Despite reporting a drop in its first quarter operating earnings, Volvo has reiterated that it sees no need to cut prices of its electric vehicles (EVs) because there is a healthy demand for them.

In February, the company had said it would not follow Tesla’s move of going into a price war to spur demand and fend off rising competition. Yesterday, its CEO Jim Rowan repeated that stand, telling Reuters that as long as demand continues to be high for the automaker, he saw no reason to change its position on pricing.

Rowan said that lithium prices, a major source of cost for the company’s EVs, had started to decline, which would help reduce costs. This was despite Chile, the world’s second largest producer of the metal, saying it would nationalise its lithium industry. He said that more lithium sources were starting to be available from other parts of the world, which made him comfortable that the cost of the material would continue to decline.

With sales up by 10% in Q1, the company reaffirmed its outlook for “solid double-digit growth” in retail sales this year, provided there were no major supply disruptions. Like other automakers, Volvo has begun slowly emerging from an extended period of supply chain shortages, which has affected output and driven up costs. The company said while there were still some shortages, its manufacturing had improved.

The Swedish automaker said yesterday that its Q1 operating earnings fell to 5.1 billion krona (RM2.2 billion) from six billion krona (RM2.59 billion) in the same period last year.