMA architectures. And this is to deliver consistent and further improved customer experience to our current cars without major investment needs. We will also offer long-range plug-in hybrids, essentially electric cars with an internal combustion engine as a backup. We see that long-range plug-in hybrids is the perfect bridge to full electric because they're the best of both worlds. The extended range will allow our customers to drive the majority of the daily commutes free from tailpipe emissions and at a lower cost while still have the backup plan to cover occasional longer trips. They would be the primary type of car other than full electric ones that we will have on offer in 2030. And that would be a necessary step on the journey towards our aim of net zero greenhouse gas emissions by 2040. These long-range PHs will help the transition for Volvo Cars globally, but perhaps they are most important in China, where the premium electric car transition is taking longer. We have a solid plan in place to meet the specific car demands while ensuring cost efficiency by leveraging our know-how in both electric and ICE powertrains. In addition to our plan to upgrade our current hybrid models and introduce new long-range plug-in hybrids, we also have five new fully electric models in various stages of active development, not only covering our needs and helping us to continue to grow profitably, but also ensuring that we remain a leader in the transition to zero tailpipe emission mobility. Our next full electric model is the ES90 which will be revealed in a few months. We were able to show you a sneak peek of this car yesterday for the first time. And while we are sure you're all very curious to hear everything about ES90, I'm afraid that the details will have to wait just a little bit longer. But what I would say is this, it is a fantastic product. It's our first low electric car, and it is in a class of its own, designed for a life in balance. It will be built on our state-of-the-art SPA2 architecture and the ES90 is a product designed for global audiences, Europe, U.S. and Asia. But it's perhaps in China, where it has its biggest opportunity. We'd love to share more detail already now, but please be patient until it's revealed in March next year. Now the ES90 is, of course, not the only car we have coming. And today, I'm also happy to be able to share that the EX60 is our next one coming after the ES90. As the fully electric successor of our current bestseller, the mid-sized SUV XC60, the EX60 is expected to be the next key volume driver for Volvo Cars. The EX60 will also be our first car based on the SPA3 architecture, which is the next generation and a step function change from SPA2. It will first be built for global consumers in our manufacturing facility here in Gothenburg. The EX60 would clearly mark another major step in our technology iteration that will both benefit the customers and bring shareholder value. The remaining three cars in active development, we won't be sharing any detail on today, but it is important for you to know that all of these five new full electric car models will be based on the same Superset technology stack from Volvo Cars, the same systems and modules, hardware and software. And that will bring our industry-leading safety expertise, the latest technologies and continuously improved customer experience faster to a wider group of customers while allowing us to capitalize on investments already made into the electric infrastructure built up for the EX90. You will hear much more on the technology underpinning our next generation of cars shortly from Anders. So in just a few years, we will have two complete lineups of cars for the period of transition towards becoming fully electric, hybrid and full electric and there are more coming beyond the immediate five new full electric models, of course, that will allow Volvo Cars to explore new market opportunities. So when these five are out in the market, we have completed our core electric portfolio, and we will then be moving to an 8x8 cycle, just as you've heard from Jim. And that is meaning eight core products that will stay on the market for 8 years. Every year, we will have a new model and major refresh of an existing one. By doing so, we will focus on continuous improvement over variant complexity. We may do additional explorations, but this will be the core. We see that we can keep cars on the road longer than the industry standard by extending the life cycle because of our capability to continuously update over the air at least 4 times per year. And this is a core compatibility differentiator for us. This will ensure our full product lineup is well positioned to meet customer needs and market demand in the future, while using our investments efficiently. While our cars are, of course, the most important piece of our business, we have in recent time, also launched an energy business, which I'd like to give you an update on today. We are working towards holistic and seamless EV use to help the transition to a future of more sustainable energy ecosystems. And a step in this is continuously improving the public charging experience for EV customers, making the access to many large public charging networks easily accessible via the Volvo app, building on our collaboration with charging facility partners. This helps reducing range anxiety and hassle for our EV customers. But beyond easily charging on the go, another step is, of course, the larger role the electric car can play in a more sustainable ecosystem. In 2023 alone, the global EV fleet consumed about 130 terawatt hours of electricity. It's roughly the same as Sweden's total electricity demand in the same year. And the amount of energy is not the only factor. It's also when we use it. We are addressing this with our new smart charging functionality in the Volvo Cars app. Our cars can automatically get charged at the optimum time and at the lowest cost for the customers, which also help balance the grid and reduce the CO2 intensity. This offer is currently live in a pilot for 250 people and will soon expand. The cars and their batteries can and will do more than eliminating tailpipe emissions. Once you are plugged in and being part of a larger energy ecosystem. When they're stationary, they can power your house, your appliances or even return power to the energy grid through bidirectional charging. And by helping balancing the grid during the peak hours, it also encourage the use of electricity from renewable sources, whilst reducing the total cost of ownership for our customers. These features are coming first to the EX90 from the first half of next year, and they will come in all new electric models available after it as well. And to make good use of this capability, we are now also launching a bidirectional home charger in Europe by the end of this year. Complementing the car's ability to be better for your home, we are also going to offer home energy storage systems in the beginning of next year. This will help EV drivers build a more self-sufficient and sustainable home energy ecosystem by reducing both their electricity bills and their dependency on the electricity grid. We're also exploring larger systems to have businesses decarbonized and transition to electro-mobility, offering value-adding solutions to cover retail and industrial needs for charging as well as battery energy storage. For example, you could take one of these industrial sized batteries to power a temporary charging station during peak charging time for high-traffic areas during vacations. With this new business area, we are strengthening our position and our capability to lead in the fully electrified future, positioning us as a sustainable energy partner. We believe that these energy solutions will become a significant product addition to our growing portfolio of cars, services and products to help meet the future needs of our customers and our business partners. We also see that this is a logical step for us that we can be a leader in this field through leveraging our technology know-how as well as our purchasing power and supply relationships from electric cars into the energy business as we buy many gigawatt hours of battery every year. So let's recap. In the years to come, we will further strengthen our product portfolio with five new fully electric car models. We will move into an 8x8 cycle to focus on eight core products to stay on the market for 8 years. We will have a new long-range plug-in hybrid, some major upgrades to our current lineup on top of regular over their updates as well as our own energy solutions. We're confident that our balanced approach will ensure a smooth and successful transition on our journey to electrification. We will also continue to strive towards our sustainability and climate ambitions, helping protect both the people and the planet. Thank you. Olivia?

Fantastic, and thank you so much, Erik. Now as you may have noticed, sustainability is not a separate presentation on our agenda today, and that's simply because it's integrated into everything we do. But to talk us through the important work that we are doing, I'd like to welcome to the stage our new Head of Global Sustainability, Vanessa Butani, who joined us earlier in the year to lead our very important sustainability agenda. We're going to have a short fireside chat, and then we're going to move straight into break.

So Vanessa, welcome. Thank you. So great to have you with us today. And again, welcome to Volvo Cars. And we heard from Jim earlier today, we also communicated yesterday about the adjustments that we're making to our electrification ambitions. Now how do you see this from your perspective in impacting both our long term but also maybe in our midterm climate ambitions and the targets that we have set ourselves?

Sure. Thank you. So our long-term ambition to reach net zero greenhouse gas emissions by 2040 remains. What we're doing now is just adjusting our near-term ambitions. So for 2025, we're going to a 30% to 35% emission reduction per car from a 2018 baseline. And for 2030, we're looking at 65% to 75% reduction. This is a reduction of about 5 to 10 percentage points. What remains, though, and what we're not changing is the fact that we, with the progress that we have made and the ambitions that we have, are still leading the industry when it comes to sustainability and you don't have to just take it from me. We've been recognized by internationally well-respected media and ratings agencies. So for example, Time magazine, S&P and Sustainalytics. And CDP has recently given Volvo Cars an A rating on climate, which is a rating only achieved by 1.7% of the 21,000 companies in that rating. So our focus on climate action and electrification has really helped us move the needle. Since 2018, we reduced our tailpipe emissions by almost half, and our overall emissions by 25%. So electrification really is the future here. And we are quickly moving away from ICE technology. We're no longer investing in pure ICE technology in R&D. And this year, we stopped producing diesel engine vehicles.

Okay. So then the future is clear. And our ambitions, as you rightly point out as well, remain very bold, which is inspiring. Now in the context of today and today's Capital Market Day, how do you see this from a cost perspective? We've spoken on that today, Jim, of course, reinforced the importance of value creation and that being a big area that we are doubling down on from Volvo Cars perspective. So do you see that sustainability needs to come at a cost? Or how do you see that?

Well, sustainability is one of the reasons that our customers buy into us, right, where they like Volvo Cars. And you can see that through the demand for our electrified vehicles, right? And it really does strengthen our brand. We're going to talk more about that later today. But if we look at the other side, sustainable options don't always have to cost more. I can take the example of the way that we've worked with energy efficiencies in our operations, where we've been able to become more efficient and reduce cost, of course. And if we look at the circular economy here, when we look at remanufacturing of parts, using recycled materials and things like that, there we can see that we use less resources, we use less virgin resources, and we also find efficiencies in doing that. And some sustainable materials, of course, and solutions do cost more. But those are also an investment in sort of future proofing us for what's coming. So we see regulations coming. For example, in the European Union, you've got the Carbon Border Adjustment Mechanism, the CBAM, and that will add a cost to carbon-intensive materials that come across the border into the EU. So yes, we see both. We see sustainability as a business opportunity, and we also see it as an opportunity to save costs in several areas.

Very good. And one last question if we can take it before we go into break is, we talked earlier today and Jim also mentioned about moving beyond CO2. So of course, CO2 being incredibly important, and we remain very fixed and firm on the goals and the ambitions that we're setting and we also released earlier in the year an updated sustainability strategy, which I know you've discussed with many people in the room since you joined. In that strategy, we actually introduced for the first time the notion of nature, of biodiversity and signaling a greater importance and a greater focus on that area. Can you explain a little bit more what the motivation was for doing that, why you feel that it's important or why we as Volvo Cars are looking more at nature and biodiversity? And maybe a bit of an example of what that means?

Yes, sure. So I mean, with the current situation and the triple planetary crisis that we find ourselves in, right, with climate change, with pollution, with biodiversity loss, we need to act now even if we don't have all the data in place, all the right methodologies and it's all still under development in the biodiversity space, but we need to come together collectively as NGOs as businesses, as researchers and other stakeholders to work on those and to push the needle to really move ahead so we can address this together. At Volvo Cars, our long-term ambition is to be net positive across the value chain and also contribute to a nature positive future. So what we've done is work together with well-renowned researchers and companies to help us fit this baseline to understand what is our starting point, what is our impact on nature and where can we move forward to actually have -- lessen our impact and get to a positive space. We've worked then using the TNFD LEAP methodology and with the LCIA approach, looking at species by year and our impact there. And here, it's really important that we work in the same way as we have with climate change. So looking at targets for our car programs, how we can reduce our impact on nature, choosing materials and looking at the processes that will help us to do that in the best way.

So speaking of those examples, is there anything that you've seen maybe recently since you've joined that really amplifies this focus? And what does it mean in reality?

Yes, sure. And I think here, we've sort of started at home in our own house. And a great example is the new Kosice plant that we're working on, where there, bio diversity and nature has been a key factor that's been taken into account in the planning of that plant. So for example, we worked to set up new habitats for birds in that area as well. And in our current operations, we're looking at understanding where we can work to regenerate nature and support the nature of where we already are today. But we're not just looking at home. We are also trying to go beyond our own boundaries and working, addressing ocean health and coastal health as well. So here, last year, we signed the WWF moratorium on deep sea mining. And we've just extended our partnership with The Ocean Race to help their work in raising awareness and driving change in oceans and coastal areas. Our For Life Fund is another avenue that we have that can help us to work with supporting partners and projects protecting natural ecosystems. So we don't have all the answers, right? But we are trying to get together and be part of the solution together with stakeholders and our business partners, right? I joined Volvo Cars just recently because this is a company that really is committed to sustainability, and we want to be pioneers for the future. Like Jim said, it's not about perfection, right? It's about making progress, pushing that needle ahead. So my plan is to continue working with my colleagues, working with like-minded business partners and making sure that we do continue on our important journey to get to net zero greenhouse gas emissions by 2040.

Thank you so much, Vanessa, thank you for joining me today, and thank you also for joining Volvo Cars once more.

Thank you.

Now it's time to wrap up this first block. Now as you're taking your coffee, make sure you check out some of the displays, you'll see some of the energy products that Erik alluded to earlier. Out here in our event space, make sure you take some time for coffee refreshments. We're going to be back here in 20 minutes. Thank you. [Break]

Hello, and welcome back. Now it's time for our sessions on technology and on safety. Now to kick off the technology session, I would like to welcome back to the stage our CEO, Jim Rowan, but before that, let's hear from one of our partners. [Presentation]

So a great key up, NVIDIA, one of our technology leaders of the day and we're going to speak now about technology. Soon, you'll hear from our Chief Technology and Engineering Officer, Anders Bell, about our Superset tech stack, one single technology stack that will power our future. But before that, let me briefly highlight our general approach to technology and development. That approach has been very deliberate and purposeful. We create technology that matter to us and how do we couple that in-house with the development and with the strategic partners that take us to that global tech leadership. The idea is always to do what we know best for our customers, and we do that in-house. So there are certain things that we can do better than anyone else. For example, we know the vehicle dynamics, we know the right performance that our customers want and we take full ownership of that. And that means controlling our e-motors in detail, and we develop these now purely in-house. Anders will talk more about that in a second. We also developed our passive and active safety tech in-house. We've done that for almost 100 years. And we have the competency that we need to do that, and we have the industry-leading safety center that helps us understand that better and gather the data we need in order to continue to make those improvements. For some other things, however, we work with global tech leaders around the world. And we're very proud of those partnerships with technology leaders such as Google, Qualcomm, NVIDIA and Luminar, some of whom are actually here today, so thank you for joining us. We were also first to introduce Android Automotive OS to those customers and to bring that embedded Google services such as maps and assistance to those customers. This allows us to operate on the very cutting edge, delivering great customer experience, and we'll continue to do that. We'll continue to work closely with Google to always improve that experience. Our partnership with Qualcomm and the low latency, truly seamless and responsive experience that we can deliver together with a rich visualization is another fantastic example using that technology from Qualcomm and the Snapdragon processor. We're the first legacy carmaker to move to an AI-enabled core compute architecture with NVIDIA, which will improve the customers' experience immensely and enable us to improve our cars through software over time and OTA. And we were an early investor in Luminar and the first to introduce this LiDAR technology at scale, taking safety of our cars to an even higher level and improving driver assistant functionality on the way. But don't take my word for this. Let's hear from one of those great tech partners that I mentioned earlier, let's hear from Cristiano, the CEO of Qualcomm. [Presentation]

So this is how we work for better client integration. We do what we do best, and we enable others to do what they do best. It's all poured in to a Superset tech stack for the benefit of our customers. This brings speed, it brings nimbleness, it brings focus. All the work that we do goes into that Superset tech stack, so we not only use it on one car, but on a complete lineup going forward. This approach is a true game changer. It will help us to improve safety for people in and around our cars. It will allow us to create true, stunning customer experiences that actually improves over time, the EX90, for the ES90 and EX60 yet to come and the cars beyond. So with that, let's now welcome Anders on stage to take us into more detail on how that will actually work. Anders?

All right. Thank you, Jim. Let's have a look under the hood. I'm here today to share some big ideas we have with technology. We are moving from cars that take you from A to B powered by internal combustion engines to truly global cars that are endlessly integrated into the society and ecosystems and people's life, technology that enables us to continue to lead in safety and sustainability, technology that delivers a stunning customer experience. Cars powered by electricity and a single Superset technology stack that delivers one brand in many different product flavors. We all know that the EX90 is coming later than was initially planned, but is here now being shipped to our retailers, starting to reach customers later this month. I personally drove the EX90 across the United States just 2 weeks ago East Coast to West Coast. It is the best car we have ever made, and I could not be prouder. We have successfully made the shift to software-defined vehicle powered by a core computing system. We have taken the leap. We have climbed the hill, if you will, and it's a hill we do not need to climb again. We are about to reap the benefits with the EX90 and all cars after it. Now let me share with you four of the key building blocks for our software-defined vehicles, core computing, 5G connection and integration to our Federated Cloud, the data center and ecosystem integration. Let's look at them one by one. First, core computing. EX90 marks the launch of Volvo Cars' software-defined vehicles. The powerful computing inside our car represents a fundamental shift in how we design and improve our cars through software over time. This is because we now do closed-loop development based on data, connectivity, software and core computing. If moving to electric was big, the shift to truly software-defined and core compute system is even more massive. Every part of the car, how it functions, what information it provides, the ability to receive new instruction, is designed centrally through software. Our capable core computing allows us to have this fast pace, software-driven development process, and we will be able to relentlessly improve every aspect of our cars. Fueled by real-time insight and run by our talented engineers in our development centers and tech hubs around the globe, to fully benefit from this approach, designed to give the customers a fantastic experience and help keep them safe, we have decided what we want to do and we go all in. That's why electrification is so important, and that's why all our future electric cars will have core computing at their center, enabling them to be truly software-defined. Starting with EX90, all our electric cars would be based on the same fundamental core of systems, modules, scalable in performance, size and cost from B2F. This fundamental core of systems, modules, software and hardware, the scalable vehicle architecture, the propulsion and energy systems, the electrical and computer architecture, the integration to the cloud and ecosystem, the software that encompasses everything and all building blocks across all engineering disciplines, all this together is the Volvo Cars' Superset tech stack. The EX90 is a subset of this tech stack. A choice of software modules, hardware systems taken from the Superset. The ES90 will be as well, not the same choice of software modules and systems as the EX90, the same goes for the EX60 and every new electric model after it. The Superset is like a building block. They can be configured in many different ways. The animation behind me represents the Superset, building blocks of software and hardware, large blocks like vehicle architecture, electric and electronic systems and smaller blocks, individual software and AI applications as well as mechanical components. So why is the convergence to a single tech stack a game changer? Because it allows all our engineering efforts towards new cars to be channeled into one single direction. We put all our focus to relentlessly progress and enhance one tech stack, where everything is fueled by the same software, where all the mechanical and electrical interfaces are defined, improving it, growing it, expanding capabilities. This is a recipe to combine the necessary discipline of mass production of the world's most complex consumer product with a desire to create a supremely powerful platform for innovation. That means that the EX90 and its customers will benefit from ongoing development efforts for future cars like ES90 and EX60. We are converging on one technology stack to allow us to move at the speed of technology to create one fantastic uniform experience for all our customers across all our cars and to be efficient and to deliver greatness. So let's zoom out a bit. All our efforts are going into the Superset tech stack. But how do we know what to improve and what additional features to develop. We believe real-time, real-world insights are the answer. For that, all our upcoming electric cars are capable of 5G connectivity and continuous data transmission to and from the Volvo Cars cloud. So instead of developing features based on data from hundreds of test vehicles and to be perfectly honest, opinions, we can now continue improving them based on insights from millions of cars on the roads. The connectivity and the flat topology where everything is connected to one central hub and a core computing architecture of our cars enable this. We can learn about and improve every aspect of the car, because we cannot only comprehend all the input from the sensors, we can also write new instructions to the actuators, improve the car and how it operates over the air. We already do this today, 3 million over-the-air updates in 85 countries last year. With our tech stack, starting with the EX90, we are taking it to the next level. The best and, of course, most important application is safety. Real-time data translating into insight, allowing us to improve the safety levels of our car to new levels. Of course, with adequate safeguards for data privacy because data safety is also safety, but more on that in a bit. So I shared two of the major building blocks for the software-defined vehicle. The core computer in our car, the 5G connectivity integration to our Federated Cloud is the second. The third is our data center. Safety data from our fleet will be processed and stored securely in Oden, our data warehouse, equipped with one of the largest AI supercomputers in Europe. Oden's AI infrastructure is powered by NVIDIA DGX H100, the latest generation of AI compute by NVIDIA. This enables our talented software engineers to facilitate the continuous learning loop based on data and allows us to use AI and machine learning capabilities to train our algorithms, improving the car's capabilities in short development loops, benefiting customers today and tomorrow. AI is obviously the big thing right now. We apply AI where it matters the most, improving safety and saving lives. There is, of course, massive potential in other areas. The core computer in our next generation is powered by the same core architecture from NVIDIA that is used to develop and run generative AI applications like GPT-4. This means it's possible for us to run generative AI directly in the car's computer, dramatically reducing latency. This is called Edge computing, and we will come back to you at a later stage on how we will use this. Before we look closer at our next generation car, let's zoom out once more for the final building block, which is ecosystem integration. For over a century, cars have taken you from A to B as a stand-alone device isolated from the rest of the world. Today, people are integrated into a myriad of different ecosystems owned by Google, Apple, Amazon, Huawei in China, SK in South Korea, you name it. But nobody wants to have as many ecosystems as devices. Our approach is to support the choices made by the customers. We aim to create APIs that third-party developers can use to build apps and services for, and we do this to improve customer experience. And we know that this will contribute to customer loyalty in an increasingly connected world. We want to be part of your ecosystem and integrate into it. The car will become more and more integrated into your life and into society. We are just at the beginning, the beginning of a new era. We have built a foundational Superset tech stack. We have built the infrastructure to support the Superset tech stack. These are investments that we do not need to make again. Now we just continue building and relentlessly iterating, operating more efficiently and delivering more value over time. Now let's deep dive into some of the key tech details for SPA3, the next evolution of our electric technology base. SPA3 is a part of the Superset technology stack. The same as SPA2 is for EX90 and ES90. With SPA3, we are simply essentially just expanding the bandwidth of the continuously evolving mechanical and hardware tech stack, all kept under the same umbrella of the same software stack. What we're doing is SPA3 is making some key upgrades to further improve customer and shareholder value. To be clear, this is not another hill to climb, like SPA2 was from SPA1. It's a step and continuation of all the work done for SPA2. Now let's have a look at core computing, batteries, e-motors and modularity. We are introducing the EX90 with a core system based on NVIDIA DRIVE Orin, a compute platform that secures high performance to improve features and build customer functionality over time. The same core system based on Orin will also power the cars on SPA3. And we are proud today to announce that we are continuing and deepening our partnership with NVIDIA. Later this decade, we will introduce core computers based on Thor to enable the next generation of computing for our next generation of cars, still on the same software stack. Thor is capable of up to 4x as many operations per second as Orin, while significantly reducing the energy consumption and improve the efficiency of the vehicle. We will offer Thor in different versions, lower performance versions for the base needs and higher performance for customers that want more advanced assisted systems and eventually autonomous diving. The shift to Thor is the next step of streamlining our offering to improve customer experience and margins for the company. Now let's talk a bit about our approach to the electric powertrain. Our first generation of electrified cars came with off-the-shelf e-motors and bought battery packs. But to be truly efficient and competitive as an EV maker, we need to optimize end-to-end and obsess about efficiency. In the latest EX40 and EX90 for example, we take things to another level. We have gone from 85% efficiency on the first generation bought motors to a very competitive 91% on our in-house designed Generation 2 already in production, all while going down in cost, size and weight. We embrace technology, improve performance and go down in cost. We have moved from buying entire battery packs in the early days, based on specification to work closely with partners developing modules that go into our in-house designed and in-house manufactured battery pack for the EX90. With this, we've taken a huge step forward. We make the cars more efficient, more competitive, enabling them to go longer with less and making the ride more Volvo, comfortable, responsive. With SPA3, we are taking a further step forward. We're looking for the next few percent of efficiency range and performance, and we're introducing our third generation of e-motors designed and built in-house with higher efficiency and performance, aiming to reach 93% efficiency and at a lower cost. With SPA3, we are also introducing a brand-new battery concept. We are fusing the battery cells to the body of the car, letting the batteries become part of the body structure in a smart way with serviceability in mind. This reduces weight, which enables more range, more space inside the car for the passengers and a better experience. And you probably guess it, it reduces cost significantly. We're also introducing the next generation of battery cells. The batteries in SPA3 have an even higher energy density than SPA2, delivering longer range at lower weight with fewer cells. Finally, on scalability, another key benefit of our next generation of architectures. As a part of the Superset tech stack, the SPA3 vehicle architecture is designed to be upgraded and scalable over time in every dimension; size, price, performance and adaptable to region, is designed to be upgraded from the get-go. Software, which unlocks the capabilities of the hardware, hardware which integrates evolves and becomes ever more capable, all with standardized interfaces, allowing parallel development and high-quality launches. This means instead of large gaps between generations, we can continue to develop and build cars of all sizes on the same technology base with the ever-evolving tech stack. And we will continuously update the cars in production with better and more efficient designs as well, of course, as updating the fleet on the road with the latest software. The EX60 will make a fantastic entry in the premium electric C/D segment, but SPA3 can also create cars in many other segments, should the company decide to do so, larger than the EX90 and smaller than the EX30, using the same scalable tech stack with supreme integration and the possibility of providing great margins. So a recap on the key takeaways. We already today do truly global products, not many carmakers do. We already today do complete and deep over-the-air updates on these products, in more countries than any other carmaker as far as I'm aware. Now add these two existing capabilities to our shift towards one single technology stack that will power all our cars going forward, this allows us to channel all our efforts into one flow, designed for scale, that is optimized continuously over time. This cuts through engineering, manufacturing, data management and more. We see this position as unique in the market. We will be able to deliver more customer value across the complete lineup. And we will be able to build shareholder value through scalability, efficiency, optimization and globalization. And last but perhaps most important, we have a fantastic talent base to make all these things happen, not only here in Sweden, but also in our engineering centers and tech hubs around the globe. Kudos to the team. Now I'd like to invite my colleague, Åsa, to join me on stage. We will walk you through how our unique approach and future technologies will continue to reinforce our safety leadership. Thank you, and welcome Åsa.

Thank you, Anders. Hi, everyone. I am Åsa Haglund, and I am the Head of Volvo Cars Safety Centre. At Volvo Cars, safety is all about people, it's about protecting people in and around our cars, their lives and the life they are living. And Volvo Cars is a legend for its safety reputation. By sharing our patent for the three-point safety belts with the industry, we have contributed to saving more than 1 million lives. In fact, many of our innovations are widely adopted by the industry, from rearward facing child seats, the inflatable curtains, the auto break and blind spot information system, just to name a few. But let's take a step back then to look at how we achieved this because that is key to our ambitions going forward. So we believe the secret behind our safety innovations is our unique approach to how we build our safety knowledge, through research in the real world. Since the 1970s, we have been collecting data and analyzing data from over 50,000 accidents involving more than 80,000 people in Volvo cars. This helps us understand the real-world exposure and accidents because in the world, there are no agreed crash angles or impact speeds. The real-world situations are far more complex than standardized testing. So initially, we collected this data with measuring tapes, hand calculation and by assessments of the scene. As technology evolves, so do we. So nowadays, we are learning even more by pulling data from the vehicles and using computer simulations, including human body models to reconstruct and analyze the accidents. So today, when everyone else starts to talk about collecting data on the roads, we've been doing exactly that for half a century. And most importantly, we've been analyzing the data and applying the insights to our safety development to continue improve safety in every generation of Volvo cars, all with the aim to make our cars equally safe for everyone in real life regardless of their gender, height, body shape or where they fit in the car. That is unique in the industry. So based on our knowledge from real-world accidents, we managed to set our very own safety standard. We call it the Volvo Cars safety standard. We test and validate our cars in a wider spectrum of crash test scenarios, not only by impact energy but also by considering variation in scenarios, condition and people, basically to cover the complexity of the real world. For example, we perform frontal crash test against the full-width barrier at 30% higher impact energy than standardized testing. And following our own standard, we have also pioneered in introducing more types of crashes into our testing, for instance, run off road collisions, rollover, large animal crashes and multiple collisions. We have also included some of the world's first crash test dummies to represent people of different genders and body shapes. To reach our stringent safety standard for occupant protection, every component in the car, whether it's part of the safety cage, the deformation zone or the restraint system is designed to contribute to the robust performance of the car with the aim to help avoid and reduce injuries for everyone in the car. This is the art our safety experts have been mastering for decades, and yet we continue evolving it with each generation of Volvo cars. Based on our new technology stack, we will be able to build our high level of safety even more efficiently into a wider range of cars on SPA2 and SPA3. Adopting technologies with maximum efficiency in protecting people, while being optimized for their everyday use of the car. For instance, the battery pack that we mentioned several times. It's not only an efficient energy storage, it can also help protect people as it reinforces the structure of the car and allows it to absorb even more energy and improve robustness and compatibility. So building on our expertise in protecting people, we are now accelerating towards our ambition of 0 collections because sometimes, the moment that never happens matter the most. With our EX90 reaching customers later this month and the ES90 soon to be revealed, we are embarking on a new era of safety and I'd like to invite Anders back on stage to talk more about this.

All right. Thank you, Åsa. With the Safe Space Technology, our next-generation cars are designed to not only help protect people in the case of accidents, but also to look out for people and help them from prevent it from happening in the first place. In the new era of safety, we aim to make everyone feel safe and cared for in their everyday journey, so they can live their life to the fullest. To that end, we develop our technologies around people, embracing the fact that we're all human beings, and we can be tired or distracted at times. Our EX90's decided to help the driver avoid collisions using automatic emergency steering or braking for instance, as you can see on the screen from our testing. And going forward, we will be able to continuously grow and improve safety features in our cars by levering cutting-edge sensors, artificial intelligence and real-time data. Let's take a look at how these technologies work to help make people's journey safer and more enjoyable.

So with state-of-the-art sensing technologies, our cars are designed to understand the driver's state, the environment around the car as well as the cabin inside. With the driver understanding in EX90, the car can identify if the driver is in a challenging state, for example, due to distraction, drowsiness or even intoxication. The occupant sensing technology can help figure out the number of occupancy in the car, whether or not the safety belt is being used and if there's a child or pet left behind. The advanced exterior sensor setup is designed to build a precise understanding of the surrounding in various conditions and detect potential threats the driver may have missed. So by integrating data from multiple sensors, the car will be able to build more accurate information and handle much more complex situations. So the car can nudge the driver with a gentle reminder or step into support, if needed. And now let's dive into how AI can help improve safety.

The safety performance and capabilities of the car can be further improved by learning more from what happens in the real world. It would not be wrong to say that data is the new safety belt to us and to everyone. By moving from a single patent on the 3-point safety belt to billions of data points, we see the potential of saving another million lives. Because with deep insights from real-time data, we will be able to take another leap in safety performance. This will give us the super power, all building our existing expertise to comprehend real-world safety. With our EX90 capable of collecting real-time data points on the road, we will be able to validate and continuously improve the active safety systems faster than ever before. Thanks to AI and machine learning, our engineers can better analyze how the active systems are engaged in real-life use cases and identify potential areas to train and optimize the system. For example, to learn and differentiate the intention of other road users around the car in order to prevent and mitigate accidents. And the restraint system in the cabin can also be prepared better to protect occupants in more active and individualized ways based on predictions of potential collisions. All the insights gained from the real-time data will be built into the superset tech stack, which will benefit all our future cars on SPA2 and SPA3. And it will also accelerate our capabilities dramatically to apply the learning from the real world into our cars, not only to new cars, but those already on the road, thanks to over-the-air updates. So our customers can enjoy continuously improved cars with the latest safety features and better performance over time.

So as the pioneers of automotive safety, we've never stopped pushing the boundaries, not only for ourselves but for the industry with the aim to make roads safer for all. And we are proud to be sharing our 50 years of research in the real world. We have made hundreds of research papers available online, giving free access to everyone, including other carmakers, road authorities and researchers. And we are committed to continue sharing our safety knowledge inside from the real world because as proud and confident as we are in being the leaders in safety innovations, we believe that in the competition for safety, there should be only winners and most importantly, because every life matters. So to sum up, our unique safety approach in real-world accidents and our stringent safety standards are the foundation of our safety leadership. Building on our strong heritage in protecting people, we are now accelerating towards the ambition of 0 collision. With our tech stack approach and Safe Space Technology, powered by intelligent algorithms, AI and the insights from real-time data, we are moving faster than ever in our safety developments. We are on our way of saving another million lives and helping everyone feel safe in their everyday journeys. So just as outlined by our founders almost 100 years ago, the care for people is at the center of everything we do at Volvo cars. And it will continue guiding Volvo cars to lead in automotive safety for the 100 years to come. Thank you.

And before we leave, it's time to hear from one of our partners in tech and safety. [Presentation]

Okay. Thank you, Åsa, and thank you, Anders. Now it's time to move into our first Q&A session of the day, and I'd like to invite, in a few moments, some of our speakers from this morning on to the stage, Jim, Johan, Bjorn, Anders and Erik.

Now before we get started, we can just go through a few practicalities. [Operator Instructions] Okay. And with that, please, to this stage. Now as we get settled, Jim, I actually thought maybe we could start with you, warming us up. We talked earlier today, we announced yesterday ambitions around electrification and how we're adjusting them in to pragmatism. You talked a little bit about the context of the why in your opening remarks this morning, which were very clear. Now when it comes to the investment curve and the capital allocation that we've talked about, do you see that this new ambition -- this new adjusted ambitions that we've laid out, do you think that this will affect our investment curve, capital intensity? How do you look at that one now?

Yes. Good question. So it's baked in. Everything that we showed today, the investment curve is baked in. So when you see that we're at the peak of our investment curve, everything going forward, everything that we'll bring out is all baked into that reduction in that investment curve. One of the biggest benefits that we have as a company is we have fantastic PHEV technology, but we took our ICE assets and we moved them outside of the company into a company called Aurobay many years ago. That gives us access to that ICE technology without the fixed costs. And Aurobay will continue to -- there's no horse because that company has now developed as well. And they will continue to invest in the ICE technology, and we have access to that, but we have an available cost basis. And that, again, allows us to focus on the superset tech stack as Anders went through today, so that we're all in on that future. And all the benefits that electrification brings. But there's another big benefit to that. We truly believe that PHEV and long-range PHEV will be a fantastic bridge to the future for those areas, those regions, those people that are not quite ready to go for the electric. The investments that we make -- and inverter modules, the investments that we make in e-motors, the investments that we make in batteries, the BMS system, the investment we make in parallel electronics, silicon carbide, gallium nitride, all of these great investments and our superset tech stack, we can take those back and put them back into the PHEVs for the electric drivetrain and that gives us range, that gives us cost benefit, that gives us charging speeds. So we're in this really unique position where we don't have a high investment curve and the investments that we're making for future electrification put all the way back into hybrids, long-range PHEVs specifically. And that's a big story that I don't think has really been unfolded at this point in time. So I'm very pleased you asked that question.

Very good. But then maybe this is a follow-up then, so we complete the ambitions side of things. We talked about electrification, also very clear. We also shared earlier today some adjustments we're making to our financial ambitions. Within that, we talked about our ambitions to outgrow the market. Maybe you could just elaborate a little bit on that. How do you look upon that? And where do you see that taking us?

So I said this the morning the market is going to be flat. Everybody in this room knows that the auto market is going to be flat. We did have a bit of an empty vessel for 4, 5, 6 years as China came up into that and many, many western brands were selling into that new car market. That's now developed. They now have a secondhand car market, which tapers off the need for new cars. And then we see the rise of the local Chinese car manufacturers taking a big bite out of that. So the only way that you can continue to grow and outgrow the market in a flat market, premium -- I'm talking premium here. So that's important, as you take market share. The only way to take market share is to add more value to the customer. Back to the superset tech stack, you've got to offer really good cars at a very competitive price and yet still maintain your margin structure. And that's exactly what we're building. The big bread share post for us back to PHEV, long-range PHEV, our ability to get those ICE engines without having a fixed cost, the ability to take the investments that we're making in and full BEV, put that back into PHEV. So this whole thing is symbiotically connected together. And we think we'll unlock the formula to provide growth, outperform the premium market for the next years while also adding value at the same time. But we'll get that growth through taking market share, not because the market is going to grow.

Very clear. Thank you so much. So over to the room. Let's take our first question, please raise your hand. We have one at the front.

[ Erik Golrang, SEB ]. I'm not sure how to phrase it exactly, but you -- I don't know how many times we heard the word premium, you just said yourself premium is very important. And I think some feel that what's premium is a bit up in the air at the moment for technology changes. And it used to be -- it started with the product and technology and then after a while you built a premium position around that, rarely, the opposite, right? You say we're a premium and you fill it with content afterwards. And now we have the ES90 in front of us and you're super focused on the core compute message, which no doubt sounds very impressive. But at the same time, I think for consumers, premium on BEVs, it's still range charging capabilities. That's still what we have on top of mind. And arguing from that standpoint, the ES90 is not premium, at least from the charging capabilities that we've had competitors for several years with more sophisticated charging capabilities. So how do you -- maybe not that's exactly the question, but what really builds premium do you think over the next 5-year period is my question?

So I would respectfully disagree that the ES90 is not premium. I'll back into that rationale in a second. If you're in the premium sector -- so first of all, within the auto industry and one of the things that became apparent to me very early on when I joined the auto industry, there's 2 industries within the industry. One is premium and one is mass. Mass market is completely on price. Premium is on features and brand and that brand attachment. So all the premium players, we all end up in this arena of premiumness, let's call it. But people enter through a different door. Some people enter through the door of performance. Some people enter through the door of comfort and luxury and right quality. Some people enter through the door tech, but we all end up in the same arena competing for those premium customers, okay? Our superpower is safety. And we enter through the door of safety, sustainability, human-centric technology and Scandinavian design. That's what our customers see as premium. That's what they've seen as premium for 100 years. That's what I think they'll continue to see is premium. So if you're wanting a car, which has got the latest technologies that can connect to Apple and Google, has a great technology around batteries and range and charging speed and all that, that's great. You need that. It's almost -- it almost becomes a hygiene factor. But what are the premium attributes that attract your customers? And we think those premium attributes are safety, sustainability, human-centric technology and beautiful Scandinavian design. And remember, we are 1% of the car industry. So we're not chasing mass. We know our tribe, we know our customers and we know what they want, and we're moving them on to the next phase. And now we're giving them all that safety -- in fact, enhanced safety over-the-air updates, so enhanced capability, and we're giving them all that in a new package where superset tech stack. And the magic happens in tech when you get more functionality for less cost and that's what SPA3 brings. And I think we bring that to the marketplace in a premium package, let's call it.

And then 1 follow-up, if I can. To Johan. You talked about 7% to 8% 2026. There's going to be fluctuation between, you said, we don't know what happens? What's the base case for how much worse before it gets better? .

Well, we don't guide on specific margins. I mean we were at 8.1% in the second quarter of this year, which was a very good quarter. I think it shows that we have a strong starting point from a brand perspective and from a demand perspective, et cetera. Now we're going into a period with -- there are -- I mean trade tariffs and macroeconomics that, of course, make this journey not to be fully linear. We aim, as we said, as a span of 7% to 8% for the full year '26, pushing towards 8%. But I will not say anything more in detail and it will not be necessarily a linear journey there, of course, but not -- we don't guide on specific margins in '24 or '25.

Okay. Next question there was a gentleman...

I will just blend down on that. So there is a reason that we waited for the EX. We just announced that EX60 today. There is a reason we waited for the EX60 to come out on the SPA3 platform. There's a volume car. You get the benefits of having volume and price reduction. And of course, that's a magic formula in itself. So when we get the EX60, as we talk about that, let's call that value release '26-or-so, that's when you get that SPA3 architecture, massively reduced costs and a high-volume car in a BEV format.

Hampus Engellau, Handelsbanken. Coming back to the question on growth and market, et cetera. I will struggle a bit when I talk premium and it'd be interesting to hear your guys' view on how you define the premium market and also what type of expectations you have for that market since you're benchmarking against it?

Yes. We don't -- I mean the premium market is a predefined set of competitors, of course. And what's important I thing to mention in that is that while we mentioned this -- we will outgrow the premium market is that over time, the premium market will outgrow to the mass market. And as such, we are clear that we will take market share and outgrow the premium market. We -- there, of course, you can probably define it in a few different ways. So I will not go into these specifics. But what's important is that we will clearly define that the premium market is expected to outgrow the mass market and we will outgrow the premium market by taking market share on the back of the new products coming up.

We don't define the premium market. The data is available in the premium market. It's defined for us. You look at the industry data, it says, this is premium growth, this is non-premium growth. So I guess, I would push the question back and say, how does the industry define premium? But premium is a subset of benefits to the customer. What are you willing to pay more for because a product does more than a mass market product? Why do people buy an iPhone rather than a cheaper phone? As we do agree that iPhone is a premium product. So what are the attributes, the ecosystem, the screen, the build quality. And for us, as I said before, the premiumness of our product is safety. People rely on having the car -- they want to get into a car where they feel safe. You have your first child, you come home from the hospital, you start thinking about safety in a much more better way. So back to that safety is our superpower, and it's a massive value adder for us in terms of how we premiumize our product and the perception of premium within our customer base. And of course, there's a whole bunch of stuff that wraps around that. Technology is becoming part of that premiumness. The connectivity to Apple and Android is becoming part of that premiumness. The latency, the screen, the big screen has become part of that premiumness. The seat quality, the right quality, the comfort, the sound system, I'm just describing incidental the EX90 so -- but that's -- it's the whole package. You don't get that in a mass market car because quite simply, you can't afford to put that in and make profit, if you do.

Can I do 1 more question more on the tech side. And that is -- I mean, now you're centralizing the core compute. When do you think -- or will we get to a point when you will do the core compute in the cloud that is obviously costing.

To Anders.

That's a good question, but it's kind of out of our hands. That's infrastructure development and a lot of other factors playing in. But by putting the core computer in the car, we can unlock the capabilities at 0 latency and immediate response to the car. I mean, look at the chassis system, adapting 500 times per second. These things can never really go into the cloud in a reliable way. So while it's an interesting idea, I think we're focusing right now on getting the power into the cars to really secure that low latency and immediate response.

Agnieszka Vilela, Nordea. So it seems to me that you are increasing your vertical integration, especially the SPA3 platform. You invest a lot on your own and also you're cooperating with external partners. But my question is, does it mean that you will grow less benefit from being a part of Geely's? Where is Geely in that calculation, so to say?

Okay. Anders, maybe you could elaborate on the technology collaborations?

So on the technology collaborations, we're not dogmatic, as we covered before. We do what we do best and then we find partners and allow them to do what they do best. So we are -- there's no dogmatism in what we choose to buy versus make. It's always a business and a customer decision in its core. It's obviously something we discussed thoroughly with finance and everybody else before we commit, right? I think over time, on the technology side, if I cover that first, we are -- as we are launching these kind of automotive emerging technologies in our car, we are encouraging standardization of emerging technologies, the kind of base technologies that will eventually be in every car. We really want to also be -- help work with the industry to standardize through partners, through Tier 1s over time. And we strongly encourage also open source collaborations in the remote software. Just to be able to standardize these things that has no direct consumer impact basically runs the car in a very efficient manner and then we tailor whatever is important to create our unique brand.

Yes. Plus, there's some tactical piece, is under some strategic. So in terms of the strategic pieces, maybe we can develop e-motors together, maybe we can develop some battery technology that would be more on the strategic spectrum. But there's also some tactical stuff, which really sees tremendous value. If we look at the EX30 is a great example to that, that's built on an ACA platform, which is a Geely platform. We saw that platform. It was a perfect size. We wanted to be in the small SUVs segment, fully electric. We looked at that platform so let's reposition that make that Volvo car. We did all the safety on that. We did the top half. We did all the design, boom, we're in production, far, far quicker than we would have been if we developed a brand-new platform. That's allowed us to take massive market share in that segment, as it evolves. So within 4 months, the EX30 is now the third best sale in the electric car in Europe. So that's how we release value from the wider group. The second part, and I guess Francesca, maybe talk about this a little bit later, is how we release value from the supply chain. When you can leverage over that bigger spend or when you can leverage all that bigger volume, when they have some technology partnerships that we don't see, that's when you start to unlock a lot more value from the wider ecosystem of the Geely Group, if you will. So -- some of that is tactical, some of it is very strategic.

Okay. I'm actually going to call it to a wrap. We've actually run out of time for today's -- for this first session of Q&A. We will have a second session of Q&A at the end with all of our speakers on the stage.

Can we have 1 more. Sorry, I know I'm breaking position here, but I know -- because I know -- was one of the first raise hand up. So I just wanted to...

Much appreciate it. Just a couple of topics, please. If you could maybe elaborate a little bit more -- this is José from JPMorgan, I should introduce myself. If you could elaborate a little bit on the strategy to grow in China and maybe reinvigorate a bit more the brand in the region? And then second, on SPA3, will all the vehicles have access to make a casting? And you mentioned in 1 of the slides some efficiencies on seats. Can you maybe elaborate a little bit more there, what that means for the group?

Sure. I'll let Anders take or Erik take the conversation on seats and SPA3 expansion. On China. So China, this is, again, our understanding that China is quite profound, and we're seeing that that's taking -- has taken a very different from the past. We've seen -- I'm going to say probably 100 to 120 new EV competitors. Most of the competitors have come in to the market at the sub-200, 250 renminbi price points. So that's mass market. We don't play in that market, so we're largely unaffected. There's a lot of turmoil in that. There's a lot of young companies in China that have borrowed money. They have 1 car in the market. Very, very few of those companies are making money. A lot of those companies are selling at 0 gross margins or below in order to stay alive because they need to keep bringing cash into the business. And that creates a very turbulent environment in the low-end EV space. But we've actually still growing in China, but we're pushing up towards the premium EM90, the EX90, so we'll enter that EV space within China very, very specifically on what we see as premium. Again, you get back to what is premium and then China is different again. But we have a very strong PHEV and we have a very strong MHEV reputation or, let's say, brand strength. And that's what's allowing us to grow and that's what's really allowing us to hold the margin structure within China. But China is flat. We know that China is going to be a flat market, and it's going to be -- and you see the numbers. We sell 50% of what we sell in the rest of the world is either BEV or PHEV. In China, I think that's 10% or 11%. The rest of that is MHEV. That's where the strength is right now for us. And it's back to that pragmatic approach and making sure that we don't try and force something into the market, which would reduce value for the company.

Anders and Erik, you want to elaborate on the efficiency?

Yes. So 2 questions, right? The first one was we will sort be based on mega casting? So the answer is yes, all cars. Second question is around vertical integration. Specifically, you mentioned seats, right, which is like one of those topics where we are not dogmatic. We're building a new factor in Kosice, first thing you start to look. We have like around -- our factories around the world, we have extremely valuable and appreciated sequencing suppliers, Tier 1 suppliers, that's provided a factory with parts and modules and systems, including seats, right? Infrastructure on Kosice a bit different story. So we need to get supply right. So that's where we look at kind of holistically overall, what's the best for the company, what creates most value? And since being 1 example, could we move that in-house? Yes, but we cannot move it in its current complexity. So this is combined with a different approach to how we -- how many variants we can allow, what's the variant offering on the car models we are talking about to really smash the variant complexity down to a minimal while providing the maximum customer selection to get it down to a complexity level where the CapEx is so low. It's actually a pretty easy fit into our existing factory, run it as part of -- I mean what we do best in our factories is to assemble components, right? So it's not only just moving it in-house with the current complexity because, again, here, our current Tier 1s are doing a fantastic job, but slashing that complexity so it's a much smaller chunk to digest, much smaller CapEx and then moving it in-house in an area where there is no source to be found anyway. This is proving to be an extremely good approach to still deliver fantastic products, but significantly reducing cost on what is effectively -- doesn't affect the customer value of the product.

And Erik, you might want to add.

I think Anders covered it mostly, but also, I mean, it's a way of how we smartly can use the investments we're making. When we're building a new plant in Kosice, we can reevaluate what is the best way of set up the supply chain for seats, for example, and utilize the investment in a new plant to unlock major values in the variable cost side as well.

Okay. Good. So with that, we will now go for a break. Thank you so much for your questions engagement. We will have a second Q&A panel. Lunch will be served on Level 5. We have the details with you. Our guides are here to help and we'll see you back after the break. Thank you so much. [Break]

Okay. And welcome back I hope you very much enjoyed your lunch and the exploring, I hope you got to do of the world Volvo. Now we'll move on to the final block of presentations, starting with global footprint, followed by commercial and brand before the wrap of the end of Q&A session for the day. So with that, I'd like to welcome to the stage, Francesca and Erik.

Hello. I am Francesca Gamboni, Chief Manufacturing and Supply Chain Officer. Together with Erik, we'll share insight into how we turn change into opportunity through our global footprint, use of strategic partnerships and optimizing end-to-end value chain.

Hello again. As you've seen today, we have a strong lineup, differentiated technology and a strong ecosystem to bring our cars to the market. But at the same time, there is a lot of disruption in the industry right now from geopolitical tension, technological innovation, supply chain challenges, to the changes in consumer spending. And we don't expect this to be momentarily. We think this is the new normal.

So today, we'll explain how we are strengthening our position to face this new normal. We'll take you through our global footprint, how we utilize strategic partnership with selected suppliers and how we optimize our end-to-end value chain. Our focus on this area leaves us better place than ever before to quickly adapt to market changes, to boost our resilience, competitiveness and efficiency. So let's get started with a quick snapshot of our global footprint strategy.

We have operations around the globe. We build and sell cars around the globe. Our overarching strategy is very simple: to build where we sell and source where we build. We started in Sweden almost 100 years ago and have since been building a strong footprint across Europe, Asia and the United States. Our products are sold in more than 100 countries. Each part of our global footprint unlocks its own strategic advantages. And collectively, this strong foundation gives us the flexibility to adapt to market forces. If we consider our SPA1 architecture, as an example, we can produce this locally in all 3 regions. Our Torslanda plant here in Sweden is an example of another kind of flexibility. In this case, we can build 5 different car models at the same location. And as you learned earlier today, eventually, all of our new cars will be built on our upcoming SPA3 scalable platform and tech stack. We will produce it in all regions, which will further enhance our flexibility and our efficiency. So let's take a quick look at our footprint, region by region.

Let's start by Europe. Europe is historically one of our most important region, and it remains so. We are a Swedish company, born in Sweden, listed in Sweden, and we are 1 of the largest employer in Sweden, and we understand what it takes to be successful in Europe. We have our global headquarter in Sweden. This includes our largest engineering hub and design center as well as our Torslanda plant, component production and our own e-motor production. We also have tech hubs in Stockholm and Lund. Having this collection of resources in 1 country benefits technology development, it enables greater levels of cross-functional collaboration and HP quality and innovation. Also in Europe, we have our software development, tech hub in Krakow, Poland. And we have our manufacturing plant in Ghent, Belgium, which expands our capacity to produce products for Europe in Europe. For example, we start producing the EX30 in Ghent during 2025, which, as you heard earlier from Bjorn, is one of the top 3 selling electric cars in Europe right now. And in 2026, our new fully electric car plant in Slovakia in the Kosice region will be operational. This will be our most advanced plant to date and will pioneer new efficiency initiatives in our manufacturing operations, applying all of our operational learnings to date. We'll talk more about this efficiency soon.

Let's take a look at APAC, particularly in China, which is one of the fastest-growing car markets. Here, we have local capabilities, including design, engineering and production. Our APAC region, HQ, R&D and design centers are all based in Shanghai, but we also have 3 car plants in China, supported by assembly factories in both India and Malaysia. And we have our own tech hubs in Singapore and in Bangalore, India. Combined with our partners in the Geely Group, we have a complete setup that caters for future needs in the Asia Pacific region. And if we focus for a minute on the China market, already today, the large majority of the cars we sell in China are produced in China, but we also engineer cars specifically for China to meet the local customer needs and demands from the outset. Our new fully electric EM90 is an example of such a product that caters nicely to the local demands in China. This ability to produce variants specifically for unique market highlights our strength and the build where we sell strategy.

Okay. Now let's go on to the U.S. The U.S., as you know, is one of the largest car markets in the world. Having manufacturing facilities in the U.S. is critical for us to serve this important market and export in other markets. We are currently producing our new fully electric EX90 in our U.S. car production in South Carolina, again, building where we sell. This location has the flexibility to produce both SPA1 and SPA2 products such as S60 and the EX90.

All combined our robust global network leads us very well placed to manage any changes that lie ahead. Our flexibility contributes to our resilience for example, building the XC60, one of our most successful models, both in China and in Europe, so we can adapt for global export as needed and our move to produce EX30 in Europe as well as in China and how we can adjust our manufacturing capabilities accordingly, should consumer appetite shift in any region or for other strategic choices we might need to make. This flexibility is important to highlight because it drives one of our strengths. Our access to an existing global footprint that enables growth in premium markets all over the world. And what's more, we're boosting the capabilities of our global footprint by our investment in technology.

As Anders spoke about earlier, all our future products will be based on the same fundamental superset technology stack and updated mechatronic platform. This is more scalable, both up and down in model size. It enables us to offer more types of car on the same base, improve margin and customer experiences. It's an important investment with significant rewards.

And as you heard from our colleagues earlier, we're also investing in battery technology, from battery cells to battery assembly shops in our plants. We have a hedged battery strategy, which is both geographically spread, and we're using a mix of partners with multiple technologies. We have flexibility in our maker by choices, combining our in-house efforts with collaborations of our selected suppliers. It's all anchored in our build where we sell global approach, using strategic partnerships to source cells closer to where we build. And so battery partners align further with our own geographical operations. We can achieve our ambition to source our battery cells in all key regions, Asia, Europe and the U.S. And our batteries are more than just energy. As you saw when Anders presented, we are integrating the batteries into the body structure of future cars. This significantly reduces the material that doesn't contribute to energy storage. This means less weight, more range, more space inside and an overall better experience. Plus, it enables better terminal management of the battery and reduces cost significantly. This is a great outcome for our products and our customers. It also demonstrates our ability to quickly industrialize it and deliver it across the globe. We recently opened our brand-new battery assembly shop in Torslanda, and this set up specifically for this integration of battery floor structure into our future course.

Our Torslanda plant is also introducing megacasting, another example of a strategic investment we have made into our future. With megacasting, large aluminum-casted parts replaced in some cases more than 100 small parts. By using less parts, we can lower our cost, reduce manufacturing complexity, improve sustainability across our supply chain and obviously create lighter cars. Landed cost for a megacast structure is up to 35% below a mixed steel-aluminum structure. Time from raw material to ready products is reduced from months to days. And the upstream value chain is replaced by raw material input directly to our plants, which gives us, obviously, greater control over the costs. This rollout at Torslanda provides a great base for scaling, both for other megacasted parts and for how we use megacasting in our other plants around the globe. We will add megacasting capabilities to our new Kosice plant in Slovakia and in the Daqing plant in China.

And our new fully electric state-of-the-art car factory in Kosice, Slovakia, will bring other new opportunities as well. On a per vehicle basis, it is expected to use 30% less energy in production, 40% less manufacturing weights and 40% less water usage compared to our current operations. It would also use 100% climate-neutral energy in manufacturing operations. In the Kosice plant, we will also introduce new efficiencies in painting and stamping. And all of our plants stand to gain from these advances in our manufacturing setup, as we share knowledge across our teams and strive towards our efficiency and sustainability ambitions.

As you can see, we are proud of our global footprint and unique in-house capabilities. But we also know that collaborators win in such unpredictable time. So let's explore how we are building strategic partnerships with selected suppliers to help push the boundaries on technology, cost resilience and sustainability. Our supplier segmentation strategy guides us on defining who we want to team up with, why and how. The way we collaborate with our Tier 1 suppliers is fundamentally changing into the future. For example, this week, we host our first automotive technology leaders roundtable, where we bring together CEOs from key Volvo cars supply chain partners to discuss the global landscape and collaboration opportunity. We are carefully selecting the right partners to co-create with, to develop new ideas, to share risks, find synergies, improve competitiveness and unlock greater efficiencies. One example of strategic partnership is how we work closely with Bosch on developing technology and solutions. We are focused on creating the solutions that are cost competitive at the leading edge of technology, increasingly more sustainable and delivered in line with our values and our approach towards social responsibility. One example is an initiative with a supplier that switched to biofuel and reduced inbound ocean container freight carbon emissions by up to 87%. At the same time, it generated over SEK 1 billion in cost savings for us.

And that is a great outcome, Francesca. Another example of collaboration on supply chain is on supply chain traceability. We're partnering with circular supply chain traceability for future battery passports, so customers can understand their car batteries origin. And also, work with Breathe, which is a startup with expertise in physics-based battery management software. We're able to develop our in-house battery management system and adapt fast charging that aims to improve our charging speed by as much as 30% for future car models. And as you saw from Anders earlier, today, our collaborations with our leading technology partners, such as NVIDIA, Qualcomm are integral to our future technology road map. As Francesca said, by combining the strengths with the right suppliers, we will continue to create opportunities to improve technology, cost, resilience and sustainability.

So you've heard about our global footprint and how we strategically partner with our ecosystem. All of this is part of how we are fine-tuning our complete end-to-end value chain approach. Through our total cost perspective enabled by system that allow end-to-end decision-making and greater visibility, we can unlock opportunities across the entire value chain. It's about seeking out opportunities in our make or buy strategy, in complexity reduction and in our overall cost optimization efforts. We are systematically examining all the commodities with a total value approach to find opportunities. That's why our teams have total value chain responsibility and accountability and visibility, but let's take a concrete example. Let's take the example of our wire harness, which is a system designed to efficiently group multiple wires or cables together. Applying the total cost perspective, we achieved a 25% cost reduction on this commodity. We reduced variants, changed the industrial setup, reduce product complexity and lower the weight. As well as the cost savings, the solution also reduced its CO2 footprint and pave the way for further efficiencies in the industrial setup. And this is just one example for over 100 commodities that we are examining for each of our future car models. That's good, no?

Yes, that's great. Discovering these opportunities that multiply across hundreds of thousands of cars sold this year, which unlocks millions of euros of cost savings, while also reducing carbon emissions. This examination of our value chains is reducing the number of parts and variants we use and it's creating opportunities to use more off-the-shelf noncritical components where it makes business sense.

But of course, there is no one-size-fits-all approach where it makes business sense. We're also finding opportunity to own more of the value-adding processes, when we consider our make or buy strategy. So what we end up is a balance of complexity reduction, smart solution for noncritical parts, either in sourcing or outsourcing to our partners, depending on what makes business sense. For in-sourcing, it's a case of owning the most value-adding processes for selected components and materials to unlock significant cost benefits like, for example, e-motors and seats.

And we will apply this thinking to our factory in Kosice, Slovakia. It will be the first Volvo cars plant to have all the major production shops established, including stamping, megacasting, body, paint, e-motors, assembly and final assembly. Kosice's in-house e-motor production complements our existing in-house e-motor production in Sweden. It will be the first of our plants that produce the seats on site. As we touched on earlier, with megacasting, we have strategic value-adding processes in-house. So as you can see, we strive for flexibility in our make or buy strategy to create opportunities and ensure that we can adapt to market and global forces as needed.

Tools such as AI can also improve and increase flexibility and efficiency. Earlier, Anders touched on using AI to manage energy in our cars. Of course, we also use AI to manage energy in our plants. In manufacturing, we use virtual reality for plant modeling and patented in-house AI products for energy management. These solutions deliver significant cost savings and other efficiencies. We are also embracing AI and GenAI in various domain across our businesses such as supplier contract management, web scrapping for supplier discovery, supplier history analysis and to identify cost-saving opportunities. And we see this landscape evolving with a mix of in-house and off-the-shelf solutions to create a wide array of efficiency opportunities.

So as you can see, at Volvo cars, we are better placed than we've ever been to navigate what lies ahead. The companies that excel in the future will be the ones who recognize opportunities and maximize the benefits of emerging technologies, and most importantly, adapt quickly. We believe that one of our greatest strength throughout our 97-year history is our ability to turn changing opportunity. And this is how we will deliver on our ambitions and create a meaningful change.

You're perfectly right, Erik. And this is why we are building on the strong foundation of our existing footprint, continually improving on our end-to-end value chain, finding opportunities where our flexible make or buy strategy and forming strategic partnerships that are mutually beneficial with selected suppliers. And we are doing all this to ensure our future success in a complex, ever-changing global environment. Thank you.

Thank you.

And now it's time to hand over to Gretchen and Susanne.

Hello, everyone. I'm Gretchen Saegh-Fleming, Head of Global Marketing.

And I'm Susanne Hägglund, Head of Global Offer. We have the privilege to talk with you about the Volvo Car brand, its strength and its potential to build further on our offer for the future. Together, we would like to share 3 facts with you. Our brand is strong, is growing and has the potential to grow even further beyond cars.

So let's dive right into the first point, the strength of our brand. Our brand is strongly connected to our purpose for life to give people the freedom to move in a personal, sustainable and safe way. This purpose serves as our Volvo Compass, differentiating us, defining who we are and guiding us into the future. And perhaps more than anything, our brand is connected to safety. For close to 100 years, we focused on keeping people safe and continually innovating to be at the forefront of safety technology.

And in today, it's a very competitive market, we know that consumers have so many choices on how to spend their money and where to spend their money. Increasingly, they prefer to purchase from brands that share their values and core values, not only buying products from us, but also buying into who we are and what we stand for.

And as you heard, with the Safe Space technology, our next-generation cars are designed to not only help protect people in the case of accidents, but also with the aim to prevent those accidents from happening in the first place. This provides our customers with a peace of mind and improves their everyday quality of life. And echoing Jim, we remain resolute on safeguarding our brand value. A key component in that is retaining our industry-leading position in electrification and sustainability. And this is evident in our EX30, which has the lowest carbon footprint of any fully electric Volvo car to date. Our brand ambition is to be the pioneer in the protection of people and planet. And we continue to focus on 3 key areas to further premiumize our brand. The first, marketing and communication. As we evolve our leading safety position even further with our investments in core computing and safety technology, expanding not only from rational but also psychological safety, we'll mirror this in our communications to drive emotional connection and closeness with our consumers. Because when you feel safe, you're free to live your life to the fullest. We're also making a continued investment in premium -- not only premium brand storytelling, but what we like to call story doing, which continues on our tradition of social, environmental and community engagement through initiatives like the recent launch of our Volvo for Life Fund. We believe this approach will invite even more consumers into the brand, enhance their willingness to pay and our ability to drive premium pricing. Now when it comes to products, our consumer research tells us that our new electric vehicles improve the consumer's perception of Volvo to be more premium, sleek and technologically innovative, elevating our brand from admired to desired.

Second, speaking about our offer. With our core computing and safe technology, we have heard during the day, we drive continuous improvements of quality of life for our consumers and our families. And I will touch on, in just a while, our expanded and elevated offer structure with richer product mix and upselling opportunities will help us to further grow together with the customers.

Third, of course, our consumer experience. And together with our retailers, we aim to provide a seamless omnichannel consumer experience in a personalized way that's fueled by our investments in consumer data and CRM capabilities. This is complemented, of course, by a consistently high level of service in every touch point that consumers have with the brand. Just like Gretchen said, leveraging our brand strength is essential and critical for us to differentiate ourselves, stay relevant to our customers and to further grow our business. This takes us to the second point that we would like to share with you here today. We are growing brand with great potential. Our strong and balanced portfolio enables us to meet a wide range of consumers. We have offers for those who are ready to go electric and for those who are yet not there. This way, we are creating flexibility to navigate in an uncertain macroeconomic environment and geopolitical landscape. And also, we can manage the different paces of electrification that we see happening across the globe. Coupled with our value over volume approach, we are performing well. We continue to have a high share of plugging hybrid together with full electric vehicles. And in the first year -- first half of this year, we had a percentage of 44% in the world of this mix and the EV accounting for the 23% and the gross margin of EVs is also improving. 8 of our markets have achieved 100% electrified car share and 19 markets exceed 80%. I'm sure you'll agree, this is an impressive performance. And the growth of this electrified segment has driven us to a new sales record for the first half of this year with almost 390,000 cars sold, a 14% increase year-on-year. The EX30 has been instrumental in this growth, ranking the top 3 best-selling EVs in Europe in the first half year. And the car is performing well around the globe, especially in countries like Japan and Brazil. The EX30 is attracting customers in a broader range. We see young singles to families purchasing their second or third car. And from our studies in Netherlands, U.K. and Germany, which are top 3 markets for the EX30, we can see that more than 50% in average are new to the Volvo Car brand. The EX30 is undeniable, a leader in the premium B SUV segment, holding a 30% market share globally and 36% market share in Europe. I was a Managing Director in one of our countries when this car was launched, and I must say it was a great experience to see another winner being born. But it's not only the EX30 that is performing well. Also our BEV cars on the CMA platform, the EX40 and the EC40 have been delivered to over 0.25 million consumers to date and continue to sell well. There is a lot of excitement about the EX90 and rightly so. It marks the beginning of a new era for Volvo cars. The initial cars are being shipped today as we speak to U.S. and European retailers. And the first customers will get their cars before the end of this month. I had the privilege to be part of the team that drove this car across the United States 2 weeks ago, and I can tell you it was the most quiet, smooth ride and inside the spaciousness, the clean lines, the technology, the sound system, give it a really premium feel. Someone was asking about the premium feel, I challenge you to go drive the car. It's an amazing experience, and it's an incredible winning flagship for us. We can't wait to get more customers into that car. In addition to our electric vehicles, we also have the plug-in hybrids that continue to perform well in our markets. The XC90, which we revealed a new version of yesterday, has sold to almost 1 million of customers since it was launched. It marks one of the most successful car lines today and accounting for about 14% of our total sales this year. The XC60 is crucial for us, being the best-selling PHEV in Europe and the top seller in our portfolio. It offers a competitive electric range and generous space to meet customer needs. And these drivelines, they play a very important role for us bridging the transformation towards an electric future. And we are continuously upgrading our models to make sure that we have appealing choices for all customers. Our commercial performance is strong. It shows that our brand value is centered around safety, sustainability, human-centric technology in Scandinavian design continues to resonate with customers. And our ambition is to meet those customers wherever they want to be, creating an omnichannel experience and meeting those customers digitally with our retailers or in our studios, making sure that we bring them on the journey of Volvo Cars together. We transitioned our U.K. market to a direct-to-consumer model last year in order to provide transparent pricing and simplified options through both digital and physical retail channels. As of June this year, we've achieved our best ever U.K. market share, and our sales are up 14 -- excuse me, 22% year-on-year. This project has been highly valuable to us since day 1. We recognize the importance of having the omnichannel presence, the value of gaining direct access to consumer data and our retail partners' ability to handle the flexibility that consumers demand has also delivered significant value for us. These learnings will be harmonized across our markets, not converting complete markets, but working to digitalize our business and thereby taking a more pragmatic approach in collaboration with our strong retailer network and partner ecosystem that we've built over the past many decades. And we will continue to enhance the collaboration with those partners even further. For sure, today, we have about 2,200 retail partners around the world, with around 65,000 brand ambassadors working together with us, and collaborating with them to harness our collective strength and also the proximity to customers will continue to be very important to lift our brand to premium levels as we spoke about before. This journey is an evolution, not a revolution, and delivering a strong omnichannel consumer experience at a lower cost remains a guiding principle for us. And we have ambitions to expand our brand and our offer above and beyond cars, which is the third point that we'd like to share together with you today. Our offer beyond the car is an important part of our For Life ecosystem. By this, we focus on targeting values for our customers such as lower cost of ownership, hassle-free experience, and also ensuring that customers can connect easier with us throughout their life cycle, so we can give them what they need when they need it. For us, it means new revenue streams, strength and profitability, stronger connections with customers so that we can reach more customers and conquer new customers. To further describe this, we would like to provide a couple of examples of the Beyond Car offer. The first one is Volvo Car service plans. Today, customer loyalty when servicing a car is high when the car is new. Then it tends to decline as the car is aging. This is a trend coming across all automotive brands. Retaining these customers is important not only because it generates parts revenue, but also because it makes sure that we can give a high quality of our services and ensure that we give them the premium experience that they've deserved. Our service plans are designed to offer appealing scheduled maintenance packages that can be acquired at the retailer or via our Volvo Car app. And since we started to sell this through the app in August 2023, we can see a clear increase of retention of older vehicles, improved brand loyalty and increased revenues. Now we focus on expanding our service plans to more markets, which we anticipate will increase further the revenues. The second example is Volvo Car Insurance. And today, this is a small yet profitable business that involves no capital investment or financial risk. Our primary role is to facilitate the insurance distribution through our retailer network. And in partnership, we direct repairs to our retailers, thereby supporting the sales of original spare parts. Insurance presents a significant opportunity to leverage volume effects and address our used cars as well as our growing car park. Insurance products from our partners are now available in 28 markets worldwide, and we'll continue to grow this business to achieve even greater profitability. And these are just some few examples. Together with the example that you also heard about Energy Solutions and that you can see outside here that Erik also talked about before. We will continue to expand our offering that creates value to our customers beyond the vehicle itself. So as we conclude, we want to emphasize our focus and our priorities ahead: one, we're a strong brand and will leverage the benefits of being a truly purpose-driven company with a strong and premium brand position For Life. Two, we're a growing brand, and we're committed to meeting our customers where they want to be through our seamless omnichannel setup and our balanced product portfolio. And three, to further expand our brand, we will go above and beyond cars. By unlocking the full potential of our For Life ecosystem, we generate more value. With that, we would like to leave you with an inspiration video that will give you a hint of what the future could look like. Thank you so much. [Presentation]

Okay. Thank you, Gretchen, and thank you, Susanne. Now it is time to move to our final Q&A session of the day. And with that, I would like to welcome all of our speakers that have been here with us today on stage to join me in the chairs. Now we will go through as many questions as we possibly can, and we have added a little bit time based on the energy from before. But again, if we don't get through to all of your questions, we do have all of our speakers here. We also have additional members of the team that are really willing and able to take your questions outside in our event space immediately following. So with that, please welcome all of our speakers back to the stage.

Okay. And let's get started.

George Galliers from Goldman Sachs. I wanted to start off just on the product side. Obviously, you gave us some little insights into what's coming next on the battery electrical vehicle from. But with respect to the plug-in hybrids, mild hybrids, can you give us any insights into what we should expect above and beyond the new XC90 that you've shown? And in terms of the sort of magnitude of the update, is what we're seeing with the XC90, what we should expect? Or could some of the cars see more radical changes? Also related to the product side, as we think about the future, and obviously, EV demand is difficult to predict, Anders spoke about the flexibility of the new platform SPA3, is there any scope for that to be used as a range extender platform in the 2030s, if that's where the market sits? Then finally, just with respect to the financials, I noticed on the cash flow, very good to hear that you expect to be positive in 2026, but you didn't have a huge amount in there for negative working capital. given the vertical integration, direct sales model and you expect volumes to grow, I would have anticipated that maybe there would be a larger working capital outflow. Is there something we're missing there?

Okay. So I'm going to break those into 3 parts. Let's start first with Erik to talk us through how we're going to continue to develop our PHEV offer. Then over to you, Anders, to look at the SPA3 range opportunities that we have with Johan then taking us on working capital. So Erik?

Okay. Thank you. I mean it's a great question or 3 great questions actually. When it comes to the PHEVs, what we have communicated today is that we are taking a pragmatic approach in how to create the balanced portfolio. We have said that we'll continue to invest in our very successful PHEVs that we have today and also continue to upgrade with long-range versions of those. We're not going into detail at what car, at what time. But I think what you can see on the XC90 here on the stage today is that the SPA1 architecture, a very successful plug-in hybrid platform with relatively small efforts, we think, keep those cars very competitive for a long time to come.

Anything you would like to add, Anders, on SPA3 range?

No, in the range extender topic. So SPA3's design is confirmed to be fully bespoke battery electric vehicle. That's why we can achieve the efficiencies and really focus on eliminating all the constraints from the old combustion engine technology. This is not just introducing new technology and new technical challenges around the battery electric vehicle is actively removing the constraints of the combustion engine to create that really gap between the awesomeness of the product and the efficiency of which we can make it. Then of course, as an engineering organization, we could do anything.

I would put on that to say that the point is to drive maximum efficiency. And when you start to fudge that architecture, you'll lose that efficiency. And so you got to be pretty focused on where you're taking the company. We have options to put in range extenders that extended PHEVs in the SPA1 and even in the SPA2 architecture. By the time you get to SPA3, you've got to be designing for the future. You've got to lean into that, and you've got to be confident that way you're taking the business and the SPA3 architecture and beyond is about full electrification. I just want to be clear on that.

Thank you. And Johan...

Yes, the question on working capital. I mean we absolutely expect strong free cash flows from 2026. And I mean, the biggest lever, as we showed is probably lower R&D spend and lower investments going forward, coming down from the levels we are now in '24, '25. Short comments specifically on working capital. I mean there are a few levers. I mean, first, we have -- we'll have different off-balance sheet solutions for cars that is in subscription, for instance. We also have this, let's say, slightly changed more omnichannel model versus completely direct sales as 1 lever as well. So I don't expect working capital to be an obstacle for generating high free cash flows from '26.

Okay. We could take 1 more question from this corner, and then we'll move over.

Henning from Barclays. First question, perhaps for Bjorn or Johan, if you prefer. Bjorn, you talked about cost parity of ICE and BEV and still having the aspiration of achieving that later in the decade. You're obviously not going to show us the EV gross margin anymore, you made great progress in Q2. I think part of that was thanks to the China dynamics that's going to change a little bit. Could you just talk about the puts and takes as you transition the EX30, for example, to Belgium now, how are you going to be able to compensate for the production cost advantage that you have been enjoying in China as you're not going to have that anymore? And then second question, I don't know, maybe for Jim, in the context of the volume ambitions, right? I mean this has been a bit of a moving target over recent years. You've now sort of shown us how you have a pricing opportunity or currently you're priced below your premium competitors. Can we just talk about that dynamic a little bit? How you already sort of had to reduce your volume ambitions at the same time you're trying to raise pricing. I appreciate thanks to some of the great content you're putting on the cost, but just sort of talk about that balance a little bit.

Okay. I'm actually going to give Bjorn the opportunity and then hopefully to build on the first question around ICE-BEV cost parity?

Well, let's start with here now on the EX30, bottom line there that the gross margin we want to get out of that landed again is very similar to what we have from the China produced cars. Yes, you have higher labor costs in Belgium than we have in China, but you take away tariff, you take away shipping, you have less capital tied up. So economically, it's pretty much the same. So that -- for that car, that change doesn't materially change anything. And then when it comes to the longer term, having a technology to deliver ICE-BEV cost parity, that's what Anders has been talking about, that is the superset tech stack and the SPA3 architecture that will deliver against that.

Okay. Good. And then to Jim, on the volume balance?

Yes, I think we're pretty much by and large, we're on price parity right now with the EX30 that's a bed when you get 400 kilometers a range for an entry price of $35,000, where gross margin of, we say between 15% and 20%. And in the last quarter, we showed that we were in the upper range of that. That pretty much gets you close to ICE-BEV parity right there. And it's harder to do that in a small car and it isn't a big car quite frankly. So I think -- and what I think we'll see will be that the investments that we'll see now by us, but by the automotive industry in general, in terms of technologies around batteries, inverters and power electronics and so on. You're going to see that drive down the cost of ICE. There's not so many people investing in ICE technology these days. So you'll see a less pronounced reduction curve in that. And of course, the ICE part will lose volume, so it will lose leverage, whereas the BEV part will gain volume and gain leverage. So all those dynamics work towards ICE-BEV parity, and we see that going. So that's on the ICE-BEV parity. It was the same question.

The second one was around balancing the volume and also contributing...

The premiumness -- like the premiumness. Okay. So it is -- I mean you hit the nail on the head, is about putting the features into the car that people see as premium and are willing to pay for. And the gap that we sell in the marketplace from a price perspective, I do not think exists, especially in our new products on features and performance basis. So that allows us, if you guys do the math as well as we do. We sell a price. On a like-for-like car, we sell a price discount to some of our key premium competitors of 20%. I can get 10% of that back. That's pretty meaningful. As we put more and more content and as our safety features develop, as our sound systems and our ride comfort and the core compute technology adds more value to those customers. I would hope that we can start to see that price discount, if you will to that was compared to start the road. And people will start to make the choice I'm going to buy a Volvo rather than one of those other competitors. That's to be fair, that is part of the whole value equation that we're trying to create here for the simple reason I'm saying, if it's a flat market, and you can only grow by taking market share. I've got to go take market share from these premium competitors and the way in which to do that is to offer more value for slightly less cost.

But just to be clear, if you don't mind, we're still talking about a clear volume growth ambition, right? Even though you've now rephrased it to outperforming a flat market, you want to grow, right?

We want to take market share in that premium market and outgrow the premium mark growth. So yes, we want to grow. It's very difficult right now with the turbulences in the industry to see what that growth rate is going to be. But I'm confident with the products that we bring into the market. And remember, we're in the 30, 40, 60, 90 size class. We are in SUVs, sedans, wagons and MPVs within MHEV, PHEV and BEVs in 85 countries around the world. We have 2,200 dealership network, 60,000 brand evangelists. We have access to 10,000 service bays and 15,000 service technicians. All of that adds premiumness to the brand, and that's part of the problem. If you can buy a car, if you don't have access to a really good dealership network that's going to take care of you afterwards, you don't have access to good service and genuine spare parts, you don't have access to those service technicians that have been highly trained by us, then that starts to erode the premiumness of those brands. And a lot of our competitors don't have that infrastructure. They don't have that access to those -- to that global network of brand evangelists and service base. And all of that is now coming together. And we see that in different industries as well. If you look at why Apple have gone to the expense and the trouble to have their stores around the world, why do they have their genius bars. I think the Apple Genius Bars are akin to our service bay technicians and it's meaningful and it's brand additive and people expect that of a premium brand.

Okay. Thank you so much. We're going to move over to this corner of the world. Any questions? I saw some hands earlier. No.

Well, it's the first time ever.

[ Austin ].

Don't ask me a question on LiDAR.

Don't worry. Exactly. What do you think about the indium gallium outside the gap in the whatnots? It was a genuine question around that no one else had one, is with all the updates that you have, how much today would you consider Volvo an auto manufacturer versus a tech company now? And then for the 100-year vision that you have going forward, what do you see that look like?

Good question. Jim?

Well, I don't -- well, first of all, I don't have a 100-year vision, put that to one side. But listen, I think the technology that we're building up, it's my personal assertion that we're having to deal with so much technology that's coming into the automotive industry. I don't even call it automotive, I call it next-generation mobility because really that's what it is. Next-generation mobility and look at what we're bringing in. We're bringing in core compute technology, high computational computing, massive them out to software on 6 different software strands, from connectivity software to iOS and Android software to embedded software, to safety software to the safety Kernel and QNX and all of those things are blending in together. That's just the software stack. Then we've got the application led of ultrasonics and cameras and radars and LiDARs and then we'll put the connectivity out to the customer and building that whole ecosystem. And there's a whole bunch of new stuff that we're putting in as well from the mechanical side and actuators and so on. It's my assertion that -- and you need to do this at the same time. It's not like you can say, well, we will just do this but for now. It doesn't work like that. So bringing all that together and us being able to cross the [ Rubicon ] to a core compute architecture that very few people have done. [indiscernible] has forced us to become a technology company. It's not that we were trying to say, let's not be an automotive company, let's be a tech company. If you want to be an automotive company, that's success on the future, you need to harness the technologies that are relevant for the future. And that pushes you to be a tech company yourself. And just as importantly, it puts you to connect the like-minded tech companies and the make versus buy decisions. So I don't know where in the spectrum we are in terms of tech versus automotive. But I know we're harnessing the right technologies for the future. Super hard question. I really appreciate that one.

Yes. And if I may add, I mean, one thing which is common, whatever we define ourselves to become, maybe we're both at this moment in time. It's 2 concepts that we need to get used to at: one is that we are looking at our cars and our future products equipping them with powerful hardware, future proof that we can unlock over time with software. I think that's for automotive, that's a new kind of thinking, not in the world of consumer electronics or computers, but sure for us. The second aspect is that we need to get used to the fact that our product is never finished, because we still have more power in the hardware that we can harness through software and reach it over the air. And these are kind of fundamental, almost quasi philosophical ideas for a traditional car industry to move into. The fact that you can always do bet you can always improve. And the fact you need to look at your hardware choices, your compute choices, your mechatronic choices, your actuated choices as potentials to unlock over time. I mean, like I'm sure you all have a smartphone in your pocket, I'm sure it was much -- it's much better today than it was 3 years ago. And that's the thing -- that is the thing with cars going forward as well, that we will be able to always do more. It's like 200 ideas up here that we want to do. We know we can do in the future. It's not a question of if it's just a question of gathering the data, the understanding and then it's just work. So that's -- it's going to be a lot of fun.

Very good. Back over to the room.

I have a question for Francesca. If you could please maybe share with you the first impressions for the first 6 months when you joined the group, you come from companies that have done very large reduction of platforms. They have basically done a huge reduction of component diversity and have achieved very large cost savings. So when you landed at Volvo, what did you see? And what do you think is the opportunity from a purchasing perspective to tighten the bolt and get those cost savings?

So I will not talk about other car companies. I will talk about Volvo. I think one of the greatest the key, let's say, success factors and opportunity that Volvo has is, again, is agility, its cross-function -- its cross-functional and collaboration and total cost approach, as I explained before. So the fact of seeing holistically all the costs and really going for the, let's say, the solution that would optimize the total cost instead of going to -- with -- for solutions, which optimize the super assemblies, I would say. It is very powerful, which obviously means that we have a lot of opportunities and a lot of let's say, commodities that we can evaluate with this approach and finding other opportunities. I explained during -- when I was talking before about 1 opportunity, but there are many other opportunities that we can unlock. And again, the key success factor is this holistic view, this total cost approach, this cross functional, which is also let's say, which is also helped by the agility that the company has and it's lean structure and management which allows really to go faster, to go deeper and to get really great opportunities.

Thank you very much. One more over here. Maybe Hampus? You go and then we'll take Hampus, we've got time.

Henning again from Barclays. So I have 2 follow-ups, please. The first was on the upgradability and the car being able to get better by putting all this content and upfront. Can you talk a little bit about the financials of that because we know that one of your competitors has like a revenue-sharing agreement where they get subsidized hardware upfront and then as they monetize later on, and it's a bit of risk sharing, of course, in that respect as well. So could you maybe remind us how that works in your case in the example of NVIDIA and Qualcomm in your case? And the other question was, Jim, actually in one of the last statements you made in response to my earlier question was about the brand ambassadors and the dealerships and the ecosystem. And that enables a lot of what you're doing. There was a bit of an absence of the direct distribution model in the presentation today, which took more airtime and prominence than previous events and presentations. So can you just clarify if there's been any kind of pivot away from that? Or was there just no time in the schedule today? Just to clarify that, please.

So in terms of the relationship with our key suppliers, we won't go into the details of that, what those purchase arrangements are and all that stuff. So I need to push that one to the item of it. On terms of the commercial, let's say, strategy, what we'll find is what we can through this and Bjorn can speak a little bit more in the details if we have time. But basically, what we've found is that there's a pragmatic approach that you need to find that works well with the dealership network and us. Do we want direct connection to the customer? Absolutely. Do we want to be able to influence that customer and keep that customer loyal and bring that back? Absolutely. What's the best way to do that? And what we've found through the course of the journey is that the dealerships play a big part of that post sales, but we need to be engaged with every sale. We need to know which customers are coming into the brand and which customers are staying in the brand. The Volvo app has become a massive portal towards that customer. We don't need to do the change order management with those customers. The dealerships are set up to do that. The dealerships are set up to do servicing. We give the dealerships access to our spare parts library and so they can order directly without need to get us involved. So that takes out cost. We make money when they use genuine spare parts, they make money when they service the customers' part. So it's a little bit more of a pragmatic approach. And what we've found is that, okay, you guys keep doing this because you get at it, but we're going to do that. So we still have the direct customer engagement through the app, specifically through the website. And then we allow the dealership network to take care of that customer post sales. So it's basically the digitization of wholesale to some extent, if you're looking for a tagline on that. Hopefully, that answers the question.

Bjorn, anything you wanted to add.

I think Jim covered it well. So net-net, that means we have a direct model in the U.K. It works well. And I think the key learning there is that the normal consumer using the normal flow. We have set up a fantastic machine to handle it. But the other learning is that the normal consumer doesn't behave in a normal way. There are so many different ways that consumers can behave. And the retailer has an unmatched opportunity to handle that flexibility. So not all segments are due to be direct based on the platform we have put in place, at least not across many markets. We're going to keep on being direct in the U.K., but for the rest of Europe, we focus on what Jim talk about making sure we stitch together the consumer data between us and the retailers have a stronger marketing CRM function us together with the retailer, work with the customer care offers. We could get much more bang for our digital back through that method.

And also in one of the presentations, I think it was also correctly that the objective or the ambition remains in the commercial strategy, which is a better customer experience at a lower cost.

Yes. And that is still and one building block for sure for our profitability ambitions, if we call it operational efficiency and have as you said, customer experience based on a lower -- at the lower cost is still a part of the increased operational efficiencies going forward, even if it was not as outbroke in the world.

Just come back on your earlier question. I won't get into the details of the agreements between suppliers and stuff. But we don't want to mortgage ourselves to the future. We need to be able to afford the technology that we put into the car as part of the bill of materials. As soon as you that to do that or start even relying on government subsidies, then you have -- you don't have a robust enough business model, in my opinion, we should be able to make sure that the components that we put in the cars that we can afford to pay for them and can afford to charge that into the price. In the same ways, we need to make sure that we're building products that can be sold to the public without the need for government subsidies. Governments have got more things to spend their money on, they shouldn't need to subsidize businesses. What they should do is help the transition to electrification to making sure there's enough green energy and making sure there's good charge infrastructure. And I'm just going to take a second and talk about that. There's 5 -- basically 5 friction factors towards full-scale adoption of BEV: one is cost, the second one is energy density that the speed, those 3 runouts. We're driving down the cost, but increase in the energy density of batteries and are increasing the charge speed. The new technologies, we'll be able to discussion 200 kilometers of range in probably 6 minutes. So we're already getting with new power electronics over that. So we're working hard. The fourth is infrastructure. That's where governments I think can help. That's where I think fast charge infrastructure makes a huge difference. Access to green energy makes a huge difference. And the first one is just change, right? People have been driving internal combustion engines for a long time. They need to get used to new technology. We went through the same thing with feature phones. Everybody loved the feature phones. People thought, "Oh, Blackberry, I love my keyboard", then all of a sudden from boom, everybody is on glass. So -- but it took a little bit of time, and that's the transition we're going through. So I just wanted to unpack that for you a little bit more.

Very good. Hampus. We probably have time for -- this is our last question, I believe.

Okay. Big expectations. I wanted to come back to a used cars -- because most people buy a used car, and a lot of people feel I'm sure about residual value, battery status, et cetera. So my question to you is what are you doing as an OEM to be more transparent on the status of the battery during its lifetime for secondhand buyers? And also secondly, are you looking into having a subscription service for, let's say, 4, 5, 6, 7 years of battery electric vehicles?

I'll take the first, but then I'll hand over to Anders in terms of the tech piece, but it rolls back into the tech stack, effectively ultimately rolls back into the tech stack. So when you get an internal combustion engine, when you look at the servicing cost of that internal combustion engine, where you've got lots of moving parts, roughly 2,500 parts and the internal combustion, we're taking whatever 5,000, 6,000 RPM, mainly mechanical structures, you've got petrol in there. You've got lots of combustion activities, vibration, noise, everything that can go wrong, blow and sell on the head gaskets, all that stuff. Don't be any of that. So when you look at the data of a core compute architecture, we will see every single sale, the performance of every single sale in that battery structure. And what we see right now and what's encouraging is the integrity and the robustness of battery chemistry and where that's going. I can't see every single screw, nut, bolt or washer, that's in an internal combustion engine. That's impossible. But I can't see every sale. So there's a path for us to be able to say, I can guarantee that battery because I know everything that's happening and say, I know when it's been charged, of it's been under charged or overcharged. I don't know exactly how many miles it's being given. That's all part of the connectivity and the superset tech stack. That's going to give then us the opportunity to say, okay, to your point, I can guarantee that battery within that car for another 5 years on a secondhand market, very, very comfortable with us putting our sales at risk. That's what's available towards us in the future. Is that available now? No, but that's what's coming. And that's another massive, massive benefit because if you can do that, residual values stay high. The other thing is as we get to 2030 and ICE ban comes into act, especially here in Europe, one of our biggest markets. The residual value about ICE machines are going to go down. And people will not make that decision in December 2034. And they'll make that decision big purchase. They'll make that decision a couple of years earlier. So you'll start to see the reduction of residual values in ICE machines happen around about the early part, if not before, of 2030. So everything is moving towards BEV in terms of the superset tech stack and the information and the data that you get, move them in the right direction, residuals going up and on ICE, things are moving down. I don't know if you want to...

No, I think you covered it well. And of course, we are working on a lot of different improvement trajectories on battery health, shorting the charge times while improving the number of discharge cycles, et cetera. The battery passport we'll be introducing so you can have full transparency on battery health. And we're going to kind of keep on expanding that as part of the tech stack in our Federated Cloud, being able to provide more and more digital twin data, if you like, on the health and the state of the car. Plus the other aspect is -- and I think the announcement yesterday on the [ 1 HMI ] is a very good example where we are -- although we are progressing and developing the hardware, we always consider backwards porting on all the software, right? So I think that's the primary example where we keep the car. The car is a static object. Those days are over. So if you buy a used car, you will still get -- to continue to get the upgrade and enjoy the benefits of the functionality we develop today. So residual market dynamics, that's more of a Bjorn topic.

But rest assured, we will package that into a fantastic pre-owned subscription or operational lease because it's going to be very important to get Volvo consumers into the second year as almost.

Okay. Thank you very much. We extended this Q&A time. I realize that there are probably some questions that we haven't managed to get through to. But as I said, all of our speakers and additional leaders from Volvo Cars with us here today. So please do make sure we get your questions answered during the end of today's session. So please, all of our speakers, thank you so much for joining me on stage. Please now join the audience as we enter into the very final part of our day. Thank you for leading us through your great content and all the fantastic sessions. It's been rewarding. It's been enlightening. And it's been a genuine pleasure to be your moderator here today. And with that, I would like to hand over one of our partners before Jim will take us home. Thank you so much. [Presentation]

We need to get back to work now. So we have a lot to deliver, and what told you today. So you've heard from us today, you've also heard from some of our tech partners. Thanks for that great collaboration, especially to those who joined us today. Okay, right. Let's wrap up, and let's go back to where we started today, which was creating value. We have an illustrative history, and in recent years, we've delivered robust financial performance. We've developed leading technologies, introducing core compute technology. We've launched several new iconic models, which has allowed us to increase our market share in the premium market. And we've done all of this in a very, very turbulent environment. However, we're not done yet. Instead, we're going to lay the foundations for the next 100 years. Our focus is on value creation. It will remain so, and there are several ways in which we're planning to do that as we've laid out today. You've heard about our financial ambitions, and our committed value creation for our shareholders and investors, and we're on track to deliver core EBIT ambitions and generate strong positive cash flow from 2026 onwards. With even more exciting products on the way as part of our transition to full electrification, value creation won't be underpinned by 2 complete lineups of fully electric vehicles and our investment, our continued investment in our hybrid models. These products will contain state-of-the-art technology powered by our superset tech stack, our software, our core computing and an AI-enabled data loop and data center. Our generation of cars or next generation of cars will deliver stunning experience for our customers, and we will deliver significant cost reductions for Volvo Cars. And then, of course, we get safety. And safety remains at the very center of everything that we do. Based on our unique real-world approach to safety, we will continue to push the boundaries as we set our own new Volvo safety standards beyond the stars. We're improving our safe technology and a standard that goes way above any of the regulatory testing requirements. We have a global footprint. We build what we sell and we source where we build. This strategy boosts flexibility across all of our operations that helps to navigate the tariffs that we now face, and we'll continue to collaborate with strategic partners to make value chains even more efficient, even more resilient, even more competitive. And then you heard about our brand and our consumer. We're a consumer-centric company that will focus on delivering premium experiences for our customers and continue to strengthen an already strong brand, which is based on safety, sustainability, human-centric technology and beautiful Scandinavian design. But safety is our superpower. We're going to build products that develop a commercial structure where everything is interconnected, it's a living organism -- that involves develops and strengthens over time. The big organs in this organism are industrial, technology, product and commercial and data is the connective tissue that holds altogether. This industrial loop with a resilient manufacturing operation and supply chain, localizing, launching new cars annually with continuous improvement of cost and quality. The product loop, feeding into this industrial on an 8x8 cycle, 1 new car and refreshed every 4 years with software 4 times a year. A technology loop powering this product group with continuous development from our superset tech stack and its system components as well as the architecture updates. And then the commercial loop providing insight from our customers and to the data loop to provide our products, improve quality and technology within the technology stack as well as enabling seamless move from consideration to purchase, to ownership, to renewal. The data loop is the connective tissue, enabling data flow, frictionless and continuous in a real-time environment. informing a development loop to ensure that we focus on the right things, supported and enabled and accelerated by AI and machine learning. This is the powerful combination, and it results in faster, more effective product development, quicker reaction to market needs, better product insights coming from data. But let's not forget that achieving all of this and the ambitions rely on great people and a great culture. I've said this before, and I'll say it again. At the end of the day, companies have differentiated by people, technologies and services and ideas are developed by people. and provided by the people within our company, pricing strategies, marketing campaigns and everything in between. We have fantastic people in our company. And what you've seen in here today are the fruits of their labor, their hard work and their commitment. So while we're on stage, well, we have an open forum here, I would like to take a moment just to say my heartfelt thanks to all of the employees with involve for the hard work, the dedication and their energy. Our people are the beating heart of our company. I also want to say a big thanks to everybody here who made this happen. Most people do this on top of the day job. We have a fantastic crew of people here. Again, partnerships are very important. And we have some fantastic partners that have helped us pull all this together. It's a lot of work, and I'd like to just say thanks. Now really to the end of the day, I will leave you with this final thought. It's all about Volvo's cars and Volvo's culture. It's about what defines us. At Volvo, we believe in making an impact. and having the courage to challenge how things have always been done because only through new ways of seeing and new ways of doing, can we truly make things better. It takes courage. It takes curiosity. It takes pioneers. That's what defines us. This defines us the spirit of the pioneer. Thank you. [Presentation]

Okay. So that is finally a wrap for Capital Markets Day 2024. We hope you've enjoyed the presentations. In just a moment, the new XC90 and EX90 would join us on stage once more. You're welcome to come and take a closer look. But please note that the flagship is also available in the event space. So if you don't manage to get up here, you will also find them out there. You'll also find that energy ecosystem installations, some refreshments and also some fantastic people to talk to. So that's all it. That's everything for today. Thank you so much again for joining us, and we wish you well. Stay safe. Bye-bye.