FULLTEXT DEL 2 AV 6
Årsredovisning 2025
Employee representatives JÖRGEN OLSSON ADRIAN AVDULLAHU ANNA MARGITINZARA BISKE MARIE STENQVIST BOARD MEMBER, REPRESENTATIVE OF UNIONEN Born 1968. Board member since 2016. Education: Upper secondary school education. Principal activities outside of Volvo Car Group and current board assignments and similar: Chairman of Unionen, Volvo Car Group. Professional experience: Previously employee representative of the Board of Volvo Bil i Göte- borg AB. Holdings in Volvo Car AB (publ.), own and related parties: 580 B shares.1) 2) BOARD MEMBER, REPRESENTATIVE OF IF METALL Born 1978. Board member since 2021. Education: Upper secondary school education. Leadership training at Bommersvikakademin and IF Metall Stockholm. Principal activities outside of Volvo Car Group and current board assignments and similar: Chairman of IF Metall, Volvo Car Group. Chairman IF Metall Group Volvo Car Sweden. Board member IF Metall Central Organization. Board member IF Metall Section 36 Gothenburg. Holdings in Volvo Car AB (publ.), own and related parties: 800 B shares.1) 2) DEPUTY BOARD MEMBER, REPRESENTATIVE OF AKADEMIKERNA Born 1969. Deputy Board member since 2016. Education: Physics, Mathematics and Electri - cal engineering from the University of Gothen - burg, Sweden. Executive MBA Business and Law from the School of Business, Economics and Law at the University of Gothenburg, Sweden. Principal activities outside of Volvo Car Group and current board assignments and similar: — Professional experience: Previous experience from several positions within Volvo Car Group, such as Chief Program Engineer, Senior Direc - tor Business Quality, Senior Director Current Model Quality, Senior Director Customer Service and Commercial Office. Holdings in Volvo Car AB (publ.), own and related parties: 786 B shares.1) 2) BOARD MEMBER, REPRESENTATIVE OF IF METALL Born 1990. Board member since 2024. Education: Upper secondary school education. Principal activities outside of Volvo Car Group and current board assignments and similar: Union representative of IF Metall. Holdings in Volvo Car AB (publ.), own and related parties: 701 B shares.1) 2) DEPUTY BOARD MEMBER, REPRESENTATIVE IF METALL Born 1963. Deputy Board Member since 2022. Education: Upper secondary education Principal activities outside of Volvo Car Group and current board assignments and similar: Vice chairman of IF Metall, Gothen - burg. Holdings in Volvo Car AB (publ.), own and related parties: 538 B shares.1) 2) 1) Information on holdings in shares is per 16 February 2026. 2) For information on transactions, please refer to the website of the Swedish Financial Supervisory Authority. PDMR transactions register | Finans- inspektionen OVERVIEW 3 MARKET 15 OUR STRATEGIC FRAMEWORK 18 DIRECTORS’ REPORT 29 RISK 36 CORPORATE GOVERNANCE 42 CORPORATE GOVERNANCE REPORT BOARD OF DIRECTORS EXECUTIVE MANAGEMENT TEAM EXTENDED EXECUTIVE MANAGEMENT TEAM AUDITOR’S REPORT FINANCIALS 61 SUSTAINABILITY 130 THE SHARE 220 OUR HERITAGE 222 55 VOLVO CAR GROUP / CORPORATE GOVERNANCE / EMPLOYEE REPRESENTATIVES ===== SIDA 56 ===== Executive Management Team HÅKAN SAMUELSSON PRESIDENT AND CEO Born 1951. Member of EMT since 2025. Education: Master of Science in Mechanical Engineering from KTH Royal Institute of Technology, Sweden. Principal activities outside of Volvo Car Group and current board assign - ments and similar: Board member in ABB E-Mobility, Modular Management Group Stockholm AB and Business Sweden. Professional experience: Former CEO of MAN AG. Previous experience from executive management (EVP) at Scania Group. Board member of Volvo Car AB from 2010-2022 and President and CEO of Volvo Car AB from 2012– 2022. Previous Chairman of Polestar Automotive Holding UK LLC. Previous Board member of Lynk & Co Investment Co., Ltd., Lynk & Co Europe AB, AB Volvo, China-Euro Vehicle Technology Aktiebolag and Zenuity AB. Previous Board member of Ideella föreningen Teknikarbetsgivarna i Sverige and Ideella föreningen Teknikföretagen i Sverige. Previous senior advisor to Geely Sweden Holdings AB. Holdings in Volvo Car AB (publ.), own and related parties: 2,186,631 shares and 2,500,000 call options. 1) 2) 3) Håkan Samuelsson is as CEO not independent in relation to the company and the Executive Management Team but he is independent in relation to the company’s major shareholders. 1) Information on holdings in shares is per 16 February 2026. 2) For information on transactions, please refer to the website of the Swedish Financial Supervisory Authority. PDMR transactions register | Finansinspektionen 3) The call options have been issued by Nordea Bank Abp. The term is 2 years, and each call option entitles the holder to acquire one B share in Volvo Car AB at an exercise price of SEK 53. HELEN HU GENERAL COUNSEL & CHIEF CORPORATE AFFAIRS OFFICER Born 1976. Member of EMT since 2024. Education: Juris Doctor, cum laude, from University of Minnesota Law school. Current board assignments and similar: – Professional experience: Previous experience within Volvo Cars as Head of Legal, deputy General Counsel, Managing Director of Volvo Car Switzerland, Head of Legal and Deputy CEO for Volvo Car Asia Pacific. Prior to that expe - rience at among others General Counsel, Asia at Luxottica Group S.p.A. Holdings in Volvo Car AB (publ.), own and related parties: 52,304 B shares.1) 2) FREDRIK HANSSON CHIEF FINANCIAL OFFICER Born 1982. Member of EMT since 2025. Education: Master of Science in Finance from studies at Gothenburg School of Business, Economics and Law. Current Board assignments and similar: Board member in Wendelsberg Invest AB. Professional experience: Previous experience within Volvo Cars as deputy CFO and member of Volvo Cars’ Group Management Team and Head of Global Controlling & Performance Steering. Member of the board at NOVO Energy AB. Partner at McKinsey & Company. Holdings in Volvo Car AB (publ.), own and related parties: 34,210 B shares.1) 2) OVERVIEW 3 MARKET 15 OUR STRATEGIC FRAMEWORK 18 DIRECTORS’ REPORT 29 RISK 36 CORPORATE GOVERNANCE 42 CORPORATE GOVERNANCE REPORT BOARD OF DIRECTORS EXECUTIVE MANAGEMENT TEAM EXTENDED EXECUTIVE MANAGEMENT TEAM AUDITOR’S REPORT FINANCIALS 61 SUSTAINABILITY 130 THE SHARE 220 OUR HERITAGE 222 56 VOLVO CAR GROUP / CORPORATE GOVERNANCE / EXECUTIVE MANAGEMENT TEAM ===== SIDA 57 ===== 1) Information on holdings in shares is per 16 February 2026. 2) For information on transactions, please refer to the website of the Swedish Financial Supervisory Authority. PDMR transactions register | Finansinspektionen ERIK SEVERINSON CHIEF COMMERCIAL OFFICER Born 1979. Member of EMT since 2024. Education: MSc at University of Gothenburg, School of Business, Economics and Law. Studies at Universität Mannheim and WHU - Otto Beisheim School of Management. Current Board assignments and similar: Chairman of the Board of VCLC Services AB. Professional experience: Various roles within Volvo Car Group since 2004, for example Chief Product & Strategy Officer and Head of Strategy & Pro - gram Management. Holdings in Volvo Car AB (publ.), own and related parties: 17,896 B shares.1) 2) FRANCESCA GAMBONI CHIEF INDUSTRIAL OPERATIONS OFFICER Born 1966. Member of EMT since 2024. Education: Master of Science in Industrial Technology Engineering from Politecnico di Milano. Current Board assignments and similar: Member of the Board of Polestar Automotive Holding UK PLC and member of the Board of E-mobility Europe Professional experience: Chief Supply Chain Officer at Accell, Senior Vice President Global Supply Chain at Stellantis, Nordic Operations Director at L’Oreal, Vice President at Renault-Nissan. Roles previous to that include time at Alcan (now Rio Tinto), Bosch and Price Waterhouse. Previous member of the supervisory board of Opel, Gefco and Headmind partners. Holdings in Volvo Car AB (publ.), own and related parties: 20,000 B shares.1) 2) HANNA FAGER CHIEF PEOPLE OFFICER Born 1975. Member of EMT since 2016. Education: Bachelor of Science in Human Resource Development, Labour Relations from University West, Sweden. Studies in labour law and EU law at Halmstad University. Current Board assignments and similar: Vice chairman of Teknikföretagen. Professional experience: Several positions within Volvo Car Group, such as SVP Corporate Functions, Senior Director HR Marketing, Sales & Services, VP HR, Centre of Expertise and VP Employee & Benefits. Holdings in Volvo Car AB (publ.), own and related parties: 43,600 B shares.1) 2) OVERVIEW 3 MARKET 15 OUR STRATEGIC FRAMEWORK 18 DIRECTORS’ REPORT 29 RISK 36 CORPORATE GOVERNANCE 42 CORPORATE GOVERNANCE REPORT BOARD OF DIRECTORS EXECUTIVE MANAGEMENT TEAM EXTENDED EXECUTIVE MANAGEMENT TEAM AUDITOR’S REPORT FINANCIALS 61 SUSTAINABILITY 130 THE SHARE 220 OUR HERITAGE 222 57 VOLVO CAR GROUP / CORPORATE GOVERNANCE / EXECUTIVE MANAGEMENT TEAM ===== SIDA 58 ===== 1) Information on holdings in shares is per 16 February 2026. 2) For information on transactions, please refer to the website of the Swedish Financial Supervisory Authority. PDMR transactions register | Finansinspektionen ANDERS BELL CHIEF ENGINEERING & TECHNOLOGY OFFICER Born 1974. Member of EMT since 2024. Education: Engineering and Product Development at Halmstad University. Current Board assignments and similar: — Professional experience: Previously Automotive Engineering at Volvo Cars 1998–2016 and Tesla 2016–2022. Holdings in Volvo Car AB (publ.), own and related parties: 0 B shares.1) 2) MICHAEL FLEISS THOMAS INGENLATH CHIEF STRATEGY AND PRODUCT OFFICER Born 1973. Member of EMT since 2025. Education: Mechanical Engineering at University of Applied Science Lübeck Current Board assignments and similar: — Professional experience: Global Sales Officer at Horse Powertrain Ltd, CEO at Aurobay Sweden, Managing Director at Powertrain Engineering Sweden, Vice President roles at Volvo Cars, Engineering Director roles at Bentley Motors and Volkswagen AG. Holdings in Volvo Car AB (publ.), own and related parties: 45,500 B shares.1) 2) CHIEF DESIGN OFFICER Born 1964. Member of EMT since 2026. Education: MA in Vehicle Design from Royal College of Art, London. Undergraduate Design Degree from Fachhochschule für Gestaltung in Pforzheim, Germany. Current Board assignments and similar: — Professional experience: Senior Design Adviser for Geely Group 2025- 2026, Previously CEO of Polestar, Senior Vice President of Design at Volvo Cars and Director of Design at Volkswagen Design Center. Holdings in Volvo Car AB (publ.), own and related parties: 63,044 B shares.1) 2) OVERVIEW 3 MARKET 15 OUR STRATEGIC FRAMEWORK 18 DIRECTORS’ REPORT 29 RISK 36 CORPORATE GOVERNANCE 42 CORPORATE GOVERNANCE REPORT BOARD OF DIRECTORS EXECUTIVE MANAGEMENT TEAM EXTENDED EXECUTIVE MANAGEMENT TEAM AUDITOR’S REPORT FINANCIALS 61 SUSTAINABILITY 130 THE SHARE 220 OUR HERITAGE 222 58 VOLVO CAR GROUP / CORPORATE GOVERNANCE / EXECUTIVE MANAGEMENT TEAM ===== SIDA 59 ===== FOR MORE INFORMATION ABOUT THE EMTe MEMBERS PLEASE SEE INVESTORS.VOLVOCARS.COM Extended Executive Management Team AREK NOWINSKI PRESIDENT OF EMEA & APEC XIAOLIN YUAN PRESIDENT OF GREATER CHINA AKHIL KRISHNAN PRODUCT LINE OWNER 60 JOHAN TAWS HEAD OF QUALITY LUIS REZENDE PRESIDENT OF AMERICAS KARIN THORN HEAD OF PROPULSION & ENERGY GUY LEDERER HEAD OF PLANNING AND LOGISTICS LUTZ STIEGLER HEAD OF ARCHITECTURE STRATEGY MALIN VULCAN HEAD OF VEHICLE ENGINEERING FREDRIK OHLSSON HEAD OF DIGITAL CORE JENNY ÅSTRÖM HEAD OF COMMUNICATION ALWIN BAKKENES HEAD SOFTWARE ENGINEERING JESSICA SPAN HEAD OF CUSTOMER EXCELLENCE NICOLAS GUIBERT HEAD OF PRODUCTION ALEXANDER PETROFSKI PRODUCT LINE OWNER 30/40 ERIC APODE HEAD OF PROCUREMENT OSCAR BERTILSSON OLSBORG PRODUCT LINE OWNER 90 & HEAD OF COMMERCIAL OPERATIONS OVERVIEW 3 MARKET 15 OUR STRATEGIC FRAMEWORK 18 DIRECTORS’ REPORT 29 RISK 36 CORPORATE GOVERNANCE 42 CORPORATE GOVERNANCE REPORT BOARD OF DIRECTORS EXECUTIVE MANAGEMENT TEAM EXTENDED EXECUTIVE MANAGEMENT TEAM AUDITOR’S REPORT FINANCIALS 61 SUSTAINABILITY 130 THE SHARE 220 OUR HERITAGE 222 59 VOLVO CAR GROUP / CORPORATE GOVERNANCE / EXTENDED EXECUTIVE MANAGEMENT TEAM ===== SIDA 60 ===== Auditor’s report on the corporate governance statement To the general meeting of the shareholders in Volvo Car AB (publ.) corporate identity number 556810-8988 Engagement and responsibility It is the board of directors who is responsible for the corporate gov - ernance statement for the financial year 2025-01-01–2025-12-31 on pages 42–59 and that it has been prepared in accordance with the Annual Accounts Act. The scope of the audit Our examination has been conducted in accordance with FAR’s standard RevR 16 The auditor’s examination of the corporate gov - ernance statement. This means that our examination of the corpo - rate governance statement is different and substantially less in scope than an audit conducted in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. We believe that the examination has provided us with suffi - cient basis for our opinions. Opinions A corporate governance statement has been prepared. Disclosures in accordance with chapter 6 section 6 the second paragraph points 2–6 the Annual Accounts Act and chapter 7 section 31 the second paragraph the same law are consistent with the annual accounts and the consolidated accounts and are in accordance with the Annual Accounts Act. Gothenburg, 4 March, 2026 Deloitte AB Signature on Swedish original Fredrik Jonsson Authorized Public Accountant This is a translation of the Swedish language original. In the event of any differences between this translation and the Swedish language original, the latter shall prevail. OVERVIEW 3 MARKET 15 OUR STRATEGIC FRAMEWORK 18 DIRECTORS’ REPORT 29 RISK 36 CORPORATE GOVERNANCE 42 CORPORATE GOVERNANCE REPORT BOARD OF DIRECTORS EXECUTIVE MANAGEMENT TEAM EXTENDED EXECUTIVE MANAGEMENT TEAM AUDITOR’S REPORT FINANCIALS 61 SUSTAINABILITY 130 THE SHARE 220 OUR HERITAGE 222 60 VOLVO CAR GROUP / CORPORATE GOVERNANCE ===== SIDA 61 ===== Financials OVERVIEW 3 MARKET 15 OUR STRATEGIC FRAMEWORK 18 DIRECTORS’ REPORT 29 RISK 36 CORPORATE GOVERNANCE 42 FINANCIALS SUSTAINABILITY 130 THE SHARE 220 OUR HERITAGE 222 61 VOLVO CAR GROUP ===== SIDA 62 ===== CONTENTS FINANCIAL REPORT CONSOLIDATED FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS PROPOSED DISTRIBUTION OF NON-RESTRICTED EQUITY AUDITOR’S REPORT 63 Consolidated Income Statements 65 Consolidated Comprehensive Income 66 Consolidated Balance Sheets 119 Income Statements and Comprehensive Income 119 Balance Sheets 67 Consolidated Statement of Changes in Equity 69 Consolidated Statement of Cash Flows 120 Statement of Changes in Equity 120 Statement of Cash Flows NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS 70 Note 1 General information for financial reporting in Volvo Car Group 72 Note 2 Revenue 74 Note 3 Expenses by nature 74 Note 4 Related party transactions 75 Note 5 Audit fees 75 Note 6 Other operating income and expenses 76 Note 7 Leases 77 Note 8 Employees and remuneration 80 Note 9 Share-based remuneration 84 Note 10 Government grants 84 Note 11 Other financial income and expenses 84 Note 12 Investments in joint ventures and associates 88 Note 13 Taxes 89 Note 14 Earnings per share 89 Note 15 Intangible assets 91 Note 16 Tangible assets 121 Note 1 Accounting policies 121 Note 2 Critical accounting estimates and judgements 121 Note 3 Related party transactions 122 Note 4 Audit fees 122 Note 5 Remuneration to the board of directors 122 Note 6 Other financial income and expenses 93 Note 17 Inventories 93 Note 18 Accounts receivable and other current and non-current assets 94 Note 19 Financial instruments and financial risks 106 Note 20 Marketable securities and cash and cash equivalents 106 Note 21 Equity 107 Note 22 Post-employment benefits 111 Note 23 Current and other non-current provisions 112 Note 24 Other current and non-current liabilities 112 Note 25 Contingent liabilities and pledged assets 112 Note 26 Cash flow statements 113 Note 27 Business combinations and divestments 114 Note 28 Segment reporting 115 Alternative performance measures 122 Note 7 Taxes 122 Note 8 Participation in subsidiaries 125 Note 9 Equity 125 Note 10 Financial instruments 125 Note 11 Contingent liabilities 63 119 126 127 70 121 OVERVIEW 3 MARKET 15 OUR STRATEGIC FRAMEWORK 18 DIRECTORS’ REPORT 29 RISK 36 CORPORATE GOVERNANCE 42 FINANCIALS CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ALTERNATIVE PERFORMANCE MEASURES PARENT COMPANY FINANCIAL STATEMENTS NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS PROPOSED DISTRIBUTION OF NON-RESTRICTED EQUITY AUDITOR’S REPORT SUSTAINABILITY 130 THE SHARE 220 OUR HERITAGE 222 62 VOLVO CAR GROUP / FINANCIALS ===== SIDA 63 ===== SEKm Note 2025 2024 Revenue 2 357,263 400,234 Cost of sales 3 –297,0421) –320,821 Gross income 60,221 79,413 Research and development expenses 3, 15 –26,0671) –16,983 Selling expenses 3 –23,213 –25,409 Administrative expenses 3 –10,476 –12,038 Other operating income and expenses 6 –8161) 2,057 Share of income in joint ventures and associates 12 654 –4,722 Operating income 4, 5, 7, 8, 9, 10 303 22,318 Interest income and similar credits 19 1,929 2,190 Interest expenses and similar charges 19 –1,251 –1,164 Other financial income and expenses 11 –1,647 –625 Income before tax –666 22,719 Income tax 13 –2,302 –6,785 Net income –2,968 15,934 Net income attributable to Owners of the parent company 174 15,401 Non-controlling interests –3,142 533 –2,968 15,934 Basic earnings per share (SEK) 14 0.06 5.17 Diluted earnings per share (SEK) 14 0.06 5.17 1) Impairment charge for the EX90 and ES90 platform CGU’s lifecycle profitability made in the second quarter 2025. Consolidated Income Statements Income and result Non-operating items affecting comparability are excluded from this text if not otherwise stated . Volvo Cars’ revenue amounted to SEK 357.3 (400.2) bn and whole - sale volumes declined by –11 per cent to 693.0 (782.6) thousand cars. The revenue decrease was primarily explained by lower wholesale volumes of SEK –34.4 bn and unfavourable sales mix and pricing of SEK –4.3 bn, partially offset by increased used car sales of SEK 6.0 bn. Revenue was also affected by the one-time sale of subscription car portfolios, amounting to SEK 5.2 (2.7) bn, which had no material impact on gross income. Foreign exchange rates had an unfavourable impact on revenue due to a stronger SEK compared to last year, amounting to SEK –14.1 bn. See complete revenue bridge on the next page. This year was impacted by a one-off non-cash impairment charge for the EX90 and ES90 platform due to reduced lifecycle profitabil - ity, which in total amounted to SEK –11.4 bn. Of this amount, SEK –4.0 bn impacted cost of sales and most of the remaining amount impacted research and development expenses. The year was also impacted by a restructuring cost as a part of the turnaround plan, which amounted to SEK –0.8 bn. Gross income decreased to SEK 64.3 (79.4) bn, resulting in a gross margin of 18.0 (19.8) per cent. Gross margin was impacted unfavourably by sales mix and pricing, higher US tariffs on imported goods and used cars. It was partially offset by material cost savings and revenue from earned emission credits which increased to SEK 3.5 (1.0) bn. Foreign exchange rate effects in the cost of sales were positive compared to last year, amounting to SEK 12.8 bn. The net effect of foreign exchange rates in gross income was negative versus last year, amounting to an impact of SEK –1.3 bn. Gross income including items affecting com - parability amounted to SEK 60.2 (79.4) bn with the corresponding margin of 16.9 (19.8) per cent. EBIT amounted to SEK 12.5 (24.0) bn, resulting in an EBIT margin of 3.5 (6.0) per cent. The decrease was mainly a consequence of sales mix and pricing and lower wholesale volume. These effects were partially offset by improved cost efficiency within selling and administrative expenses, as well as by the unrecognised share of Polestar losses. The exchange rate effects had a negative impact on EBIT compared to last year of SEK –1.7 bn. EBIT including items affecting comparability amounted to SEK 0.3 (22.3) bn with the corresponding margin of 0.1 (5.6) per cent. See complete EBIT bridge on the next page. Net financial items decreased to SEK –1.0 (0.4) bn, mainly as a result of changes in market valuations of financial investments and lower interest income attributable to lower interest rates. The effective tax rate increased to 42.2 (27.8) per cent. The increase was mainly explained by valuation adjustments to deferred tax assets in China of SEK –2.3 bn, of which SEK –1.8 bn related to deferred tax assets not recognised during the year. Net income was SEK 6.7 (17.6) bn, representing 1.9 (4.4) per cent of revenue. Net income including items affecting comparability amounted to SEK –3.0 (15.9) bn with the associated effective tax rate of –345.6 (29.9) per cent. Basic earnings per share amounted to SEK 0.06 (5.17). OVERVIEW 3 MARKET 15 OUR STRATEGIC FRAMEWORK 18 DIRECTORS’ REPORT 29 RISK 36 CORPORATE GOVERNANCE 42 FINANCIALS CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ALTERNATIVE PERFORMANCE MEASURES PARENT COMPANY FINANCIAL STATEMENTS NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS PROPOSED DISTRIBUTION OF NON-RESTRICTED EQUITY AUDITOR’S REPORT SUSTAINABILITY 130 THE SHARE 220 OUR HERITAGE 222 VOLVO CAR GROUP / FINANCIALS / CONSOLIDATED FINANCIAL STATEMENTS 63 ===== SIDA 64 ===== Research and development spending, SEKm 2025 2024 Research and development spending –26,378 –28,308 Capitalised development costs 15,855 18,724 Amortisation of capitalised development costs –8,171 –7,399 Impairment of capitalised development costs –7,373 — Research and development expenses –26,067 –16,983 Changes to Revenue, SEKbn Full year Revenue 2024 400.2 Volume –34.4 Sales mix and pricing –4.3 Sale of licences 1.3 Foreign exchange rates –14.1 Contract manufacturing –2.2 Other1) 10.8 Revenue 2025 357.3 Change, % –11 1) Including used cars, one-time sale of subscription car portfolios, emission credits as well as parts and accessories. Items affecting comparability, SEKbn 2025 2024 Impairment charge for the EX90 and ES90 platform –11.4 — Restructuring costs –0.8 — Impairment of JV-shareholding in NOVO Energy AB — –1.7 Total –12.2 –1.7 Changes to Operating income, SEKbn Full year EBIT 2024 22.3 Volume –7.9 Sales mix and pricing –9.4 Sale of licences 1.2 Foreign exchange rates –1.7 Share of income in JVs and associates 2) 3.7 Items affecting comparability –10.5 Other3) 2.6 EBIT 2025 0.3 Change, % –99 2) Positive change mainly due to unrecognised share of Polestar losses. 3) Includes personnel and material cost efficiencies, emission credits, change in capitalised expenses, parts and accessories as well as depreciation and amortisation. OVERVIEW 3 MARKET 15 OUR STRATEGIC FRAMEWORK 18 DIRECTORS’ REPORT 29 RISK 36 CORPORATE GOVERNANCE 42 FINANCIALS CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ALTERNATIVE PERFORMANCE MEASURES PARENT COMPANY FINANCIAL STATEMENTS NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS PROPOSED DISTRIBUTION OF NON-RESTRICTED EQUITY AUDITOR’S REPORT SUSTAINABILITY 130 THE SHARE 220 OUR HERITAGE 222 VOLVO CAR GROUP / FINANCIALS / CONSOLIDATED FINANCIAL STATEMENTS 64 ===== SIDA 65 ===== SEKm 2025 2024 Net income –2,968 15,934 Other comprehensive income Items that will not be reclassified subsequently to income statement: Remeasurements of provisions for post-employment benefits 2,403 –312 Tax on items that will not be reclassified to income statement –496 55 Items that have been or may be reclassified subsequently to income statement: Translation difference on foreign operations –4,646 965 Translation difference of hedge instruments of net investments in foreign operations 749 –316 Change in fair value of cash flow hedge related to currency and commodity price risks 8,591 –5,383 Tax on items that have been or may be reclassified to income statement –1,924 1,174 Other comprehensive income, net of income tax 4,677 –3,817 Total comprehensive income 1,709 12,117 Total comprehensive income attributable to Owners of the parent company 5,397 11,285 Non–controlling interests –3,688 832 1,709 12,117 Consolidated Comprehensive Income OVERVIEW 3 MARKET 15 OUR STRATEGIC FRAMEWORK 18 DIRECTORS’ REPORT 29 RISK 36 CORPORATE GOVERNANCE 42 FINANCIALS CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ALTERNATIVE PERFORMANCE MEASURES PARENT COMPANY FINANCIAL STATEMENTS NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS PROPOSED DISTRIBUTION OF NON-RESTRICTED EQUITY AUDITOR’S REPORT SUSTAINABILITY 130 THE SHARE 220 OUR HERITAGE 222 VOLVO CAR GROUP / FINANCIALS / CONSOLIDATED FINANCIAL STATEMENTS 65 ===== SIDA 66 ===== SEKm Note 31 Dec 2025 31 Dec 2024 ASSETS Non-current assets Intangible assets 15 82,965 83,781 Tangible assets 7, 16 99,391 107,124 Investments in joint ventures and associates 12 7,003 8,998 Other long-term securities holdings 19 10,454 12,753 Deferred tax assets1) 13 8,363 12,260 Other non-current interest-bearing receivables 19 1,235 1,440 Non-current derivative assets 19 1,743 283 Other non-current assets1) 18 4,217 2,984 Total non-current assets 215,371 229,623 Current assets Inventories 17 59,024 62,455 Accounts receivable 4, 18 21,241 22,780 Current tax assets 1,284 1,854 Current derivative assets 19 4,923 485 Other current assets 18 13,764 14,665 Marketable securities 20 1 — Cash and cash equivalents 20 57,564 56,373 Total current assets 157,801 158,612 TOTAL ASSETS 373,172 388,235 Consolidated Balance Sheets SEKm Note 31 Dec 2025 31 Dec 2024 EQUITY & LIABILITIES Equity 21 Equity attributable to owners of the parent company 147,079 137,461 Non-controlling interests 1,299 4,738 Total equity 148,378 142,199 Non-current liabilities Provisions for post-employment benefits 22 5,853 8,111 Deferred tax liabilities 13 9,864 11,080 Other non-current provisions 23 8,528 9,501 Liabilities to credit institutions 19 6,723 3,885 Non-current bonds 19 21,645 18,826 Non-current contract liabilities to customers 2 8,605 10,755 Other non-current interest-bearing liabilities 7, 19 5,355 7,745 Non-current derivative liabilities 19 253 1,252 Other non-current liabilities 4, 24 6,714 5,298 Total non-current liabilities 73,540 76,453 Current liabilities Current provisions 23 8,356 11,379 Liabilities to credit institutions 19 922 1,059 Current bonds 19 1,500 5,723 Current contract liabilities to customers 2 31,264 34,997 Accounts payable 4 57,768 56,479 Current tax liabilities 1,322 1,246 Other current interest-bearing liabilities 7, 19 1,570 2,490 Current derivative liabilities 19 485 2,890 Other current liabilities 24 48,067 53,320 Total current liabilities 151,254 169,583 TOTAL EQUITY & LIABILITIES 373,172 388,235 1) In 2025, Volvo Cars has adjusted the presentation of certain unused tax credits in the US, resulting in a reclassification amounting to SEK 1,099 (1,278) m, to more accurately reflect the nature of these items. OVERVIEW 3 MARKET 15 OUR STRATEGIC FRAMEWORK 18 DIRECTORS’ REPORT 29 RISK 36 CORPORATE GOVERNANCE 42 FINANCIALS CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ALTERNATIVE PERFORMANCE MEASURES PARENT COMPANY FINANCIAL STATEMENTS NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS PROPOSED DISTRIBUTION OF NON-RESTRICTED EQUITY AUDITOR’S REPORT SUSTAINABILITY 130 THE SHARE 220 OUR HERITAGE 222 VOLVO CAR GROUP / FINANCIALS / CONSOLIDATED FINANCIAL STATEMENTS 66 ===== SIDA 67 ===== SEKm Share capital1) Share premium Other contributed capital Currency translation reserve Other reserves Retained earnings Attributable to owners of the parent Non- controlling interests Total Balance at 1 January 2024 61 31,654 8,452 4,092 2,016 80,096 126,371 4,114 130,485 Net income — — — — — 15,401 15,401 533 15,934 Other comprehensive income Remeasurements of provisions for post-employment benefits — — — — — –312 –312 — –312 Translation difference on foreign operations — — — 666 — — 666 299 965 Translation difference of hedge instruments of net investments in foreign operations — — — –316 — — –316 — –316 Change in fair value of cash flow hedge related to currency and commodity price risks — — — — –5,383 — –5,383 — –5,383 Tax attributable to items recognised in other comprehensive income — — — 65 1,109 55 1,229 — 1,229 Other comprehensive income — — — 415 –4,274 –257 –4,116 299 –3,817 Total comprehensive income — — — 415 –4,274 15,144 11,285 832 12,117 Transactions with owners Capital contribution from non-controlling interest2) — — — — — — — 3 3 Divestment of non-controlling interest 2) — — — — — 1 1 –211 –210 Distribution of shares3) –30 — — — — –60 –90 — –90 Bonus issue3) 30 — — — — –30 — — — Acquisition of treasury shares 4) — — — — — –190 –190 — –190 Issue of treasury shares 4) — — — — — 67 67 — 67 Share-based payments4) — — — — — 17 17 — 17 Transactions with owners — — — — — –195 –195 –208 –403 Balance at 31 December 2024 61 31,654 8,452 4,507 –2,258 95,045 137,461 4,738 142,199 Consolidated Statement of Changes in Equity 1) Share capital amounted to SEK 60,947,709. 2) For further information, see Note 21 – Equity and Note 8 – Participation in subsidiaries (Parent company). 3) For further information, see Note 12 – Investments in joint ventures and associates and Note 21 – Equity. 4) For further information, see Note 9 – Share-based remuneration and Note 21 – Equity. OVERVIEW 3 MARKET 15 OUR STRATEGIC FRAMEWORK 18 DIRECTORS’ REPORT 29 RISK 36 CORPORATE GOVERNANCE 42 FINANCIALS CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ALTERNATIVE PERFORMANCE MEASURES PARENT COMPANY FINANCIAL STATEMENTS NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS PROPOSED DISTRIBUTION OF NON-RESTRICTED EQUITY AUDITOR’S REPORT SUSTAINABILITY 130 THE SHARE 220 OUR HERITAGE 222 VOLVO CAR GROUP / FINANCIALS / CONSOLIDATED FINANCIAL STATEMENTS 67 ===== SIDA 68 ===== SEKm Share capital1) Share premium Other contributed capital Currency translation reserve Other reserves Retained earnings Attributable to owners of the parent Non- controlling interests Total Balance at 1 January 2025 61 31,654 8,452 4,507 –2,258 95,045 137,461 4,738 142,199 Net income — — — — — 174 174 –3,142 –2,968 Other comprehensive income Remeasurements of provisions for post-employment benefits — — — — — 2,403 2,403 — 2,403 Translation difference on foreign operations — — — –4,100 — — –4,100 –546 –4,646 Translation difference of hedge instruments of net investments in foreign operations — — — 749 — — 749 — 749 Change in fair value of cash flow hedge related to currency and commodity price risks — — — — 8,591 — 8,591 — 8,591 Tax attributable to items recognised in other comprehensive income — — — –154 –1,770 – 496 –2,420 — –2,420 Other comprehensive income — — — –3,505 6,821 1,907 5,223 –546 4,677 Total comprehensive income — — — –3,505 6,821 2,081 5,397 –3,688 1,709 Transactions with owners Divestment of non-controlling interest 2) — — — — — –289 –289 249 –40 Divestment of joint venture under common control3) — — — — — 4,656 4,656 — 4,656 Distribution of shares — — — — — 3 3 — 3 Acquisition of treasury shares 4) — — — — — –219 –219 — –219 Issue of treasury shares 4) — — — — — 126 126 — 126 Share-based payments4) — — — — — –56 –56 — –56 Transactions with owners — — — — — 4,221 4,221 249 4,470 Balance at 31 December 2025 61 31,654 8,452 1,002 4,563 101,347 147,079 1,299 148,378 1) Share capital amounted to SEK 60,947,709. 2) For further information, see Note 21 – Equity, Note 27 - Business combinations and divestments and Note 8 – Participation in subsidiaries (Parent company). 3) For further information, see Note 4 – Related party transactions and Note 12 – Investments in joint ventures and associates. 4) For further information, see Note 9 – Share-based remuneration and Note 21 – Equity. Consolidated Statement of Changes in Equity Equity Total equity increased to SEK 148.4 (142.2) bn, resulting in an equity ratio of 39.8 (36.6) per cent. The change is mainly attributable to divestment under common control (Lynk & Co) of SEK 4.6 bn, as well as a positive effect in other comprehensive income of SEK 4.7 bn. The increase was offset by a net loss amounting to SEK –3.0 bn. The change in other comprehensive income is related to a foreign exchange translation effect, including hedges of net investments in foreign operations of SEK –4.0 bn (net of tax). Remeasurements of provisions for post-employment benefits had an effect of SEK 1.9 bn (net of tax). The change in fair value of cash flow hedge reserve related to currency and commodity price risks had a positive effect of SEK 6.8 bn (net of tax). The change in value of cash flow hedges is mainly due to positive effects from increased prices of raw materials and appreciated SEK compared to most of the major currencies. OVERVIEW 3 MARKET 15 OUR STRATEGIC FRAMEWORK 18 DIRECTORS’ REPORT 29 RISK 36 CORPORATE GOVERNANCE 42 FINANCIALS CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ALTERNATIVE PERFORMANCE MEASURES PARENT COMPANY FINANCIAL STATEMENTS NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS PROPOSED DISTRIBUTION OF NON-RESTRICTED EQUITY AUDITOR’S REPORT SUSTAINABILITY 130 THE SHARE 220 OUR HERITAGE 222 VOLVO CAR GROUP / FINANCIALS / CONSOLIDATED FINANCIAL STATEMENTS 68 ===== SIDA 69 ===== Consolidated Statement of Cash Flows SEKm Note 2025 2024 OPERATING ACTIVITIES Operating income 303 22,318 Depreciation and amortisation of non-current assets 15, 16 23,945 22,730 Dividends received from joint ventures and associates 205 213 Interest and similar items received 1,929 2,190 Interest and similar items paid –1,538 –1,623 Other financial items –1,963 –836 Income tax paid –3,724 –4,448 Adjustments for other non-cash items 26 6,281 2,754 25,438 43,298 Movements in working capital Change in inventories 2,353 –2,757 Change in accounts receivable –84 –1,386 Change in accounts payable 7,205 –7,539 Change in provisions –1,867 –1,905 Change in contract liabilities to customers 644 8,709 Change in other working capital 936 8,952 Cash flow from movements in working capital 9,187 4,074 Cash flow from operating activities 34,625 47,372 INVESTING ACTIVITIES Investments in shares and participations 27 280 –1,901 Divestment in shares and participations 12, 27 7,716 –217 Loans to affiliated companies1) –2,727 –75 Repayment of loans from affiliated companies 2) 1,688 — Investments in intangible assets –17,252 –19,774 Investments in tangible assets –22,825 –25,259 Disposal of tangible assets 872 981 Other 72 — Cash flow from investing activities –32,176 –46,245 Cash flow from operating and investing activities 2,449 1,127 SEKm Note 2025 2024 FINANCING ACTIVITIES Proceeds from credit institutions 4,947 199 Proceeds from bond issuance 19 5,476 5,857 Acquisition of treasury shares –219 –190 Repayment of bond –5,732 –6,936 Repayment of liabilities to credit institutions –1,631 –862 Repayment of interest-bearing liabilities –2,108 –2,053 Matured marketable securities 20 –1 10,269 Other 996 –368 Cash flow from financing activities 1,728 5,916 Cash flow for the year 4,177 7,043 Cash and cash equivalents at beginning of year 56,373 47 861 Exchange difference on cash and cash equivalents –2,986 1,469 Cash and cash equivalents at end of year 20 57,564 56,373 1) In the second quarter 2025, Volvo Cars made a payment under the financial guarantee arrangement described in Note 25 – Contingent liabilities and pledged assets, relating to the loans of a UK entity subject to a purchase option. 2) In the third quarter 2025, Volvo Cars received repayment of a loan in connection with a divestment of a subsidiary. Net financial position and liquidity Total cash and cash equivalents together with marketable securities, amounted to SEK 57.6 (56.4) bn. Net cash was SEK 26.9 (27.1) bn, with the decrease primarily driven by working capital. Liquidity amounted to SEK 80.8 (88.5) bn, which includes undrawn credit facilities of SEK 23.3 (32.2) bn. Cash flow from operating activities was positive, amounting to SEK 34.6 (47.4) bn, and included a one-off impact of SEK 11.4 bn in adjustments for other non-cash items, primarily reflecting a non-cash impairment charge related to the EX90 and ES90 platforms following a reassessment of their lifecycle profitability. The change in working capital amounted to SEK 9.2 (4.1) bn, primarily driven by change in accounts payable SEK 7.2 (–7.5) bn, due to increased production. Cash flow from investing activities amounted to SEK –32.2 (–46.2) bn, mainly driven by investments in tangible and intangible asset. As the major investments in the new product architecture are being finalised, a reduction in investment levels is seen and expected to continue, supported by continued cost conscious - ness. The investing activities were partially offset by the payment from the divestment of the 30 per cent shareholding in Lynk & Co, which amounted to SEK 7.8 bn. Cash flow from financing activities totalled SEK 1.7 (5.9) bn, primarily attributable to the issuance of a new green bond and the drawdown of a credit facility from the European Investment Bank, partially offset by the repayment of an existing bond. OVERVIEW 3 MARKET 15 OUR STRATEGIC FRAMEWORK 18 DIRECTORS’ REPORT 29 RISK 36 CORPORATE GOVERNANCE 42 FINANCIALS CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ALTERNATIVE PERFORMANCE MEASURES PARENT COMPANY FINANCIAL STATEMENTS NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS PROPOSED DISTRIBUTION OF NON-RESTRICTED EQUITY AUDITOR’S REPORT SUSTAINABILITY 130 THE SHARE 220 OUR HERITAGE 222 VOLVO CAR GROUP / FINANCIALS / CONSOLIDATED FINANCIAL STATEMENTS 69 ===== SIDA 70 ===== NOTE 1 GENERAL INFORMATION FOR FINANCIAL REPORTING IN VOLVO CAR GROUP Basis of preparation The consolidated financial statements of Volvo Car AB (publ.) have been prepared in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), as adopted by the European Union and the Swedish Annual Accounts Act. In addition, RFR 1 Supplementary Rules for Groups has been applied, a standard issued by the Swed - ish Financial Reporting Board. RFR 1 specifies mandatory additions to the IFRS disclosure requirements in accordance with the Swedish Annual Accounts Act. Group companies apply the same accounting policies, irrespective of national legislation, as defined in Volvo Car Group accounting directives and they have been applied consist - ently for all periods, unless otherwise stated. The financial statements are based on cost, apart from certain financial instruments, provisions for pensions and other post-em - ployment benefits which are reported at fair value. Preparation of the financial statements in accordance with IFRS requires the Com - pany’s Executive Management and the Board of Directors to make estimations and judgements that affect the value of the reported assets, liabilities, income and expenses. Estimates and judgements will impact the values of assets and liabilities. The actual outcome (value) may differ from these estimates and judgements and correc - tions may be necessary to make. Therefore, the estimates and judgements are reviewed on a regular basis. All accounting policies and critical accounting estimates and judgements considered material to Volvo Car Group are described in conjunction with each note. When a new accounting policy has been implemented or when there has been changes in disclosures this is described as part of the relevant note. In order to avoid duplication of information, cross-references have been made between different parts of the annual report. action failure and fulfilment of the Paris Agreement. Volvo Cars continuously evaluates how climate change transitional and physical risks affects our business strategy and operations as sustainability is deeply integrated in our business model. In preparing the consolidated financial statements, the potential impact of climate change has been considered when developing the critical accounting estimates and judgements used by management. The financial impact relating to climate change occurs gradually as Volvo Car Group navigates the transition to electrification in line with its strategic ambitions and has not had a material effect on the financial statements as of 31 December 2025. The table included in this note identifies disclosures where considerations of climate related risks are further described, if applicable. Foreign currency The Group’s Consolidated Financial Statements are presented in Swedish Krona (SEK), which is also the Parent Company’s functional currency. Assets and liabilities denominated in foreign currencies other than the functional currency are translated to the functional currency using the balance sheet closing rate. Exchange rate differ - ences are recognised in the income statement. Exchange rate differences on operating assets and liabilities are recognised in other operating income and expenses, while exchange rate differences arising on financial assets and liabilities are recog - nised in financial income and expenses. When preparing the consolidated financial statements, items in the income statements of foreign subsidiaries are translated to SEK using monthly average exchange rates. Balance sheet items are translated into SEK using exchange rates at year-end (closing rate). Exchange rate differences arising on translation are recognised in other comprehensive income and accumulated in equity. The accu - mulated translation differences related to subsidiaries, joint ven - tures or associates are reversed to the income statement as a part of the gain/loss arising from disposal of such a company. New accounting policies New accounting policies 2025 IASB has published amendments to standards that were endorsed by EU, effective after 1 January 2025. These additions have not had any material impact on the financial statements. New accounting policies 2026 and later IASB has published standards and amendments to standards that were endorsed by EU, effective after 1 January 2026. None of the amendments are expected to have a material effect on the financial statements. The new standard IFRS 18 Presentation and Disclosure in Financial Statements was released in April 2024 and has an effec - tive date 1 January 2027. An impact assessment is currently being performed as to how this new standard will impact the financial statements. Basis of consolidation The consolidated accounts include Volvo Car AB (publ.) and its subsidiaries. Subsidiaries are all entities over which Volvo Car Group has control. Volvo Car Group controls an entity when exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. All wholly-owned subsidiaries and certain companies owned to 50 per cent or more, are consolidated, see Note 8 – Participation in subsidiaries (Parent Company). Subsidiaries are fully consolidated from the date on which control is transferred to Volvo Car Group. They are deconsolidated from the date that control ceases. When a subsidiary is not wholly-owned by Volvo Car Group, the portion of the results and equity attributable to the non-controlling interest are presented separately in the financial statements. Climate change Being an automotive industry actor, Volvo Cars acknowledges the global threat of climate change and global warming, together with the importance of our own contribution to prevent global climate Notes to the Consolidated Financial Statements All amounts are in SEKm unless otherwise stated. Amounts in brackets refer to the preceding year. OVERVIEW 3 MARKET 15 OUR STRATEGIC FRAMEWORK 18 DIRECTORS’ REPORT 29 RISK 36 CORPORATE GOVERNANCE 42 FINANCIALS CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ALTERNATIVE PERFORMANCE MEASURES PARENT COMPANY FINANCIAL STATEMENTS NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS PROPOSED DISTRIBUTION OF NON-RESTRICTED EQUITY AUDITOR’S REPORT SUSTAINABILITY 130 THE SHARE 220 OUR HERITAGE 222 VOLVO CAR GROUP / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 70 ===== SIDA 71 ===== The main exchange rates applied are presented in the table below: Average rate Close rate Country Currency 2025 2024 2025 2024 China CNY 1.34 1.47 1.32 1.51 Euro zone EUR 10.97 11.42 10.82 11.45 United Kingdom GBP 12.53 13.46 12.39 13.82 United States USD 9.48 10.51 9.22 11.03 Japan JPY 0.06 0.07 0.06 0.07 Classification of current and non-current assets and liabilities An asset is classified as current when it is held primarily for the pur - pose of trading, is expected to be realised within 12 months after the balance sheet date or consists of cash or cash equivalents, provided it is not subject to any restrictions. All other assets are classified as non-current. A liability is classified as current when it is held primar - ily for the purpose of trading or is expected to be settled within 12 months after the balance sheet date and Volvo Car Group do not have the right to defer settlement of the liability for at least 12 months after the balance sheet date. All other liabilities are classi - fied as non-current. When the criteria for being classified as a non-current asset held for sale are fulfilled and the asset or disposal group are of material value, the asset or disposal group and the related liabilities are recognised on a separate line on the balance sheet. Note Critical accounting estimates and judgements Climate consider ations Note 1 – General information for financial reporting in Volvo Car Group Note 2 – Net revenue Sales with residual value commitments, repurchase commitments and variable sales prices Note 7 – Leases Lease term and discount rate Note 10 – Government grants Assessment of reasonable assurance in complying with grant terms Note 12 – Investments in joint ventures and associates Joint control and significant influence assessments Note 13 – Taxes Recoverability of deferred tax assets Note 15 – Intangible assets Impairment testing of intangible assets, useful life Note 16 – Tangible assets Impairment testing of tangible assets, useful life Note 17 – Inventories Write down of inventories Note 19 – Financial instruments and financial risks Valuation of level 3 instruments Note 22 – Post employment benefits Assumptions in calculating benefit obligations Note 23 – Current and other non–current provisions Assumptions used in calculating product warranty, legal claims, etc. Note 25 – Contingent liabilities and pledged assets Assumptions regarding legal and supplier claims, volume commitments Note 27 – Business combinations and divestments Assessment of if a transaction is a common control transaction Note 28 – Segment Reporting Judgements regarding operating segments Climate considerations are generally incorporated in the notes under the Critical accounting estimates and judgments section, apart from Note 19 – Financial instruments and financial risks, where they are addressed under Refinancing Risk Management Status at Year End , and Note 1 – General information for financial reporting in Volvo Car Group, where they appear under the Climate change heading. OVERVIEW 3 MARKET 15 OUR STRATEGIC FRAMEWORK 18 DIRECTORS’ REPORT 29 RISK 36 CORPORATE GOVERNANCE 42 FINANCIALS CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ALTERNATIVE PERFORMANCE MEASURES PARENT COMPANY FINANCIAL STATEMENTS NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS PROPOSED DISTRIBUTION OF NON-RESTRICTED EQUITY AUDITOR’S REPORT SUSTAINABILITY 130 THE SHARE 220 OUR HERITAGE 222 VOLVO CAR GROUP / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 71 ===== SIDA 72 ===== estimated residual value to be paid in the future. This value is recog - nised as a contract liability. For the sale of cars where a repurchase commitment (right or obligation to repurchase) is issued to the customer as part of the sales contract, revenue is recognised over the contract period as if it were an operating lease contract due to the customer not obtaining control of the car at the point of sale. The deferred revenue, equal to the transaction price less sales taxes less the repurchase commit - ment, is recognised as contract liabilities and the repurchase com - mitment, equal to the repurchase price, as other liabilities. The car is recognised on the balance sheet as a tangible asset under operating lease over the contract period and is depreciated to the estimated residual value. The useful life and residual value of the assets are monitored closely and changed if necessary. For further information regarding operating leases see Note 7 – Leases. Revenue from sale of services Volvo Car Group sells services in the form of maintenance con - tracts, extended warranties, connectivity, and in-car software to customers. Revenue from these services is generally recognised over the contract period on a straight-line basis. When an extended warranty contract is bundled with the sale of a car and the inclusion in the contract is assessed to be common practice in the market, a provision is recognised at the point of sale for the costs. When the inclusion goes beyond common practice in the market, part of the revenue is deferred as a contract liability and recognised over the contract period. The revenue deferred is based on stand-alone selling prices, or if not observable, estimated based on the expected cost plus a margin approach. Maintenance and extended warranty contracts can in some cases meet the definitions of both a customer contract and an insurance contract. Considering the terms of these contracts, Volvo Car Group applies the policy choice available to account for these as customer contracts and applies the accounting policies described in this note. Emission credits Volvo Car Group recognises income from government grants relat - ing to emission credits earned during the period for exceeding the emission targets related to car production in certain markets. A fair value for credits received is calculated when Volvo Car Group deter - mines that an active market for the credit exists and that the Group is likely to engage in transactions in that credit market. Revenue is recognised or adjusted according to net realisable value principles as the credits are classified as inventories. The earned credits are classified as inventories until they are either sold and transferred to a third-party or consumed in Volvo Car Group’s operations. When credits are sold and transferred that either did not have a determi - nable fair value as of their grant date or were sold at a value that exceeds the fair value on the grant date, this gain is recognised, on a net basis, in revenue when the credits are transferred to the customer and derecognised from inventory. For more information see Note 10 – Government grants and Note 17 – Inventories. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS Variable revenue components An inherent risk regarding different forms of variable revenue components in a sales contract, is the probability of a reversal of revenue in future periods. On initial recognition, variable revenue components are estimated, and revenue is recognised when it is highly probable that a revenue reversal in future periods will not occur. An example of this is when cars are sold to a retailer with volume discounts based on aggregate sales over a 3–12 months period. Revenue from these sales is recognised based on the price specified in the sales contract, adjusted for volume discounts for the wholesale period. Estimates and judgements initially made are updated continuously at each reporting period. Residual value guarantees Volvo Car Group is exposed to residual value risk, meaning that there is a potential loss for Volvo Car Group if the future market value of a used car is lower than the guaranteed value of the car according to the sales contract. This potential negative effect is recognised as a contract liability, and the future market value of cars is monitored individually on a continuing basis. An estimate is made based on evaluating, among other things, recent car auction values, future price deterioration due to expected change of market condi - tions and production planning, vehicle quality data, repair and reconditioning costs and with consideration given to the specific markets demand for internal combustion engines and electric vehi - cles as customer purchasing decisions are influenced by climate change factors. NOTE 2 REVENUE ACCOUNTING POLICIES Revenue from the sale of goods and services is valued at transaction price less sales taxes and is recognised when control of the deliv - ered good or service is transferred to the customer. Control passes to the customer generally when they can direct the use of and obtain the benefits from the good or service. This passing of control can happen at a point in time or over a period of time and revenue recognition follows this. For bundled sales contracts which include both a car and services where the customer can benefit from these independently of each other, the transaction price of the car is reduced by allocating a transaction price to the services based on stand-alone selling prices, or an estimate thereof based on the expected cost plus a margin approach. Sales contracts may include variable revenue components, such as volume discounts, incentive programmes, and other discounts that are paid out at a later date. When revenue is recognised from these transactions, it is adjusted by the estimated value of the varia - ble components, which is recognised as a contract liability. For sales contracts where Volvo Car Group has an obligation to transfer goods or services to the customer and has received consid - eration in advance, or an amount of consideration is due from the customer, a contract liability is recognised. Revenue is then recog - nised, and the contract liability derecognised when the good or service is transferred to the customer. This applies to sales con - tracts with residual value guarantees, sales related to extended service business, sales with repurchase commitment, and advance payments from customers. The contract liability is derecognised against cash and cash equivalents when it pays out or settles sales generated obligations such as a discount. Revenue from sale of goods Revenue recognition for sale of new and used cars, parts and acces - sories as well as sale of goods that are part of contract manufactur - ing arrangements, depends on specific contract terms, but generally is at a point in time around when the customer takes physical possession. For the sale of cars where a residual value guarantee is issued to an independent financing provider as part of the sales contract, revenue recognised is reduced by the amount corresponding to the OVERVIEW 3 MARKET 15 OUR STRATEGIC FRAMEWORK 18 DIRECTORS’ REPORT 29 RISK 36 CORPORATE GOVERNANCE 42 FINANCIALS CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ALTERNATIVE PERFORMANCE MEASURES PARENT COMPANY FINANCIAL STATEMENTS NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS PROPOSED DISTRIBUTION OF NON-RESTRICTED EQUITY AUDITOR’S REPORT SUSTAINABILITY 130 THE SHARE 220 OUR HERITAGE 222 VOLVO CAR GROUP / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 72 ===== SIDA 73 ===== Contract liabilities where revenue is deferred and recognised over time: Sales generated obligations Residual value guarantees Deferred revenue – extended service business Deferred revenue – sale with repurchase commitment Advance payments from customers Total Balance at 1 January 2024 21,703 3,942 9,447 2,004 1,869 38,965 Provided for during the year 67,938 2,891 13,582 6,584 99,339 190,334 Utilised during the year –67,004 –2,454 –12,557 –5,351 –98,102 –185,468 Translation differences 1,091 277 378 88 87 1,921 Balance at 31 December 2024 23,728 4,656 10,850 3,325 3,193 45,752 Of which current 23,728 1,476 4,475 2,819 2,499 34,997 Of which non-current — 3,180 6,375 506 694 10,755 Balance at 1 January 2025 23,728 4,656 10,850 3,325 3,193 45,752 Provided for during the year 66,176 4,657 10,929 5,659 116,969 204,390 Utilised during the year –68,182 –4,251 –10,774 –5,754 –116,620 –205,581 Translation differences –2,497 –616 –1,170 –179 –230 –4,692 Balance at 31 December 2025 19,225 4,446 9,835 3,051 3,312 39,869 Of which current 19,225 2,078 4,080 2,572 3,309 31,264 Of which non-current — 2,368 5,755 479 3 8,605 Timing of revenue recognition 2025 2024 At the point of delivery 345,635 388,210 Over the contract term 11,628 12,024 Total 357,263 400,234 Repurchase commitments Volvo Car Group is exposed to a potential loss on sales with repur - chase commitments if the estimated value of the car guaranteed in the contract is greater than the market value at the time of repur - chase. The potential negative effect is recognised as an increased depreciation or an impairment of the car. Estimates of the car value are made on a continuous basis, based on evaluating, among other things, recent car auction values, future price deterioration due to expected change of market conditions and production planning, vehicle quality data, repair and reconditioning costs and with consideration given to the specific markets demand for internal combustion engines and electric vehicles as customer purchasing decisions are influenced by climate change factors. The value of the car on the balance sheet is adjusted if necessary. Revenue allocated to geographical regions: 2025 2024 Europe 193,593 208,914 of which Sweden 1) 39,555 48,096 of which United Kingdom 35,213 30,438 of which Germany 33,334 30,795 US 64,043 69,496 China 49,304 63,682 Other markets 50,323 58,142 of which Türkiye 7,847 8,051 of which Canada 6,793 6,659 Total 357,263 400,234 1) Includes the Contract manufacturing sales channel. Revenue allocated to category: 2025 2024 Sales of new cars 250,468 303,880 Sales of used cars 32,509 27,747 Sales of parts and accessories 38,835 38,497 Revenue from subscription, leasing and rental business 5,675 6,709 Sales of licences and royalties 1,936 647 Contract manufacturing 10,249 13,151 Emissions credits 3,501 994 Other revenue 2) 14,090 8,609 Total 357,263 400,234 2) Includes one-time sale of subscription car portfolios amounting to SEK 5,245 (2,741) m. OVERVIEW 3 MARKET 15 OUR STRATEGIC FRAMEWORK 18 DIRECTORS’ REPORT 29 RISK 36 CORPORATE GOVERNANCE 42 FINANCIALS CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ALTERNATIVE PERFORMANCE MEASURES PARENT COMPANY FINANCIAL STATEMENTS NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS PROPOSED DISTRIBUTION OF NON-RESTRICTED EQUITY AUDITOR’S REPORT SUSTAINABILITY 130 THE SHARE 220 OUR HERITAGE 222 VOLVO CAR GROUP / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 73 ===== SIDA 74 ===== Significant events and agreements with related parties during the reporting period • On 14 February 2025, Volvo Cars divested its 30 per cent share - holding in Lynk & Co Automotive Technology Co., Ltd to Zhejiang Zeekr Intelligent Technology Co., Ltd., after approval at an Extraordinary General Meeting of Volvo Cars’ shareholders on 6 February as well as other regulatory approvals. Cash considera - tion, including interest, amounted to RMB 5,463 m. The capital gain, recognised directly in equity due to divestment under com - mon control, amounted to RMB 3,144 m (SEK 4,656 m), including tax cost relating to the transaction which amounts to RMB 803 m. • In May, Volvo Cars sold a significant number of the owned sub - scription cars in the UK to Volvo Car Financial Services UK Ltd. The one-time transaction amounted to a revenue of SEK 3,288 m, with limited effect on profit. The transaction is part of the updated commercial strategy. Transactions with related parties Significant transactions with related parties and the nature of these are specified in the below tables and text. Sales of goods, services and other 2025 2024 Related parties 1)2) 15,792 17,918 of which Polestar Automotive Holding UK Group 13,730 15,402 of which Ningbo Fuhong Auto Sales Co., Ltd 571 1,783 Joint ventures and associated companies 13,121 11,821 of which Volvo Car Financial Services UK Ltd 11,276 7,686 Purchases of goods, services and other 2025 2024 Related parties 1)2) –37,095 –54,451 of which Aurobay Sweden AB (prior name Powertrain Engineering Sweden AB) –11,561 –13,125 of which Zhangjiakou Geely New Energy Automobile Co., Ltd –9,089 — of which Viridi E-Mobility Technology (Ningbo) Co., Ltd –3,360 –1,481 of which Zhejiang Geely Automobile Co.,Ltd –3,270 –28,497 of which Zhangjiakou Aurobay Powertrain Manufacturing Co., Ltd –3,110 –3,933 of which Geely Changxing Automatic Transmission Co., Ltd –1,745 –1,795 of which Zhejiang Haoqing Automobile Manufacturing Co., Ltd –328 –1,995 Joint ventures and associated companies –1,188 –2,262 Receivables 3) Payables 3) 31 Dec 2025 31 Dec 2024 31 Dec 2025 31 Dec 2024 Related parties 1)2) 21,091 23,077 12,344 12,679 Joint ventures and associated companies 1) 1,390 1,801 86 716 1) Related parties refer to entities that belong to the Geely sphere of companies. Joint ventures and associated companies within the Geely sphere are presented as Related parties. For joint ventures and associated companies see Note 12 – Investments in joint ventures and associates. 2) Including contract manufacturing. 3) Non-current part of receivables amounts to SEK 10,800 (13,120) m. Non-current part of payables amounts to SEK 1 (1) m. The Polestar Automotive Holding UK Group The revenue from the Polestar Automotive Holding UK Group mainly relate to sales of Polestar cars from the Taizhou and Charleston plants, technology licences and development of technology as well as revenue related to sales of other services. Ningbo Fuhong Auto Sales Co., Ltd The revenue from Ningbo Fuhong Auto Sales Co., Ltd mainly relate to sales of cars. NOTE 3 EXPENSES BY NATURE 2025 2024 Material cost incl. freight, distribution and warranty –248,108 –273,852 Personnel 1) –41,627 –44,985 Amortisation/depreciation –23,945 –22,730 Other –43,118 –33,684 Total –356,798 –375,251 1) The amounts presented as Personnel have been reduced by capital - ised salary costs related to product development. Depreciation and amortisation according to plan by function: 2025 2024 Cost of sales –10,984 –11,369 Research and development expenses –10,236 –8,905 Selling expenses –1,599 –1,541 Administrative expenses –1,095 –884 Other income and expense –31 –31 Total –23,945 –22,730 NOTE 4 RELATED PARTY TRANSACTIONS ACCOUNTING POLICIES Volvo Car Group has a close collaboration with its related parties. The main part of the transactions is related to sales and purchases of cars, licences of technology and purchases of components. Related parties include companies outside the Volvo Car Group, but within the Geely sphere of companies as well as other companies, such as joint ventures and associates. All transactions with related parties are performed at arm’s length. OVERVIEW 3 MARKET 15 OUR STRATEGIC FRAMEWORK 18 DIRECTORS’ REPORT 29 RISK 36 CORPORATE GOVERNANCE 42 FINANCIALS CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ALTERNATIVE PERFORMANCE MEASURES PARENT COMPANY FINANCIAL STATEMENTS NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS PROPOSED DISTRIBUTION OF NON-RESTRICTED EQUITY AUDITOR’S REPORT SUSTAINABILITY 130 THE SHARE 220 OUR HERITAGE 222 VOLVO CAR GROUP / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 74 ===== SIDA 75 ===== NOTE 5 AUDIT FEES 2025 2024 Deloitte Audit fees –60 –64 Audit-related fees –7 –6 Tax services –2 –3 Other services –10 –8 Total –79 –81 Audit fees involve audit of the Annual Report, interim report and the administration by the Board of Directors and the Managing Directors. The audit also includes advice and assistance as a result of the observations made in connection with the audit. Audit-related fees refer to other assignments to ensure quality in the financial statements including consultations on reporting requirements and internal control. Tax services include tax-related advisory. All other work performed by the auditor is defined as other services . NOTE 6 OTHER OPERATING INCOME AND EXPENSES ACCOUNTING POLICIES Foreign exchange rate gains and losses on operating transactions are presented net in other operating income and expenses. Also presented net are fluctuations in the fair value of derivatives hedg - ing operating transactions where there is ineffectiveness on hedging relationships relating to the operating transaction. Information of the classification of financial instruments, see Note 19 – Financial instruments and Financial risks. 2025 2024 Other operating income Net foreign exchange rate differences — 403 of which foreign exchange rate gains — 2,577 of which foreign exchange rate losses — –2,174 Net change in fair value on financial instruments 207 — Sold services 521 684 Government grants 26 30 Other 976 2,321 Total 1,730 3,438 2025 2024 Other operating expenses Amortisation and depreciation of intangible and tangible assets –31 –31 Net foreign exchange rate differences –1,571 — of which foreign exchange rate gains 3,278 — of which foreign exchange rate losses –4,849 — Net change in fair value on financial instruments — –72 Property tax –189 –155 Other –755 –1,123 Total –2,546 –1,381 Volvo Car Financial Services UK Ltd The revenue from Volvo Car Financial Services UK Ltd mainly relate to sales of cars. Aurobay Sweden AB The purchases from Aurobay Sweden AB (prior name Powertrain Engineering Sweden AB) are mainly related to combustion engines and product development. Zhangjiakou Geely New Energy Automobile Co., Ltd The purchases from Zhangjiakou Geely New Energy Automobile Co., Ltd are mainly related to EX30. Zhejiang Geely Automobile Co.,Ltd The purchases from Zhejiang Geely Automobile Co.,Ltd are mainly related to EX30. Zhangjiakou Aurobay Powertrain Manufacturing Co., Ltd The purchases from Zhangjiakou Aurobay Powertrain Manufactur - ing Co., Ltd are mainly related to combustion engines. Viridi E-Mobility Technology (Ningbo) Co., Ltd The purchases from Viridi E-Mobility Technology (Ningbo) Co., Ltd are mainly related to batteries. Geely Changxing Automatic Transmissions Co., Ltd The purchases from Geely Changxing Automatic Transmission Co., Ltd are mainly related to gearboxes. Zhejiang Haoqing Automobile Manufacturing Co., Ltd The purchases from Zhejiang Haoqing Automobile Manufacturing Co., Ltd are mainly related to EM90 and EX30. Volvo Car Group does not engage in any transactions with Board members or senior executives except ordinary remunerations for services and the share-based programme as described in Note 8 – Employees and remuneration and Note 9 – Share-based remuneration. OVERVIEW 3 MARKET 15 OUR STRATEGIC FRAMEWORK 18 DIRECTORS’ REPORT 29 RISK 36 CORPORATE GOVERNANCE 42 FINANCIALS CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ALTERNATIVE PERFORMANCE MEASURES PARENT COMPANY FINANCIAL STATEMENTS NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS PROPOSED DISTRIBUTION OF NON-RESTRICTED EQUITY AUDITOR’S REPORT SUSTAINABILITY 130 THE SHARE 220 OUR HERITAGE 222 VOLVO CAR GROUP / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 75 ===== SIDA 76 ===== ance sheet at cost less accumulated depreciation and impairment and classified as Assets under operating lease (see Note 16 – Tangi - ble assets). For subscription contracts, lease income is recognised as revenue on a straight-line basis over the lease term. For repur - chase commitment contracts, deferred revenue is recognised as Contract liabilities to customers, see Note 2 - Revenue, at the time the vehicle is sold (equal to the sales price received from the cus- tomer less the agreed repurchase value that Volvo Car Group is contractually obligated to pay in the future) and recognised as reve - nue on a straight-line basis until repurchase date. In addition to this, a liability is recognised for the agreed repurchase value to be paid at repurchase date. see Note 24 – Other Current and Non-Current Liabilities. Sale and leaseback transactions From time to time, Volvo Car Group sells a tangible asset (primarily owned cars and buildings) and immediately reacquires the right to use the asset by entering into a lease with the buyer. The leaseback period can range from three months to three years. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS At lease contract commencement date, Volvo Car Group is required to make judgements as a lessee which affect the measurement of its RoU asset and lease liability. When determining the lease term, Volvo Car Group considers all facts and circumstances that create an economic incentive to exer - cise an extension option, or not to exercise a termination option in addition to the non-cancellable lease term. These options are added to the lease term if they are reasonably certain. For example, Volvo Car Group would consider it reasonably certain to exercise an extension option if investments have been made to improve the underlying asset or tailor it for our special needs, and/or if the underlying asset is of importance to Volvo Car Group’s operations. The assessment is reviewed if a significant event or change in circumstances occurs that may affect the initial assessment. Volvo Car Group incremental borrowing rate is the weighted average effective interest rate of all borrowings, and takes into consideration for example credit risk, currency risk, country risk and lease term. For sale and leaseback transactions, Volvo Car Group is required to make judgements about whether the transfer of an asset to the buyer qualifies as a sale under IFRS 15 which then determines the accounting treatment for the transaction. Volvo Car Group deter - mines whether a sale exists by making judgements of whether con - trol of the asset passes to the buyer and applies the same account - ing principles to this judgement as discussed in Note 2 – Revenue. If the transfer does not qualify as a sale and the assets in the trans - action involve owned cars, the transfer proceeds received from the buyer are recognised on the balance sheet, split between Inter - est-bearing liabilities (equal to the present value of future lease payments, see Note 19 - Financial Instruments and Financial Risks) and Contract liabilities from customers (equal to deferred revenue recognised at the end of the lease period relating to the car sale, see Note 2 – Revenue). For some assets, Volvo Car Group makes an esti - mate of the leaseback period which impacts the value of each com - ponent. This estimate is based on historical asset usage patterns. Volvo Car Group as lessee Amounts recognised in income statement 2025 2024 Depreciation expenses on right-of-use assets –1,636 –2,070 Interest expense on lease liabilities –214 –406 Expense relating to short-term leases –455 –369 Expense relating to leases of low value assets –63 –55 Expense relating to variable lease payments not included in the measurement of the lease liability –109 –133 Income from sub-leasing right-of-use assets 90 121 The total cash outflow for leases amounts to SEK 2,387 (2,912) m. The amount includes payments for lease agreements recognised as liabilities, variable payments, short-term payments and payments for leases of low value. NOTE 7 LEASES ACCOUNTING POLICIES Volvo Car Group as a lessee Volvo Car Group leases primarily real estate assets (such as office buildings and warehouses) and equipment (such as production tool - ing and IT hardware). At lease contract commencement date, Volvo Car Group recog - nises on the balance sheet a right-of-use (RoU) asset and lease lia - bility. RoU assets are measured at cost less accumulated deprecia - tion and impairment and classified as Tangible assets on the balance sheet, see Note 16 – Tangible assets. Lease liabilities are measured as the present value of future lease payments and amortised using the interest rate implicit in the lease or using Volvo Car Group’s incremental borrowing rate when this cannot be determined. Inter - est expense on Lease liabilities is presented as interest expense in the income statement. Volvo Car Group has elected not to separate non-lease compo - nents and accounts for the lease and non-lease components as a single lease component. If a lease contract has a term of 12 months or less, or the under - lying asset is of low value, or includes variable lease payments not dependent on an index or rate, no RoU asset or lease liability is recognised. The cost of these leases is recognised as a lease expense on a straight-line basis over the lease term in the functional expense line for which the leased asset is used. Volvo Car Group as a lessor Volvo Car Group classifies a lessor contract as either a finance lease or an operating lease. If substantially all the risks and rewards inci - dental to ownership of the leased asset are transferred to the les - see, it is classified as a finance lease. If substantially all the risks and rewards remain with Volvo Car Group, it is classified as an operating lease. Operating leases Volvo Car Group’s operating leases consist primarily of cars under a subscription contract with a customer (Care by Volvo) and cars sold with a repurchase commitment (for example to financial institutions and rental fleet companies). These cars are recognised on the bal - OVERVIEW 3 MARKET 15 OUR STRATEGIC FRAMEWORK 18 DIRECTORS’ REPORT 29 RISK 36 CORPORATE GOVERNANCE 42 FINANCIALS CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ALTERNATIVE PERFORMANCE MEASURES PARENT COMPANY FINANCIAL STATEMENTS NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS PROPOSED DISTRIBUTION OF NON-RESTRICTED EQUITY AUDITOR’S REPORT SUSTAINABILITY 130 THE SHARE 220 OUR HERITAGE 222 VOLVO CAR GROUP / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 76 ===== SIDA 77 ===== Lease liabilities 2025 2024 Non-current lease liabilities 5,309 7,523 Current lease liabilities 1,562 2,176 Accrued Interest expenses on lease liabilities 20 103 The maturity analysis of lease liabilities is presented as other cur - rent and non-current interest-bearing liabilities respectively in Note 19 – Financial instruments and Financial Risks. Volvo Car Group as lessor Operating lease contracts The table contains a maturity analysis of lease payments and the total of undiscounted lease payments that will be received after the balance sheet date. Future lease income of operating lease contracts, undiscounted 2025 2024 No later than 1 year 1,803 2,577 Later than 1 year but no later than 2 years 520 1,009 Later than 2 year but no later than 3 years 36 173 Later than 3 year but no later than 4 years 17 53 Later than 4 year but no later than 5 years 17 20 Later than 5 years 19 43 Total 2,412 3,875 NOTE 8 EMPLOYEES AND REMUNERATION ACCOUNTING POLICIES Incentive programmes Volvo Car Group manages a total of four different global incentive programmes, whereof two are short-term and two are long-term. Short-term • The Short-Term Variable Pay Programme for Senior Leaders (STVP for Senior Leaders) • The Volvo Bonus programme Long-term • The Performance share programme (PSP) • The Employee share matching programme (ESMP) The design and pay-out of all programmes are subject to approval by the Board of Directors. The share-based programmes are subject to decision by the Annual General Meeting. Short-term incentive programmes For the short-term incentive programmes a liability is recognised if all prerequisites are met and the cost is recognised as an operating expense. Long-term incentive programmes For information on share-based programmes, see Note 9 – Share- based remuneration. Restructuring Volvo Car Group from time-to-time engage in restructuring pro - grammes to reduce cost and drive efficiencies. Such programmes may involve a redundancy of employees. When a detailed and formal plan of restructuring has been publicly announced, the amounts of provision are determined based on the total direct expenditure arising from the restructuring when the recognition criteria for provisions are met, see Note 23 – Current and other non-current provisions. Right-of-use asset Buildings and land Machinery and equipment Total Acquisition cost Balance at 1 January 2024 11,876 673 12,549 Additions 2,354 2,863 5,217 Acquired through business combinations 8 — 8 Divestments and disposals –1,321 –173 –1,494 Reclassifications –2 — –2 Translation differences 367 40 407 Balance at 31 December 2024 13,282 3,403 16,685 Additions 1,385 710 2,095 Divestment of business –8 — –8 Divestments and disposals –513 –2,578 –3,091 Reclassifications 10 –10 — Translation differences –960 –440 –1,400 Balance at 31 December 2025 13,196 1,085 14,281 Right-of-use asset Buildings and land Machinery and equipment Total Accumulated depreciation Balance at 1 January 2024 –4,983 –444 –5,427 Depreciation expense –1,547 –523 –2,070 Divestments and disposals 1,179 213 1,392 Reclassifications 3 — 3 Translation differences –105 –9 –114 Balance at 31 December 2024 –5,453 –763 –6,216 Depreciation expense –1,717 81 –1,636 Divestment of business 7 — 7 Divestments and disposals 398 354 752 Reclassifications –4 4 — Translation differences 381 70 451 Balance at 31 December 2025 –6,388 –254 –6,642 Net balance at 31 December 2024 7,829 2,640 10,469 Net balance at 31 December 2025 6,808 831 7,639 OVERVIEW 3 MARKET 15 OUR STRATEGIC FRAMEWORK 18 DIRECTORS’ REPORT 29 RISK 36 CORPORATE GOVERNANCE 42 FINANCIALS CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ALTERNATIVE PERFORMANCE MEASURES PARENT COMPANY FINANCIAL STATEMENTS NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS PROPOSED DISTRIBUTION OF NON-RESTRICTED EQUITY AUDITOR’S REPORT SUSTAINABILITY 130 THE SHARE 220 OUR HERITAGE 222 VOLVO CAR GROUP / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 77 ===== SIDA 78 ===== 2025 2024 Salaries and other remuneration to the Board3), CEO, Executive Management Team (EMT)4) and other employees Wages and salaries, other remune- rations (of which variable salaries) Social security expenses (of which pension expenses) Wages and salaries, other remune- rations (of which variable salaries) Social security expenses (of which pension expenses) Board, Chief Execu - tive Officers and EMT 297 (52) 110 (40) 324 (90) 124 (39) Other employees 27,409 11,240 (5,647) 28,641 10,658 (5,274) Total 27,706 (52) 11,350 (5,687) 28,965 (90) 10,782 (5,313) 1) The FTE number in 2025 and 2024 reflects temporary layoffs. 2) Senior executives are defined as key personnel within the subsidiaries. 3) The Board includes all Board members in the subsidiaries within Volvo Car Group. 4) The Executive Management Team (EMT) consists of the CEO in Volvo Car AB (publ.) and Volvo Car Corporation and key management personnel other than Board members, in total 8 (8). Compensation to Board members The shareholders have elected a Nomination Committee, which on a yearly basis proposes appropriate remuneration principles and remuneration for Volvo Cars Board. The remuneration to the mem - bers of the Board is determined at the Annual General Meeting or at an Extraordinary General Meeting when new Board members are elected. At the Annual General Meeting 2025 it was decided that Board members elected at the meeting who are employed or other - wise remunerated by Volvo Car Group or the Zhejiang Geely Holding Group shall not be entitled to any remuneration. The other Board members elected at the Annual General Meeting shall receive remuneration containing the following elements: (i) a market-based fixed remuneration decided at the Annual General Meeting (ii) a company car in accordance with the Group´s company car policy in force from time to time and (iii) to Board members who are members of any of the Boards’ committees an additional market-based fixed remuneration as decided at the Annual General Meeting. The Extraordinary General Meeting held on 8 December 2025 resolved that the new Board members elected at the Extraordinary General Meeting shall receive remuneration in accordance with the remu - neration levels as resolved by the Annual General Meeting 2025. Expensed remuneration to the individual Board members is specified below: Board member 2025 Ordinary compensa- tion, TSEK 2024 Ordinary compensa- tion, TSEK Eric Li (Li Shufu), Chairperson — — Daniel Li (Li Donghui) — — Lone Fønss Schrøder (until June 2025) 1,655 3,270 Winfried Vahland (until January 2024) — 39 Jonas Samuelson 1,600 1,371 Diarmuid O’Connell 1,345 1,331 Lila Tretikov 1,420 1,402 Anna Mossberg 1,200 1,189 Jim Rowan (until March 2025) — — Håkan Samuelsson (from April 2025) — — Ruby Lu (Rong Lu) 1,420 1,358 Caroline Grégoire-Sainte-Marie (from December 2025) — — Pieter Nota (from December 2025) — — Total 8,640 9,960 Terms of employment and remuneration to the CEO The Board has assigned the People Committee (PC) to determine the remuneration guidelines for the CEO, subject to the sharehold - ers’ meetings approval. The chairperson of the Board shall in dia - logue with PC decide the remuneration to the CEO in accordance with the remuneration guidelines decided by the shareholders meeting. A CEO total remuneration package may consist of a fixed annual base salary, short-term variable cash remuneration (STVP), long-term variable remuneration (PSP) and other benefits such as a company car and insurance. The notice period for a CEO is a maxi - mum of 12 months in case of termination by either Volvo Car Group or the CEO. Furthermore, the CEO is, in case of termination by Volvo Car Group, entitled to severance pay based on the fixed salary, during a period of maximum 12 months. A payment of SEK 10.9 m was paid as a one-time sign-on incen - tive in 2025 to the current CEO. A payment of 860 TSEK was paid as a recognition award in 2025 to the former CEO. The current CEO has a defined contribution pension plan to which Volvo Car Corporation allocates 50 per cent of the fixed monthly salary on a rolling basis. Average number of employees by region 1) 2025 Of whom women,% 2024 Of whom women,% Sweden 22,379 25 21,640 28 Nordic countries other than Sweden 797 35 763 39 Belgium 5,735 14 5,192 15 Europe other than the Nordic countries and Belgium 2,044 32 1,813 39 North and South America 2,801 32 3,347 38 China 7,691 16 8,726 19 Asia other than China 1,087 27 1,005 20 Other countries 116 41 114 37 Total 42,650 23 42,600 26 31 Dec 2025 Of whom women,% 31 Dec 2024 Of whom women,% Number of Board members and senior executives 2) Board members (Chief Executive Officers and senior executives),% Board members (Chief Executive Officers and senior executives),% Parent company 10 (—) 40 (—) 9 (—) 44 (—) Subsidiaries 97 (267) 28 (32) 102 (290) 27 (37) Total 107 (267) 29 (32) 111 (290) 29 (37) 2025 2024 Salaries and other remunerations Wages and salaries, other remune- rations Social security expenses (of which pension expenses) Wages and salaries, other remune- rations Social security expenses (of which pension expenses) Parent company 10 3 (—) 11 3 (—) Subsidiaries 27,696 11,347 (5,687) 28,954 10,779 (5,313) Total 27,706 11,350 (5,687) 28,965 10,782 (5,313) OVERVIEW 3 MARKET 15 OUR STRATEGIC FRAMEWORK 18 DIRECTORS’ REPORT 29 RISK 36 CORPORATE GOVERNANCE 42 FINANCIALS CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ALTERNATIVE PERFORMANCE MEASURES PARENT COMPANY FINANCIAL STATEMENTS NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS PROPOSED DISTRIBUTION OF NON-RESTRICTED EQUITY AUDITOR’S REPORT SUSTAINABILITY 130 THE SHARE 220 OUR HERITAGE 222 VOLVO CAR GROUP / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 78 ===== SIDA 79 ===== The notice period for a member of EMT is a maximum of 12 months in case of termination by either Volvo Car Group or the member of EMT. Furthermore the member of EMT is, in case of termination by Volvo Car Group, entitled to severance pay based on the fixed salary, during a period of maximum 12 months. During 2025 3 (3) members of EMT left their positions. Remuner - ation during the notice period and severance pay amounted to SEK 41 (21) m, excluding social expenses. Members of EMT are covered by the ITP plan and, where applica - ble, the VMP. On average, the contributions for members of EMT is 28–30 per cent of the pensionable salary. Disability benefits follow the ITP and VMP regulations. Volvo Car Group’s outstanding post-employment benefits obliga - tions to former CEOs and EMT amounted to SEK 36 (34) m. Other long-term benefits Apart from the compensation accounted for under share-based remuneration disclosed in Note 9 – Share-based remuneration, EMT does not have any other long-term benefits. Restructuring In 2025 an accelerated cost and cash action plan was launched with the aim to protect profitability and drive structural efficiencies on direct and indirect costs. Part of the plan involves creating a leaner and more efficient organisation with a lower cost base, and redun - dancies were announced to achieve this. The workforce has during the year been reduced by approximately 2,300 employees globally at a cost of SEK 807 m. In addition, approximately 1,100 consultants and agency personnel were impacted. The carrying value of the restructuring provision as at 31 December 2025 is SEK 326 m, including social expenses, see Note 23 – Current and other non- current provisions. Incentive programmes Short-term incentive programmes Volvo Bonus The Volvo Bonus programme includes all Volvo Car Group employ - ees, except those who participates in the STVP for Senior Leaders. The purpose of the Volvo Bonus is to strengthen global alignment among employees around Volvo Car Group’s vision, objectives and 2025 2024 Expensed compensa - tion to Executive Management Team (EMT), TSEK Salary1) Variable pay2) Long-term variable pay Share-based remunera- tion6) Social security expenses (of which pension expenses) Salary1) Variable pay2) Long-term variable pay Share-based remunera- tion6) Social security expenses (of which pension expenses) Håkan Samuelsson, CEO 15,620 10,900 — 2,276 14,285 (9,320) — — — — — (—) Jim Rowan, former CEO3) 38,393 860 103 113 12,242 (1,517) 16,745 32,987 –128 1,069 24,286 (6,074) Björn Annwall, former Deputy CEO4) — — — — — (—) 20,632 3,822 –26 63 10,620 (2,220) Javier Varela, former Deputy CEO5) — — — — — (—) 3,559 — –270 –2,574 1,436 (1,262) Other members of EMT 44,324 6,599 34 2,727 28,529 (11,750) 35,176 16,439 –62 1,391 28,948 (10,327) Total 98,337 18,359 137 5,116 55,056 (22,587) 76,112 53,248 –486 –51 65,290 (19,883) 1) Includes benefits such as insurance and company car. 2) Includes STVP and also other additional short-term variable pay in accordance with individual agreements. 3) CEO until 31 March 2025. Remuneration above also includes remuneration during the notice period and severance pay. 4) Deputy CEO until 31 October 2024. Remuneration above also includes remuneration during notice period and severance pay. 5) Deputy CEO until 2 May 2024. 6) For information on share-based programmes, see Note 9 – Share-based remuneration. The former CEO was covered by the ITP plan and a supplementary pension plan - Volvo Management Pension (VMP). On average, the contributions for the former CEO were 30 per cent of the pensiona - ble salary. Disability benefits followed the ITP and VMP regulations. The CEO agreement for the current CEO is a fixed term and there is no notice period or severance pay included in the terms of agree - ment. The notice period for the former CEO was a maximum of 12 months in case of termination by either Volvo Car Group or the for - mer CEO. Furthermore, the former CEO was, in case of termination by Volvo Car Group, entitled to severance pay based on the fixed salary, during a period of maximum 12 months. Terms of employment and remuneration to a Deputy CEO The Board has assigned the People Committee (PC) to determine the remuneration to a Deputy CEO, proposed by the CEO, and in line with the remuneration guidelines approved by the shareholders’ meeting. A Volvo Car Group Deputy CEO is entitled to a remunera - tion consisting of a fixed annual base salary, short-term variable cash remuneration (STVP), long-term variable remuneration (PSP) and other benefits such as a company car and insurance. A Deputy CEO is covered by the ITP plan and a supplementary pension plan – Volvo Management Pension (VMP). On average, the pension contri - bution for a Deputy CEO is 28–30 per cent of the pensionable salary. Disability benefits follow the ITP and VMP regulations. The notice period for a Deputy CEO is a maximum of 12 months in case of termination by either Volvo Car Group or the Deputy CEO. Furthermore, a Deputy CEO is, in case of termination by Volvo Car Group, entitled to severance pay based on the fixed salary, during a period of maximum 12 months. Remuneration to Executive Management Team The Board has further assigned the People Committee to determine the remuneration to the Executive Management Team (EMT), proposed by the CEO, and in line with the remuneration guidelines approved by the shareholders’ meeting. Members of EMT are enti - tled to a remuneration consisting of a fixed annual base salary, short-term variable cash remuneration (STVP), long-term variable remuneration (PSP) and other benefits such as company car and insurance. Some of the EMT members also have retention awards, paid annu- ally during three years from start of their employment. The annual amount of the retention awards varies between SEK 1 m to SEK 1.7 m. OVERVIEW 3 MARKET 15 OUR STRATEGIC FRAMEWORK 18 DIRECTORS’ REPORT 29 RISK 36 CORPORATE GOVERNANCE 42 FINANCIALS CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ALTERNATIVE PERFORMANCE MEASURES PARENT COMPANY FINANCIAL STATEMENTS NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS PROPOSED DISTRIBUTION OF NON-RESTRICTED EQUITY AUDITOR’S REPORT SUSTAINABILITY 130 THE SHARE 220 OUR HERITAGE 222 VOLVO CAR GROUP / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 79 ===== SIDA 80 ===== NOTE 9 SHARE-BASED REMUNERATION ACCOUNTING POLICIES Share-based long-term programmes The fair value of the share-based programmes are based on the share price reduced by expected dividends connected with the share during the vesting period. Additional social expenses are recognised as a liability, revalued at each balance sheet date. The aim of these share-based programmes is to generate engage- ment and commitment to the organisation on a long-term basis. The PSP is equity-settled while the ESMP programme contains both equity-settled and cash-settled components. For components of the programmes that are equity-settled, the total compensation expense is based on the fair value at the grant-date together with consideration of any relevant performance conditions and is recog - nised over the relevant service period, with a corresponding increase in equity. All share-based payment programmes with employees have a service component while one has performance components as well. The amount recognised as an expense is adjusted to consider the total number of awards for which the rele- vant non-market performance conditions and service conditions are expected to be met. The result is that the amount ultimately recog- nised is based on the actual number of awards that meet the relevant service and non-market performance conditions at the vesting date. For share-based payment transactions with non-vesting conditions, the grant-date fair value is adjusted to reflect these conditions. For components of the ESMP that are cash-settled, the liability is valued based on the fair value of the liability and is revalued at the end of each reporting period, with any changes in fair value recog - nised in the income statement for the period. Share-based incentive programmes Performance Share Plan (PSP) At the Annual General Meeting 2022, the shareholders adopted a share-based incentive programme (Performance Share Plan, PSP 2022), with a purpose to create a long-term focus amongst the par - ticipants on reaching Volvo Car Group´s long-term ambitions, as well as to facilitate recruitment and retention of employees with key competencies. Since the Board of Directors also believes that long- term share ownership is an important way to create alignment between the EMT and Volvo Car´s shareholders, it has implemented a policy setting out recommendations for certain levels of share ownership for members of the EMT. The PSP offers an opportunity for such members to increase their holdings to achieve the recom - mended share ownership. A new share-based incentive programme, PSP 2023, was adopted at the Annual General Meeting 2023 and at the Annual General Meeting 2024 a third share-based incentive programme was adopted, PSP 2024. A fourth share-based incentive programme was adopted at the Annual General Meeting 2025, PSP 2025. The struc - ture of these three plans corresponds to the incentive programme approved in 2022. In all programmes, each PSP participant will at commencement of the programme, free of charge receive a conditional award of Per - formance Shares (a “PSP Award”). The PSP Award will amount to the number of Performance Shares the value of which corresponds to a percentage of each participant’s gross annual base salary. The share price used to calculate the PSP Award value was the volume - weighted average price paid for the Volvo Car AB (publ.) class B share during a period of 30 trading days in connection with the commencement of the vesting period. The number of Performance Shares allocated to the participants after expiration of the three-year vesting period may amount to between 0 and 200 per cent of the PSP Award, depending on the satisfaction of four performance conditions; PSP 2022 performance conditions • average operating margin during financial years 2022–2024 (weight 40 per cent) • average revenue growth during financial years 2022–2024 (weight 40 per cent) • reduction of CO 2 emissions per car sold (average CO 2 emissions per car sold in 2018 compared to the average CO 2 emissions per car sold in 2024) (weight 10 per cent) • gender diversity (portion of non-male participants) in the STVP programme as of 31 December 2024 (weight 10 per cent) PSP 2023 performance conditions • average operating margin (excl share of income in JV and associ - ates) during financial years 2023–2025 (weight 30 per cent) • average revenue growth during financial years 2023–2025 (weight 30 per cent) • reduction of CO 2 emissions per car sold (average CO 2 emissions per car sold in 2018 compared to the average CO 2 emissions per car sold in 2025) (weight 30 per cent) strategies and to encourage all employees to achieve and exceed the business plan targets. To reach maximum pay-out a number of performance indicators must be reached. These include Volvo Car Group profit target (EBIT), excluding share of income in joint ven - tures and associates, and a target related to cash flow. A threshold, target and maximum level is set for each performance indicator. In order for any Volvo Bonus to be paid out in respect of each perfor - mance indicator, the threshold level needs to be met. The pay-out is generated between threshold and maximum. The pay-out is capped at 200 per cent of the so-called target bonus. Depending on the employee’s position, the employee is eligible for a certain target level that can be either a fixed amount or a percentage of the employee´s annual base salary 31 December at the end of the per - formance year. To be eligible for pay-out, the employee must remain within Volvo Car Group on the pay-out month. The remuneration is paid in cash. STVP for Senior Leaders The STVP for Senior Leaders is an incentive programme for the CEO, EMT and certain senior executives. The purpose of the STVP for Senior Leaders is to support the corporate strategy and the trans - formation of Volvo Car Group. To reach maximum pay-out a number of performance targets must be reached. Targets include Volvo Car Group profit target (EBIT), excluding share of income in joint ven - tures and associates, but also other targets related to sales and cash flow. A threshold, target and maximum level is set for each performance indicator. In order for any STVP to be paid out in respect of each performance indicator, the threshold level needs to be met. The pay-out is generated between threshold and maximum. The pay-out is capped at 200 per cent of the so-called target award. The target award is a percentage of the employee’s gross annual base salary on 31 December at the end of each performance year. To be eligible for pay-out, the employee must remain within Volvo Car Group on the pay-out month. The remuneration is paid in cash. Liability and cost For 2025 the Board of Directors decided that no Volvo Bonus or STVP should be paid out. For 2024 the cost for the Volvo Bonus and STVP programmes amounted to SEK 1,946 m including social secu - rity expenses, of which SEK 41 m was related to EMT. OVERVIEW 3 MARKET 15 OUR STRATEGIC FRAMEWORK 18 DIRECTORS’ REPORT 29 RISK 36 CORPORATE GOVERNANCE 42 FINANCIALS CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ALTERNATIVE PERFORMANCE MEASURES PARENT COMPANY FINANCIAL STATEMENTS NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS PROPOSED DISTRIBUTION OF NON-RESTRICTED EQUITY AUDITOR’S REPORT SUSTAINABILITY 130 THE SHARE 220 OUR HERITAGE 222 VOLVO CAR GROUP / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 80 ===== SIDA 81 ===== PSP 2025 programme Total of which CEO of which former CEO1) of which other members of EMT Outstanding number of shares at the beginning of the year — — — — Granted shares during the year 6,655,658 838,601 — 754,781 Forfeited during the year –81,137 — — — Outstanding number of shares at the end of the year 6,574,521 838,601 — 754,781 PSP 2024 programme Outstanding number of shares at the beginning of the year 3,600,636 — 349,478 297,708 Granted shares during the year 39,115 — — — Forfeited during the year –423,860 — Reclassification — — –349,478 –67,256 Outstanding number of shares at the end of the year 3,215,891 — —2) 230,452 PSP 2023 programme Outstanding number of shares at the beginning of the year 2,268,229 — 271,492 192,039 Forfeited during the year –180,170 — — — Reclassification — — –271,492 –50,210 Outstanding number of shares at the end of the year 2,088,059 — —2) 141,829 PSP 2022 programme Outstanding number of shares at the beginning of the year 1,139,405 — 157,912 54,384 Forfeited during the year –76,493 — –10,951 –313 Decrease due to performance conditions –526,903 — –73,481 –27,038 Vested during the year –526,799 — –73,480 –27,033 Outstanding number of shares at the end of the year 9,210 — —2) — 1) CEO until 31 March 2025. 2) The PSP Awards have been prorated accordingly after leaving the position as CEO. For 2022 programme the prorated number of shares was 146,961, for 2023 programme the prorated number of shares was 173,150 and for 2024 programme the prorated number of shares was 106,280. • gender diversity (portion of non-male participants) in the STVP programme as of 31 December 2025 (weight 10 per cent) PSP 2024 performance conditions • average EBIT (excl share of income in JV and associates) during financial years 2024–2026 (weight 40 per cent) • compound annual growth rate during financial years 2024–2026 (revenue for financial year 2026 is compared to revenue for financial year 2023) (weight 25 per cent) • percentage of reduction of CO 2 emissions per Volvo car manufac- tured in 2018 compared to the average CO 2 emissions per car manufactured in 2026 (weight 25 per cent) • gender diversity (share of females within senior leaders) as of 31 December 2026 (weight 10 per cent) PSP 2025 performance conditions • average EBIT (excl share of income in JV and associates) during financial years 2025–2027 (weight 40 per cent) • accumulated free cash flow during financial years 2025–2027 (weight 30 per cent) • percentage of reduction of CO 2 emissions per Volvo car manufac- tured in 2018 compared to the average CO 2 emissions per car manufactured in 2027 (weight 20 per cent) • gender diversity (share of females within senior leaders) as of 31 December 2027 (weight 10 per cent) The performance conditions for all programmes include a minimum level which must be exceeded in order for any Performance Shares to be allocated at all. Should the minimum level be exceeded but the maximum level not reached, a proportionate number of Perfor - mance Shares will be allocated. The PSP 2022 and 2023 programmes shall each comprise a maxi - mum of 9,886,909 class B shares in Volvo Car AB (publ.) respec - tively, the PSP 2024 programme shall comprise a maximum of 12,539,648 class B shares in Volvo Car AB (publ.) and the PSP 2025 programme shall comprise a maximum of 14,436,511 class B shares in Volvo Car AB (publ.). Allocation of Performance Shares is also conditional upon the participants retaining the employment within the Volvo Car Group over the entire vesting period. For so-called good leavers the num - ber of performance shares allocated will be proportionately reduced for the time served during the vesting period. OVERVIEW 3 MARKET 15 OUR STRATEGIC FRAMEWORK 18 DIRECTORS’ REPORT 29 RISK 36 CORPORATE GOVERNANCE 42 FINANCIALS CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ALTERNATIVE PERFORMANCE MEASURES PARENT COMPANY FINANCIAL STATEMENTS NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS PROPOSED DISTRIBUTION OF NON-RESTRICTED EQUITY AUDITOR’S REPORT SUSTAINABILITY 130 THE SHARE 220 OUR HERITAGE 222 VOLVO CAR GROUP / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 81 ===== SIDA 82 ===== PSP 2023 programme vesting level Performance condition, % Weight Minimum level Maximum level Perfor- mance outcome Achieved vesting level Average operating margin (excl share of income in JV and associates) during financial years 2023–2025 30 5.6 7 5.41) 0 Average revenue growth during financial years 2023–2025 30 7.5 17.5 3.5 0 Reduction of CO 2 emissions per car sold (average CO 2 emissions per car sold in 2018 compared to average CO 2 emissions per car sold in 2025) 30 26 40 31 71 Gender diversity (portion of non-male participants) in the STVP programme as of 31 December 2025 10 30 34 28.5 0 Overall achieved vesting level 21 1) The operating margin for 2025 has been adjusted for items affecting comparability in accordance with a decision from PC. PSP 2022 programme vesting level Performance condition, % Weight Minimum level Maximum level Perfor- mance outcome Achieved vesting level Average operating margin during financial years 2022–2024 40 6 7.6 5.8 0 Average revenue growth during financial years 2022–2024 40 10.5 14.5 12.7 111 Reduction of CO 2 emissions per car sold (average CO 2 emissions per car sold in 2018 compared to average CO 2 emissions per car sold in 2024) 10 26 40 24 0 Gender diversity (portion of non-male participants) in the STVP programme as of 31 December 2024 10 30 34 31.1 55 Overall achieved vesting level 50 The total value of the Performance Shares at the end of the vesting period may not exceed 400 per cent of the PSP Award value and the number of Performance Shares allotted may be reduced accord - ingly. Should there be a decline in the price of the Volvo Car AB (publ.) class B share such that the number of Performance Shares subject to allocation exceeds the maximum number of Performance Shares, the number of Performance Shares allocated to the partici - pants will be reduced proportionately. The Board of Directors is entitled to reduce the number of Perfor - mance Shares subject to allocation or, wholly or partially, terminate the PSP programmes in advance if significant changes in the Group or in the market occur which, in the opinion of the Board of Direc - tors, would result in a situation where the conditions for allocation of Performance Shares become unreasonable. The fair value of the Volvo Car AB (publ.) class B share at grant date is calculated as the market value of the share excluding the present value of expected dividend payments for the next three years and amounted to SEK 75.26 for the PSP 2022, SEK 40.43 for the PSP 2023, SEK 34.06 and SEK 24.56 for the PSP 2024 and SEK 17.37 for the PSP 2025, dependent on the date the Performance Share was granted on. During 2024 Volvo Car AB (publ.) modified the PSP 2022, PSP 2023 and PSP 2024 programmes by granting an additional PSP Award to participants to reflect the effects on the share price in connection with the distribution of Volvo Cars’ shareholding in Polestar Automotive Holding UK PLC. The fair value of the Volvo Car AB (publ.) class B share at grant date for the modification amounted to SEK 28.42 and is applicable to all programmes. Terms and condi - tions of vesting are aligned with the existing programmes. The expenses for the additional PSP Award will be recognised from the modification date up until the date for vesting in each programme. The total expenses for the additional Awards during 2025 was SEK 2 (2) m, of which SEK 1 (2) m is equity settled and SEK — (—) is cash settled. Liability and cost The total cost for the PSP programmes amounted to SEK 33 (1) m of which SEK 23 (4) m is equity-settled. SEK 10 (–3) m is cash- settled, of which SEK 9 (–1) m is related to social security expenses. The total liability amounted to SEK 16 (16) m. OVERVIEW 3 MARKET 15 OUR STRATEGIC FRAMEWORK 18 DIRECTORS’ REPORT 29 RISK 36 CORPORATE GOVERNANCE 42 FINANCIALS CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ALTERNATIVE PERFORMANCE MEASURES PARENT COMPANY FINANCIAL STATEMENTS NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS PROPOSED DISTRIBUTION OF NON-RESTRICTED EQUITY AUDITOR’S REPORT SUSTAINABILITY 130 THE SHARE 220 OUR HERITAGE 222 VOLVO CAR GROUP / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 82 ===== SIDA 83 ===== date the Matching Share was granted. For ESMP 2023 the fair value of the share at grant date amounted to SEK 36.96, SEK 42.72, SEK 45.32, SEK 40.14, SEK 32.56 and SEK 33.6 dependent on the date the Matching Share was granted. For ESMP 2024 the fair value of the share at grant date amounted to SEK 35.32, SEK 31.56, SEK 31.41 and SEK 23.73 dependent on the date the Matching Share was granted. When the employee receives the Matching Shares, it is normally seen as a taxable benefit. Volvo Cars has therefore decided to con - tribute with an additional cash sum corresponding to a general tax level for each country. The contribution is calculated on a general level and is not individually set. Since this part of the programme meets the description of a cash- settled share-based payment transaction, a liability will be recog - nised and remeasured to fair value at the end of each reporting period. During 2024, Volvo Car AB (publ.) granted an additional cash contribution to ESMP 2022 and ESMP 2023 participants to reflect the effects on the share price in connection with the distribution of Volvo Cars’ shareholding in Polestar Automotive Holding UK PLC. Payment of the cash contribution is aligned with the vesting of the existing programmes and the cost for the additional cash contribu - tion will be taken from the modification date up until the date for vesting in each programme. The total cost for 2025 for the addi - tional cash contribution was SEK 9 (26) m (all cash settled). Liability and cost The total cost for the ESMP programme amounted to SEK 98 (153) m of which SEK 47 (80) m is equity-settled. SEK 51 (73) m is cash- settled, of which SEK 17 (24) m is related to social security expenses. The total liability amounted to SEK 58 (78) m. ESMP 2024 ESMP 2023 ESMP 2022 Outstanding number of shares at the beginning of the year 1,821,311 1,559,470 625,244 Granted shares during the year — — — Forfeited during the year –195,412 –43,468 –8,729 Vested during the year — –1,482,042 –616,515 Outstanding number of shares at the end of the year 1,625,899 33,960 — Employee Share Matching Plan (ESMP) In 2022, the Annual General Meeting also approved the implemen - tation of a share-based incentive programme (Employee Share Matching Plan, ESMP 2022) giving all permanent employees of Volvo Car Group the opportunity to become shareholders in Volvo Car AB (publ.). The purpose of the ESMP is to create engagement, commitment and motivation for the entire permanent workforce of Volvo Car Group, excluding the participants of PSP. Two additional ESMP programmes have been approved, one at the Annual General Meeting 2023, ESMP 2023 and another one at the Annual General Meeting 2024, ESMP 2024, similar to the one implemented during 2022. To participate in the programmes, the participants must make own investments in class B shares in Volvo Car AB (publ.) (Investment shares), up to an aggregate value for each participant at the time of the investment of no more than SEK 10,000. For each Investment share, the participants will be entitled to allocation of one Matching Share free of charge after the expiration of the two-year vesting period. Allocation of Matching Shares is conditional upon the participants retaining the employment within the Volvo Car Group over the entire vesting period and that the participants has retained the Investment shares purchased. Both ESMP 2022 and 2023 programmes shall comprise a maxi - mum of 7,832,000 class B shares in Volvo Car AB (publ.) respec - tively. The ESMP 2024 programme shall comprise a maximum of 16,578,427 class B shares in Volvo Car AB (publ.). Should there be a decline in the price of the Volvo Car AB (publ.) class B share such that the number of Matching Shares subject to allocation exceeds the maximum number of Matching Shares, the number of Matching Shares allocated to the participants will be reduced proportionately. The Board of Directors is entitled to reduce the number of Match - ing Shares subject to allocation or, wholly or partially, terminate the ESMP programmes in advance if significant changes in the Group or in the market occur which, in the opinion of the Board of Directors, would result in a situation where the conditions for allocation of Matching Shares become unreasonable. The fair value of the Volvo Car AB (publ.) class B share at grant date is calculated as the market value of the share excluding the present value of expected dividend payments for the next two years. For ESMP 2022 the fair value of the share at grant date amounted to SEK 44.34, SEK 50.71, SEK 49.43 and SEK 44.14 dependent on the OVERVIEW 3 MARKET 15 OUR STRATEGIC FRAMEWORK 18 DIRECTORS’ REPORT 29 RISK 36 CORPORATE GOVERNANCE 42 FINANCIALS CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ALTERNATIVE PERFORMANCE MEASURES PARENT COMPANY FINANCIAL STATEMENTS NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS PROPOSED DISTRIBUTION OF NON-RESTRICTED EQUITY AUDITOR’S REPORT SUSTAINABILITY 130 THE SHARE 220 OUR HERITAGE 222 VOLVO CAR GROUP / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 83 ===== SIDA 84 ===== NOTE 10 GOVERNMENT GRANTS ACCOUNTING POLICIES Government grants are recognised in the financial statements in accordance with their purpose, either as a reduction of expense or as a reduction of the carrying amount of the asset. Government grants intended to compensate for a specific expense are recog - nised as a cost reduction in the same period as the expense which the grant is intended to compensate has been recognised. Govern - ment grants related to acquiring assets are deducted from the car - rying amount of the asset and are recognised in the income state - ment over the life of a depreciable asset as a reduced depreciation expense. In cases where the received government grant is not intended to compensate for any expenses or the acquisition of assets, the grant is classified by the nature of the income, either as revenue or other income. Government grants for future expenses are recognised as deferred income. For more information relating to the accounting policies for emission credits see Note 2 – Revenue. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS A government grant is recognised when there is reasonable assur - ance that Volvo Car Group will comply with the conditions attached to the grant and that the grant will be received. Judgement includes assessing if Volvo Car Group is in compliance with the prerequisites in the contract or not and if there is a potential risk of repayment if these prerequisites are breached during the contract period. As of today, Volvo Car Group’s assessment is that there are no govern - ment grants received where there is a risk of material repayments. Volvo Car Group receives grants from several parties, mainly from the Slovak, American, Chinese and Belgian Governments as well as from the European Union. In 2025 the government grants received amounted to SEK 797 (167) m and the government grants realised in the income statement amounted to SEK 3,686 (1,116) m. Grants relating to earned emission credits amounted to SEK 3,501 (994) m. Non-monetary government grants have been received in China, mainly in the form of rent-free office and factory premises, and in the US in the form of reduced lease fees and reduced property tax related to office premises and the manufacturing site. NOTE 11 OTHER FINANCIAL INCOME AND EXPENSES ACCOUNTING POLICIES Financing expenses on repurchase obligations are presented as other financial expenses. Foreign exchange rate gains and losses on financial transactions are presented net in other financial income and expenses. Also presented net are fluctuations in the fair value of derivatives hedging financial transactions where hedge accounting is not applied. Information on the classification of financial instru - ments, see Note 19 – Financial instruments and Financial risks. Other financial income 2025 2024 Net change in fair value on financial instruments — 358 Net foreign exchange rate differences — 84 of which foreign exchange rate gains — 2,201 of which foreign exchange rate losses — –2,117 Other financial income 2 9 2 451 Other financial expenses 2025 2024 Financing expenses on repurchase obligations –917 –797 Net change in fair value on financial instruments –241 — Net foreign exchange rate differences –219 — of which foreign exchange rate gains 3,256 — of which foreign exchange rate losses –3,475 — Fees on factoring –151 –184 Expenses on credit facilities –99 –69 Other financial expenses –22 –26 –1,649 –1,076 NOTE 12 INVESTMENTS IN JOINT VENTURES AND ASSOCIATES ACCOUNTING POLICIES Joint ventures refer to joint arrangements whereby Volvo Car Group together with one or more parties have joint control and rights to the net assets of the arrangements. Associated companies are companies in which Volvo Car Group has a significant but not controlling influence, which generally is when Volvo Car Group holds between 20 and 50 per cent of the shares, but it also includes investments with less participation if sig - nificant influence is proven based on other facts and circumstances. Investments in joint ventures and associated companies are recognised in accordance with the equity method. When Volvo Car Group’s share of losses in a joint venture or associate equals or exceeds its interest in the joint venture or associate, Volvo Cars does not recognise further losses unless it has a legal or construc - tive obligations in relation to the joint venture or associate. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS A critical judgement in relation to joint ventures is whether joint control exists when Volvo Car Group has a shareholding of greater than 50 per cent but based on other facts and circumstances has joint control over the investee. This could be based on but not lim - ited to the governance structure of the joint venture, and proce - dures for appointment of key management and dispute resolution. The judgement that is made is whether Volvo Car Group has the power to direct the activities that significantly affect the returns of the joint venture, has a right to variable returns from the joint ven - ture, and the ability to exercise its power over the joint venture to affect the amount of its returns. Even with a greater than 50 per cent ownership in an investee, if Volvo Car Group cannot direct the activi- ties of the joint venture to significantly affect its returns from the joint venture, nor exercise its power over the joint venture. Volvo Car Group recognises Volvo Car Group Financial Leasing (Shanghai) Co., Ltd as a joint venture with a 55 per cent shareholding and voting interest because it has joint decision-making power over the operations. A critical judgement in relation to associates is whether signifi - cant influence exists where Volvo Car Group has voting power of less than 20 per cent but based on other facts and circumstances could have significant influence over a company. This could be OVERVIEW 3 MARKET 15 OUR STRATEGIC FRAMEWORK 18 DIRECTORS’ REPORT 29 RISK 36 CORPORATE GOVERNANCE 42 FINANCIALS CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ALTERNATIVE PERFORMANCE MEASURES PARENT COMPANY FINANCIAL STATEMENTS NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS PROPOSED DISTRIBUTION OF NON-RESTRICTED EQUITY AUDITOR’S REPORT SUSTAINABILITY 130 THE SHARE 220 OUR HERITAGE 222 VOLVO CAR GROUP / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 84 ===== SIDA 85 ===== based on the content of a shareholder agreement, evaluation of the company’s financing structure and board of directions composition, or other market-based assumptions and relationship-based facts. Volvo Car Group recognises Polestar Automotive Holding UK PLC as an associate with a 13.7 (18.0) per cent shareholding and 12.5 (14.9) per cent of voting power, and retains significant influence in the Polestar Group through its remaining shareholding, board rep - resentation, operational collaborations and technical reliance. 2025 2024 Share of income in joint ventures 597 –1,937 Share of income in associates 57 –2,785 Total 654 –4,722 Share of income in joint ventures and associates is specified below: 2025 2024 Lynk & Co Automotive Technology Group –137 –624 Polestar Automotive Holding Group 1) 46 –2,794 Ziklo Bank AB 379 393 Other companies 2) 366 –1,697 Total 654 –4,722 1) After the second quarter 2024, no further losses have been recognised. 2) Impairment of shareholding in NOVO Energy AB of SEK — (–1,702) m. Investments in joint ventures and associates 31 Dec 2025 31 Dec 2024 At beginning of the year/acquired acquisition value 8,998 14,142 Share of net income 654 –4,722 Reversal internal profit elimination –46 –2,018 Investment in NOVO Energy AB — 2,136 Investment in Volvo Car Group Financial Leasing (Shanghai) Co., Ltd. — 802 Investment in World of Volvo AB — 25 Investment in Zenuity AB 3 6 Divestment of Lynk & Co Automotive Technology Co., Ltd –2,235 — Liquidation of GV Automobile Technology (Ningbo) Co., Ltd –43 Reclassification from joint venture to subsidiary — –908 Revaluation of earn-out rights in Polestar Automotive UK PLC — 581 Dividends –205 –213 Translation difference –123 –833 Total 7,003 8,998 Volvo Car Group’s carrying amount on investments in joint ventures and associates: Corp. ID no. Country of incorporation % interest held 31 Dec 2025 31 Dec 2024 Joint ventures Volvo Trademark Holding AB 556567-0428 Sweden 50 7 7 VH Systems AB 556820-9455 Sweden 50 38 37 Zenuity AB 559073-6871 Sweden 50 — — Ziklo Bank AB 556069-0967 Sweden 50 3,905 3,717 World of Volvo AB 559233-9849 Sweden 50 89 87 VCFS Germany GmbH HRB 85091 Germany 50 4 4 VCIS Germany GmbH HRB 86800 Germany 50 12 9 Volvo Car Financial Services UK Ltd 12718441 United Kingdom 50 1,215 1,036 Volvo Car Group Financial Leasing (Shanghai) Co., Ltd 91310115MA1K49CY8Y China 55 1,694 1,612 GV Automobile Technology (Ningbo) Co., Ltd 91330201MA2AGKLQ8E China — (50) — 40 Lynk & Co Automotive Technology Co., Ltd 91330200MA2AF25Y7B China — (30) — 2,414 Associated companies VCC Försäljnings KB 969712-0153 Sweden 50 1 1 VCC Tjänstebilar KB 969673-1950 Sweden 50 5 2 Volvohandelns PV Försäljnings AB 556430-4748 Sweden 50 19 17 Volvohandelns PV Försäljnings KB 916839- 7009 Sweden 50 6 7 Polestar Automotive Holding UK PLC 3) 13624182 United Kingdom 14 (18) — — Trio Bilservice AB 556199-1059 Sweden 33 1 1 Göteborgs Tekniska College AB 556570-6768 Sweden 26 7 6 Leiebilservice AS 879 548 632 Norway 20 — 1 Carrying amount, participation in joint ventures and associates 7,003 8,998 3) The share of voting power is 12.5 (14.9) per cent. The share of voting power corresponds to holdings in per cent as per above, unless otherwise noted. For practical reasons, some of the joint ventures and associates are included in the consolidated financial statements with a certain time lag, normally one month. Lynk & Co Automotive Technology Co., Ltd The joint venture company Lynk & Co Automotive Technology Co., Ltd was an establishment between Volvo Cars (China) Investment Co., Ltd, (30 per cent), Ningbo Geely Automobile Industry Co., Ltd. (50 per cent) and Zhejiang Geely Holding Group Co., Ltd. (20 per cent). The principal activity of the Lynk & Co Automotive Technol - ogy Co., Ltd is to engage in the manufacturing and sale of vehicles under the “Lynk & Co” brand, and support after-sale services relating thereto. On 14 February, Volvo Cars divested its 30 per cent shareholding in Lynk & Co Automotive Technology Co., Ltd to Zhejiang Zeekr Intelligent Technology Co., Ltd., after approval at an Extraordinary General Meeting of Volvo Cars’ shareholders on 6 February 2025 as well as other regulatory approvals. Disposal consideration, including interest, amounted to RMB 5,463 corresponding to SEK 8,053 m. 70 per cent of the disposal consideration (RMB 3,824 m) was received at closing and the remaining 30 per cent of the disposal considera - tion (RMB 1,639 m) was paid on 28 November 2025 . Since the trans- OVERVIEW 3 MARKET 15 OUR STRATEGIC FRAMEWORK 18 DIRECTORS’ REPORT 29 RISK 36 CORPORATE GOVERNANCE 42 FINANCIALS CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ALTERNATIVE PERFORMANCE MEASURES PARENT COMPANY FINANCIAL STATEMENTS NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS PROPOSED DISTRIBUTION OF NON-RESTRICTED EQUITY AUDITOR’S REPORT SUSTAINABILITY 130 THE SHARE 220 OUR HERITAGE 222 VOLVO CAR GROUP / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 85 ===== SIDA 86 ===== action is a divestment under common control, the capital gain of SEK 5,818 m (excluding tax) was recognised directly in equity. The recognised losses in Lynk & Co Automotive Technology Co., Ltd have been accounted for up until 14 February 2025, using the equity method. Polestar Automotive Holding UK PLC The associated company Polestar Automotive Holding UK PLC is owned by Volvo Car Group’s wholly-owned subsidiary Snita Holding B.V., with 13.7 (18.0) per cent shareholding and 12.5 (14.9) per cent of voting power. Polestar Automotive Holding UK PLC is listed on the Nasdaq Stock Exchange in New York (ticker symbol: PSNY). Other major shareholders are PSD Investment Ltd 36.7 (39.2) per cent with voting power 42.3 (49.9) per cent, and Geely Sweden Automo - tive Investment B.V. 18.1 (23.8) per cent with voting power 16.5 (19.6) per cent. On 26 March 2024, the Annual General Meeting of Volvo Cars resolved, in accordance with the Board of Directors’ proposal, to distribute a portion of Volvo Cars’ shareholding in Polestar to Volvo Cars’ shareholders. In preparation for the distribution of the shares, an internal share transfer was made from Snita Holding B.V. to Volvo Cars parent company Volvo Car AB (publ.) at a purchase price equivalent of the fair market value of each share on the Nasdaq Stock Exchange in New York on the transaction date, 8 May 2024. On 8 May 2024, Volvo Car AB (publ.) completed the distribution of 62.7 per cent of its shareholding in Polestar Automotive Holding UK PLC amounted to SEK 9,332 m to Volvo Cars’ shareholders. The major shareholder is Geely Sweden Holdings AB with 78.65 per cent of the shares. The distribution involved a share split (2:1), whereby Volvo Cars’ shareholder received redemption shares which was redeemed as part of the distribution. The distribution of SEK 3.13 per share was made to the holders of the redemption shares on the record date of of 8th of May 2024, in total 2,979,524,179 redemption shares. For further information, see Note 21 – Equity. After the distribution, Volvo Car Group’s remaining shareholding in Polestar through the wholly-owned subsidiary Snita Holding B.V. was reduced to 18.0 per cent with a voting right of 14.9 per cent. On 30 October 2024, Volvo Cars executed its redemption right to acquire Northvolt’s 50 per cent shareholding in NOVO Energy AB. The NOVO Energy Group was up to 30 October 2024 reported in accordance with the equity method and thereafter reclassified to a subsidiary. For further information, see Note 27 – Business combi - nations and divestments. Until 8 May 2024, recognised losses in Polestar were accounted for using the equity method with a shareholding of 48.3 per cent and thereafter with 18.0 per cent. After the second quarter 2024, when recognised losses exceeded the carrying amount of Volvo Car Group’s investment in Polestar, no further losses have been recog - nised. On 23 July 2025, Polestar Automotive Holding UK PLC closed a private investment in public equity, “PIPE investment” of USD 200 m with its major shareholder PSD Investment Ltd. As a result, Volvo Car Group’s shareholding in Polestar was diluted from 18.0 per cent down to 16.5 per cent and voting rights were diluted down from 14.9 per cent to 14.8 per cent. On 23 December 2025, Polestar Automotive Holding UK PLC closed a PIPE investment of USD 300 m with two financial insti - tutes. As a result, Volvo Car Group’s shareholding was further diluted down to 13.7 per cent and voting rights were diluted down to 12.5 per cent. As of 31 December 2025, Volvo Cars’ fair value of the Polestar Group, listed on the Nasdaq Stock Exchange in New York, was SEK 2,498 (4,405) m based on the quoted market price. Ziklo Bank AB Ziklo Bank AB is a joint venture between Volvo Car Corporation and AB Volverkinvest. In Sweden, Ziklo Bank AB is one of the leading banks within vehicle financing services. During 2024, Volvofinans Bank AB changed its legal name to Ziklo Bank AB, however Volvo - finans still exists as a brand. Other companies On 8 December, GV Automobile Technology (Ningbo) Co., Ltd, a joint venture between Volvo Car Corporation and Ningbo Geely Automobile Technology Research & Development Co. Ltd, was liquidated. NOVO Energy AB was a joint venture between Volvo Car Corpora - tion (50 per cent) and Northvolt AB (50 per cent). The purpose of the joint venture was to develop and produce more sustainable bat - teries to contribute to powering the next generation of pure electric Volvo and Polestar cars. OVERVIEW 3 MARKET 15 OUR STRATEGIC FRAMEWORK 18 DIRECTORS’ REPORT 29 RISK 36 CORPORATE GOVERNANCE 42 FINANCIALS CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ALTERNATIVE PERFORMANCE MEASURES PARENT COMPANY FINANCIAL STATEMENTS NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS PROPOSED DISTRIBUTION OF NON-RESTRICTED EQUITY AUDITOR’S REPORT SUSTAINABILITY 130 THE SHARE 220 OUR HERITAGE 222 VOLVO CAR GROUP / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 86 ===== SIDA 87 ===== The following tables present summarised financial information for the Volvo Car Group’s material joint ventures and associates. Summarised balance sheets Lynk & Co Automotive Technology Group 1) Polestar Automotive Holding Group 2) Ziklo Bank AB3) 2025 2024 2025 2024 2025 2024 Percentage ownership — 30 16 18 50 50 Non-current assets — 30,686 14,383 24,958 51,880 44,488 Cash and cash equivalents — 8,367 9,177 8,100 3,646 4,064 Other current assets — 45,614 14,865 17,403 6,106 5,525 Total assets — 84,667 38,425 50,461 61,632 54,077 Equity4) — 7,881 –42,627 –31,489 7,058 6,683 Non-current financial liabilities — 6,045 24,080 26,237 49,932 42,376 Non-current liabilities 4) — 4,551 2,240 3,055 1,372 1,174 Current financial liabilities — 2,745 31,802 28,968 — — Current liabilities — 63,445 22,930 23,690 3,270 3,844 Total equity and liabilities — 84,667 38,425 50,461 61,632 54,077 Summarised income statements Lynk & Co Automotive Technology Group 1) Polestar Automotive Holding Group 2) Ziklo Bank AB3) 2025 2024 2025 2024 2025 2024 Revenue — 62,282 21,592 21,373 6,124 5,745 Depreciation and amortisation — –5,429 –374 –1,188 –18 –20 Interest income — 315 707 173 — — Interest expense — –704 –2,789 –4,150 — — Profit/loss from continuing operations — –2,339 –15,499 –16,578 626 633 Profit (loss) for the year — –2,339 –15,499 –16,578 626 633 Other comprehensive income for the year — 137 386 –420 — — Total comprehensive income for the year — –2,202 –15,113 –16,998 626 633 Dividends received from joint ventures and associates during the year — — — — 191 201 Reconciliation of the summarised financial information presented to the carrying amount of its interest in joint ventures and associates. Reconciliation of summarised financial information Lynk & Co Automotive Technology Group 1) Polestar Automotive Holding Group 2) Ziklo Bank AB3) 2025 2024 2025 2024 2025 2024 Net asset of the joint venture and associate — 7,881 –42,627 –31,489 7,058 6,683 Proportion of Volvo Car Group's owner - ship, % — 30 16 18 50 50 Goodwill — — — — 376 376 Adjustments for differences in accounting principles — — 455 455 — — Adjustments for unrecognised share of losses — — 5,194 2,956 — — Adjustments for common control transaction — 54 –47 20 — — Polestar listing — — 8,970 8,970 — — Revaluation of earn-outs rights — — 315 315 — — Distribution of Polestar shares — — –5,626 –5,626 — — Equity-settled share-based payments — — –106 –92 — — Capital injection from investors other than Volvo Car Group — — –1,107 –764 — — Net foreign exchange rate effect — –4 –1,027 –560 — — Carrying amount of Volvo Car Group's interest in joint ventures and associates — 2,414 — — 3,905 3,717 1) Volvo Car Group’s equity share in Lynk & Co Automotive Technology Group was in year 2024 included with a time lag of a month, and a forecast for December. 2) Volvo Car Group’s equity share in Polestar Automotive Holding Group is included with a time lag of a quarter. 3) Volvo Car Group’s equity share in Ziklo Bank AB is included with a time lag of a quarter. 4) Equity and non-current liabilities are adjusted with the portion of untaxed reserves where appropriate. Significant restrictions For the Chinese joint venture company, there are some restrictions on the Volvo Car Group's ability to access cash. OVERVIEW 3 MARKET 15 OUR STRATEGIC FRAMEWORK 18 DIRECTORS’ REPORT 29 RISK 36 CORPORATE GOVERNANCE 42 FINANCIALS CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ALTERNATIVE PERFORMANCE MEASURES PARENT COMPANY FINANCIAL STATEMENTS NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS PROPOSED DISTRIBUTION OF NON-RESTRICTED EQUITY AUDITOR’S REPORT SUSTAINABILITY 130 THE SHARE 220 OUR HERITAGE 222 VOLVO CAR GROUP / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 87 ===== SIDA 88 ===== NOTE 13 TAXES ACCOUNTING POLICIES Income taxes Income taxes include current and deferred taxes as well as with - holding tax, mainly on licenses, and are reported in the income statement unless the underlying transaction is recognised directly in equity or other comprehensive income. For those items the related income tax is also reported directly in equity or other comprehensive income. Deferred taxes are recognised on tax loss carry-forwards, unused tax credits and differences that arise between the taxable value and carrying value of assets and liabilities, with the exception of good - will. Volvo Car Group applies the mandatory temporary exemption in IAS 12 to not recognise or disclose information about deferred tax assets and liabilities related to the OECD Pillar Two rules. Informa - tion regarding the Group’s exposure to the enacted Swedish Pillar Two legislation is presented in this note. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS Deferred tax assets The recognition of deferred tax assets requires assumptions about the level of future taxable income and the timing of recovery of deferred tax assets. These assumptions take into consideration forecasted taxable income. The measurement of deferred tax assets is subject to uncertainty and the actual result may diverge from judgements due to future changes in business climate, altered tax laws etc. An assessment is made at each closing date of the likeli - hood that the deferred tax asset will be utilised. If needed the carry - ing amount of the deferred tax asset will be altered. The judgements that have been made may affect net income both positively and negatively. Income tax recognised in income statement 2025 2024 Current income tax for the year –2,690 –2,799 Current income tax for previous years –450 –317 Deferred taxes 647 –3,434 Pillar Two – minimum tax –7 –9 Withholding taxes 1) 171 –255 Other taxes 27 29 Total –2,302 –6,785 1) Withholding tax on i.a. royalty and licence sales, mainly to China. Reconciliation between current tax rate in Sweden and effective tax rate 2025 2024 Income before tax for the year –666 22,719 Tax according to applicable Swedish tax rate, 20.6 (20.6)% 137 –4,680 Operating income/costs, non-taxable –20 6 Withholding taxes 171 –255 Other taxes, non-tax deductible 20 20 Share of income in joint ventures and associates, tax exempt 113 –1,127 Capital gains or losses, non-tax deductible –75 –334 Effect of different tax rates –214 –186 Tax effect on deferred tax due to change of tax rate –30 — Non-recognised deferred tax asset on tax losses carry forward 2) –2,267 –70 Remeasurements of previously non-recognised deferred tax on tax losses 110 6 Revaluation of previously non-valued losses and other temporary differences –212 –134 Other –35 –31 Total –2,302 –6,785 2) Non-recognised deferred tax asset of tax losses carry forwards and temporary tax adjustments relates to China. Deferred tax assets were not recognised due to IAS 12 criteria regarding convincing evidence of future taxable income and limitation of tax losses carry-forwards to five years. The impairment is allocated to taxable losses and tempo - rary tax adjustments recognised during the year SEK -1,594 (-70) m and remeasurement of previous year recognised deferred tax assets of SEK -673 (—) m. The corporate statutory income tax rate in Sweden was 20.6 (20.6) per cent. The effective tax rate on profit before taxes was –345.65 (29.86) per cent. Income tax recognised in other comprehensive income 2025 2024 Deferred tax Tax effects on cash flow hedge reserve 1,770 –1,109 Tax effect of remeasurement of provisions for post-employment benefits 496 –55 Tax effects on translation difference of hedge instruments of net investments in foreign operations 154 –65 Total 2,420 –1,229 Specification of deferred tax assets 31 Dec 2025 31 Dec 2024 Goodwill arising from the purchase of the net assets of a business –9 36 Provision for employee benefits 467 1,042 Unutilised tax loss carry-forwards and tax credits 3) 11,975 10,534 Accruals 7,287 9,258 Reserve for unrealised income in inventory 767 1,730 Provision for warranty 1,690 1,757 Fair value of financial instruments — 743 Lease liabilities 1,578 2,385 Other temporary differences 1,681 1,517 Total deferred tax assets 25,436 29,002 Netting of assets/liabilities –17,073 –16,742 Total deferred tax assets, net 8,363 12,260 Specification of deferred tax liabilities 31 Dec 2025 31 Dec 2024 Fixed assets 17,824 20,112 Untaxed reserves 125 47 Auto lease portfolio 7,317 7,125 Fair value of financial instruments 1,202 — Other temporary differences 469 538 Total deferred tax liabilities 26,937 27,822 Netting of assets/liabilities –17,073 –16,742 Total deferred tax liabilities, net 9,864 11,080 3) In 2025, Volvo Cars has adjusted the presentation of certain unused tax credits in the US, resulting in a reclassification amounting to SEK 1,099 (1,278) m, to more accurately reflect the nature of these items. Comparative figures have been restated (prior Other non-current assets). OVERVIEW 3 MARKET 15 OUR STRATEGIC FRAMEWORK 18 DIRECTORS’ REPORT 29 RISK 36 CORPORATE GOVERNANCE 42 FINANCIALS CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ALTERNATIVE PERFORMANCE MEASURES PARENT COMPANY FINANCIAL STATEMENTS NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS PROPOSED DISTRIBUTION OF NON-RESTRICTED EQUITY AUDITOR’S REPORT SUSTAINABILITY 130 THE SHARE 220 OUR HERITAGE 222 VOLVO CAR GROUP / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 88 ===== SIDA 89 ===== Volvo Car Group is subject to the OECDs model rules for Pillar Two and on 13 December 2023, the government of Sweden, where the parent company is incorporated, enacted the Pillar Two income tax legislation effective from 1 January 2024 and applicable from fiscal year 2024. Based on the legislation, the Group is obliged to pay additional tax on profits in each jurisdiction where the effective tax rate according to the GloBE rules is below the minimum tax rate of 15 per cent. The Group has identified exposure to Pillar Two income taxes on profits earned in a few countries. The exposure comes from the constituent entities (mainly operating subsidiaries) in these jurisdictions. The current tax expense related to Pillar Two income taxes is disclosed separately. The Group is continuing to assess the impact of the Pillar Two income tax legislation on its future financial performance and is adapting to local compliance rules as they are implemented. For the sake of completeness, it should be noted that some countries, including China, have not yet implemented Pillar Two rules (or a local Qualified Domestic Top Up Tax) within their domestic legislation. Changes in deferred tax assets and liabilities during the reporting period 31 Dec 2025 31 Dec 2024 Net book value of deferred taxes at 1 January 3) 1,180 2,977 Deferred tax income/expense recognised through income statement 647 –3,434 Change in deferred taxes recognised directly in other comprehensive income –2,420 1,229 Reclassifications 3) — 143 Exchange rate impact –908 265 Net book value of deferred taxes at 31 December 3) –1,501 1,180 3) In 2025, Volvo Cars has adjusted the presentation of certain unused tax credits in the US, resulting in a reclassification amounting to SEK 1,099 (1,278) m, to more accurately reflect the nature of these items. Com - parative figures have been restated (prior Other non-current assets). As of 31 December 2025, the recognised tax loss carry-forwards amounted to SEK 48,726 (41,780) m. The tax value of these tax loss carry-forwards is reported as an asset. Of the total SEK 10,876 (9,256) m recognised deferred tax assets related to tax loss carry- forwards, SEK 6,878 (6,085) m relates to Sweden with indefinite periods of utilisation. SEK 3,327 (2,265) m relates to US where tax loss carry-forwards are expected to be utilised before expiration date and SEK 334 (698) m relates to China where tax loss carry- forwards are expected to be utilised before expiration date. The Group had total unrecognised deferred tax assets of SEK 2,404 (353) m related to tax losses carry-forwards and temporary tax adjustments, these were not recognised due to IAS 12 criteria regarding convincing evidence of future taxable income and limita - tion of tax losses carry-forwards to five years. The majority, SEK 2,289 (—) m is related to China with definite periods of utilisation. The final years in which the recognised loss carry-forwards can be utilised are shown in the following table. Tax-loss carry-forwards; year of expiration 31 Dec 2025 31 Dec 2024 Due date Expiring within one year 11 — Expiring after one year but within five years 808 2,791 Expiring after five years 47,907 38,989 Total 48,726 41,780 NOTE 14 EARNINGS PER SHARE ACCOUNTING POLICIES Basic earnings per share is calculated as net income attributable to owners of the parent company divided by the weighted average number of ordinary shares outstanding during the period. Effects on Earnings per share (EPS) connected with equity- settled employee incentive plans are reflected in the diluted earnings per share calculation when they are dilutive. For the performance share programme this is based on the fulfilment of the performance conditions. For the employee share matching programme dilutive effects are calculated using the treasury stock method. Basic earnings per share 2025 2024 Net income attributable to owners of the parent company 174 15,401 Net income attributable to owners of ordinary shares in the parent company 174 15,401 Weighted average number of ordinary shares outstanding, basics1)2) 2,968,505,485 2,977,042,500 Basic earnings per share (SEK) 0.06 5.17 Diluted earnings per share 2025 2024 Net income in basic earnings per share 174 15,401 Net income in diluted earnings per share 174 15,401 Weighted average number of ordinary shares outstanding, basic1)2) 2,968,505,485 2,977,042,500 Dilutive effect for share-based payment programmes 2,431,998 1,135,042 Weighted average number of ordinary shares, diluted 2,970,937,483 2,978,177,542 Diluted earnings per share (SEK) 0.06 5.17 1) The weighted average number of outstanding shares takes into account the weighted average effect of changes in treasury shares during the year. 2) Total number of treasury shares held by Volvo Car Group amounts to 14,894,838 (5,020,194) shares. NOTE 15 INTANGIBLE ASSETS ACCOUNTING POLICIES The intangible assets held by Volvo Car Group consists primarily of vehicle product development, licenses and patents, trademark, goodwill, dealer network and investments in IT-systems and soft - ware. Volvo Car Group applies the cost model for measurement of intangible assets. Product development Volvo Car Group applies a waterfall model with distinct gates that governs all phases of product development projects. Costs related to product development are only recognised as assets when the recognition criteria are met. Normally this correlates with the indus - trialisation phase of the project when the product is prepared for serial production and the product is launched. Costs prior to the industrialisation phase of the project, the concept phase, are recog - nised in the income statement as incurred. Development costs that are contractually shared with other par - ties are recognised as intangible assets to the extent of the relevant proportion of Volvo Car Group interests. Incurred costs for devel - oped technology not controlled by Volvo Car Group are recognised in the income statement as cost of sales at the time of sale. OVERVIEW 3 MARKET 15 OUR STRATEGIC FRAMEWORK 18 DIRECTORS’ REPORT 29 RISK 36 CORPORATE GOVERNANCE 42 FINANCIALS CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ALTERNATIVE PERFORMANCE MEASURES PARENT COMPANY FINANCIAL STATEMENTS NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS PROPOSED DISTRIBUTION OF NON-RESTRICTED EQUITY AUDITOR’S REPORT SUSTAINABILITY 130 THE SHARE 220 OUR HERITAGE 222 VOLVO CAR GROUP / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 89 ===== SIDA 90 ===== Amortisation methods for intangible assets Intangible assets with finite useful lives are amortised on a straight- line basis over their respective expected useful lives. When assets are used only in the production of a specific vehicle or platform, the useful life of the assets is aligned with the production period for that vehicle or platform. The amortisation period for contractual rights such as licences does not exceed the contract period. All intangible assets are considered to have a finite useful life, with the exception of goodwill and trademarks. Trademarks are assumed to have indefi- nite useful lives since Volvo Car Group has the right and the intention to continue to use the trademarks for the foreseeable future, while generating net positive cash flows for Volvo Car Group. An intangible asset with an indefinite useful life is not amortised. The following use- ful lives are applied to intangible assets with finite useful lives: Dealer network 30 years Software 3–8 years Product development 3–15 years Patents, licences and similar rights 3–10 years Amortisation is included in cost of sales, research and development expenses as well as selling or administrative expenses, depending on how the assets have been used. Amortisation of intangible assets related to vehicle platforms are included in research and develop - ment expenses. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS Management regularly reassesses the useful life of all significant assets. When the useful life of an intangible asset is reduced, amor - tisation is accelerated and increased in future periods to reflect the reduction over time over which the Group will derive benefits from the asset. A shorter estimated useful life is not always an indicator of impairment, as impairment is characterised by a change in the expected cash flows to be derived from the asset. When assessing the useful life, climate-related risks were considered and found to have no material impact. The carrying amount of intangible assets with finite useful lives is tested for impairment when there are indicators of a decline in the expected future economic benefits related to the asset. Impairment testing of assets that do not generate largely independent cash inflows is performed by grouping assets per platform, which constitute the cash-generating units (CGUs) of Volvo Cars. Product development1) 4) Software4) Assets under con- struction Trademark and goodwill2) Other intangible assets3) Total Acquisition cost Balance at 1 January 2024 51,441 8,031 37,466 4,218 10,008 111,164 Additions 6,306 25 14,552 — 47 20,930 Acquired through business combinations — — — 115 — 115 Divestments and disposals –3,645 –769 –190 –179 –69 –4,852 Reclassifications 28,233 2,244 –30,928 — 124 –327 Effect of foreign currency exchange rate differences 1 –7 46 — 125 165 Balance at 31 December 2024 82,336 9,524 20,946 4,154 10,235 127,195 Additions 3,326 24 14,570 — 52 17,972 Acquired through business combinations — — — 102 — 102 Divestment of business –4 — — — — –4 Divestments and disposals –1,698 –396 –289 — –35 –2,418 Reclassifications 11,717 1,990 –14,082 — 245 –130 Effect of foreign currency exchange rate differences –2 7 –66 –5 –206 –272 Balance at 31 December 2025 95,675 11,149 21,079 4,251 10,291 142,445 Accumulated amortisation and impairment Balance at 1 January 2024 –29,068 –3,459 — — –6,533 –39,060 Amortisation expense –7,399 –959 — — –846 –9,204 Divestments and disposals 3,616 429 — — 64 4,109 Reclassifications — — — — 853 853 Effect of foreign currency exchange rate differences — 25 — — –137 –112 Balance at 31 December 2024 –32,851 –3,964 — — –6,599 –43,414 Amortisation expense 4) –8,171 –1,185 — — –845 –10,201 Impairment –7,237 — –136 –180 –58 –7,611 Divestment of business 4 — — — — 4 Divestments and disposals 1,228 326 — — 35 1,589 Reclassifications — 6 — — 5 11 Effect of foreign currency exchange rate differences 2 –40 — — 180 142 Balance at 31 December 2025 –47,025 –4,857 –136 –180 –7,282 –59,480 Net balance at 31 December 2024 49,485 5,560 20,946 4,154 3,636 83,781 Net balance at 31 December 2025 48,650 6,292 20,943 4,071 3,009 82,965 1) Volvo Car Group has capitalised borrowing costs related to product development of SEK 970 (1,120) m. A capitalisation rate of 4.4 (4.6) per cent was used to determine the amount of borrowing costs eligible for capitalisation. 2) Of the total Net balance at 31 December 2025, Goodwill amounted to SEK 473 (556) m. 3) Other intangible assets refers to licences, dealer network and patents. 4) During the year, due to changes in the cycle plan concerning China, planned production in the Daqing manufacturing plant was affected, resulting in increased amortization of SEK 208 m recognised in Cost of sales and Research and development. OVERVIEW 3 MARKET 15 OUR STRATEGIC FRAMEWORK 18 DIRECTORS’ REPORT 29 RISK 36 CORPORATE GOVERNANCE 42 FINANCIALS CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ALTERNATIVE PERFORMANCE MEASURES PARENT COMPANY FINANCIAL STATEMENTS NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS PROPOSED DISTRIBUTION OF NON-RESTRICTED EQUITY AUDITOR’S REPORT SUSTAINABILITY 130 THE SHARE 220 OUR HERITAGE 222 VOLVO CAR GROUP / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 90 ===== SIDA 91 ===== Intangible assets with indefinite useful lives are tested annually for impairment. Trademarks are tested for impairment at Volvo Car Group level, as they do not generate largely independent cash inflows. Goodwill arising from business combinations is allocated to the relevant platform CGUs and tested for impairment at that level. In calculating an impairment test certain estimations must be made with regards to future cash flows, required return on invest - ments and other adequate assumptions. The estimated future cash flows are based on assumptions that represent management’s best estimate of the economic conditions that will exist during the asset’s remaining useful life and are based on internal business plans or forecasts. Future cash flows are determined on the basis of long- term planning, which is approved by management and valid at the date of preparation of the impairment test. The planning is based on expectations regarding future market share, the market growth, the products’ profitability, as well as managements most current assumptions about climate related matters. During 2025, Volvo Cars identified indicators of impairment for one of its cash-generating units (CGUs); the EX90 and ES90 platform CGU. As a result, an impairment test was performed during the sec - ond quarter of the financial year. The CGU comprises of product development intangible assets, as well as an allocation of produc - tion related assets and goodwill relating to the EX90 and ES90. The indicators of impairment were primarily related to: • The launch of the EX90 and ES90 platform experienced delays, which led to increased development costs due to extended time - lines and additional resource requirements. Furthermore, the delayed release resulted in the platform entering the market under less favourable macroeconomic conditions than originally anticipated, impacting its initial performance and return expecta - tions. • The imposition of increased tariffs on imported raw materials and automotive parts and cars, which significantly impacted produc - tion costs and profitability. • The transition from ICE vehicles to BEVs has been progressing at a slower pace than previously forecasted. As a result, Volvo Cars conducted an impairment test. Impairment test and key assumptions The recoverable amount of the CGU was determined based on its value in use, calculated using a discounted cash flow model. A pre- tax discount rate of 10.7 per cent was used, reflecting CGU-specific risks and market conditions at the time of assessment. The key assumptions applied in the model included: • Cash flow projections based on business plans approved by man - agement and the Board covering the expected useful life of the platform. • Assumptions regarding sales volumes, pricing, and margins, including the anticipated impact of tariffs, as well as the CGU’s contribution toward internal netting of emission credits between BEV and ICE cars. These assumptions reflect management’s best estimates of eco - nomic conditions and future performance at the time of the impair - ment assessment, considering the market environment and future developments. Impairment loss recognised As a result of the impairment test, an impairment loss of SEK 11,431 m was recognised in the consolidated income statement during the second quarter. The impairment, which included the full write-down of goodwill allocated to the CGU, was allocated on a pro-rata basis across the CGU’s assets based on their carrying amounts. The impairment loss was distributed as follows: • SEK 7,373 m was recognised under Research and development expenses, related to the impairment of product development assets. • SEK 3,982 m was recognised under Cost of sales, related to the impairment of allocated buildings, machinery and equipment. • SEK 76 m was recognised under Other operating income and expenses, related to the impairment of allocated goodwill. At the reporting date, management assessed whether any impair - ment indicators existed for this CGU and concluded that no further impairment or reversal was required. A Volvo Car Group level impairment test was also performed for non CGU specific assets, including remaining goodwill, trademark and other assets, and no impairment was identified. Carrying amount of the EX90/ES90 platform CGU before and after impairment SEK m Carrying amount before impairment 34,543 Impairment loss recognised –11,431 Recoverable amount 23,112 Sensitivity analysis The impairment assessment is sensitive to changes in key assump - tions used in determining the recoverable amount and the sensitivity analysis presented reflects conditions at the second quarter impair - ment test date; as of the reporting date, management assessed that there is no significant risk of additional impairment based on rea - sonably possible changes in key assumptions. A change in the fol - lowing assumptions, holding all other variables constant, would have had the following approximate impact on the recoverable amount: • A 1 per cent increase in the discount rate would reduce the recov - erable amount by approximately SEK 1,441 m. • A 1 per cent decrease in the yearly sales volumes would reduce the recoverable amount by approximately SEK 306 m. • A 1 per cent decrease in the sales margin of the cars and associ - ated parts and accessories, including effects of tariffs and emission credits, would reduce the recoverable amount by approximately SEK 2,841 m. NOTE 16 TANGIBLE ASSETS ACCOUNTING POLICIES The tangible assets held by Volvo Car Group consist primarily of buildings, land and land improvements, machinery and equipment, right-of-use assets (RoU), and assets under operating leases. The cost method is applied for the measurement of tangible assets. Buildings, land and land improvements include assets such as office buildings, production facilities, leasehold improvements and struc- tures built to make land ready for use, such as drainage and roadways. Machinery and equipment include production related assets, such as type-bound tooling, robots and assembly lines, as well as office equipment. OVERVIEW 3 MARKET 15 OUR STRATEGIC FRAMEWORK 18 DIRECTORS’ REPORT 29 RISK 36 CORPORATE GOVERNANCE 42 FINANCIALS CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ALTERNATIVE PERFORMANCE MEASURES PARENT COMPANY FINANCIAL STATEMENTS NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS PROPOSED DISTRIBUTION OF NON-RESTRICTED EQUITY AUDITOR’S REPORT SUSTAINABILITY 130 THE SHARE 220 OUR HERITAGE 222 VOLVO CAR GROUP / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 91 ===== SIDA 92 ===== Buildings and land1)2) Machinery and equipment1) 2) 3) Construction in progress 1) Right-of-use assets4) Assets under operating leases5) Total Acquisition cost Balance at 1 January 2024 30,045 112,832 12,755 12,549 13,182 181,363 Additions 591 12,578 12,744 5,217 11,358 42,488 Acquired through business combinations 181 77 1,937 8 1,047 3,250 Divestments and disposals –507 –6,402 –176 –1,494 –305 –8,884 Reclassifications 1,960 6,047 –8,983 –2 –11,139 –12,117 Effect of foreign currency exchange rate differences 1,152 2,349 586 407 173 4,667 Balance at 31 December 2024 33,422 127,481 18,863 16,685 14,316 210,767 Additions 284 7,126 14,981 2,095 8,178 32,664 Acquired through business combinations — — — — 4,036 4,036 Divestment of business — — — –8 –2,351 –2,359 Divestments and disposals –226 –5,309 –176 –3,091 –376 –9,178 Reclassifications 2,106 5,092 –7,277 — –14,361 –14,440 Effect of foreign currency exchange rate differences –2,257 –6,179 –898 –1,400 –829 –11,563 Balance at 31 December 2025 33,329 128,211 25,493 14,281 8,613 209,927 Accumulated depreciation and impairment Balance at 1 January 2024 –13,177 –77,832 — –5,427 –814 –97,250 Depreciation expense –1,236 –7,648 — –2,070 –2,572 –13,526 Acquired through business combinations –1 –2 — — –42 –45 Divestments and disposals 373 4,855 — 1,392 109 6,729 Reclassifications –3 1 — 3 2,221 2,222 Effect of foreign currency exchange rate differences –408 –1,231 — –114 –20 –1,773 Balance at 31 December 2024 –14,452 –81,857 — –6,216 –1,118 –103,643 Depreciation expense 3) –1,289 –8,431 — –1,636 –2,388 –13,744 Impairment 1) –583 –3,284 –186 — — –4,053 Acquired through business combinations — — — — –527 –527 Divestment of business — — — 7 700 707 Divestments and disposals 138 3,560 — 752 60 4,510 Reclassifications 13 –74 — — 2,096 2,035 Effect of foreign currency exchange rate differences 732 2,878 — 451 118 4,179 Balance at 31 December 2025 –15,441 –87,208 –186 –6,642 –1,059 –110,536 Net balance at 31 December 2024 18,970 45,624 18,863 10,469 13,198 107,124 Net balance at 31 December 2025 17,888 41,003 25,307 7,639 7,554 99,391 1) Includes EX90/ES90 Platform CGU impairment losses of SEK 3,982 m recognised in Cost of sales. 2) Volvo Car Group has no mortgages in Buildings and land or Machinery and equipment. For further information regarding pledged assets, see Note 25 – Contingent liabilities and Pledged assets. 3) During the year, due to changes in the cycle plan concerning China, planned production in the Daqing manufacturing plant was affected, resulting in increased depreciation of SEK 437 m recognised in Cost of sales. 4) For information regarding Right-of-use assets, see Note 7 – Leases. 5) Assets under operating leases mainly relate to vehicles sold with repurchase commitments and contracts under the name Care by Volvo. Depreciation methods for tangible assets Tangible assets are depreciated on a straight-line basis over their estimated useful lives. When a component of a tangible asset has a cost that is significant in relation to the total cost of the item and a useful life that differs from the useful life of the other components of the item, the components are depreciated separately. RoU assets where Volvo Car Group is a lessee are depreciated over the lease contract period. When assets are used only in the produc- tion of a specific vehicle or platform, the useful life of the assets is aligned with the production period for that vehicle or platform. The following useful lives are applied in Volvo Car Group: Buildings 15–50 years Land improvements 15–30 years Machinery 8–30 years Equipment 3–20 years Land Indefinite Depreciation is included in cost of sales, research and development expenses as well as selling or administrative expenses depending on how the assets have been used. For more information on RoU assets and assets under operating leases, see Note 7 – Leases. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS Management regularly reassesses the useful life and residual value of all significant assets. When the useful life of a tangible asset is reduced, depreciation is accelerated and increased in future periods to reflect the reduction of time over which the Group will derive economic benefits from the assets. A shorter estimated useful life is not always an indicator of impairment, as impairment is character - ised by a change in the expected cash flows to be derived from the asset. When assessing the useful life, climate-related risks were consid - ered and found to have no material impact. This is because manage - ment takes certain mitigation efforts against physical risks, among other things, considering potential impacts of climate change during initial design and construction of tangible assets as well as main - taining insurance in case significant damage or disruption does occur. OVERVIEW 3 MARKET 15 OUR STRATEGIC FRAMEWORK 18 DIRECTORS’ REPORT 29 RISK 36 CORPORATE GOVERNANCE 42 FINANCIALS CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ALTERNATIVE PERFORMANCE MEASURES PARENT COMPANY FINANCIAL STATEMENTS NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS PROPOSED DISTRIBUTION OF NON-RESTRICTED EQUITY AUDITOR’S REPORT SUSTAINABILITY 130 THE SHARE 220 OUR HERITAGE 222 VOLVO CAR GROUP / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 92 ===== SIDA 93 ===== NOTE 17 INVENTORIES ACCOUNTING POLICIES Inventories consist of raw material and consumables, work in pro - gress, finished goods and goods for resale, and emission credits. Assets held under operating lease, with a maturity less or equal to 12 months, are also recognised as inventory. Inventories are meas - ured at the lower of cost and net realisable value. Cost of inventories comprise of all costs of purchase, production charges and other expenditures incurred in bringing the inventories to their present location and condition. The initial value of emission credit invento - ries is based on the fair value on the date they are earned. The cost of inventories of similar assets is established using the first-in, first-out method (FIFO). Net realisable value is calculated as the selling price in the ordinary course of business, less estimated costs of completion and selling costs. For groups of similar prod - ucts, a Group valuation method is applied. Physical stock counts are carried out annually or more often where appropriate in order to verify the records. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS Net realisable value is based on the most reliable evidence of the amount Volvo Car Group expects to realise from vehicles and com - ponents on future sales trends or needs, for components, and takes into account items that are wholly or partially obsolete. A future unexpected decline in market conditions could result in an adjustment in future expected sales, requirements and in esti - mated selling prices assumptions, which may require an adjustment to the carrying amount of inventories. 31 Dec 2025 31 Dec 2024 Raw materials and consumables 71 364 Work in progress 11,161 13,768 Current assets held under operating lease 10,685 10,964 Finished goods and goods for resale 31,857 35,398 Emissions credits 5,250 1,961 Total 59,024 62,455 Of which value adjustment reserve: –2,080 –1,282 The cost of inventories recognised as an expense and included in cost of sales amounted to SEK 280,868 (303,208) m. Current assets held under operating lease consists of a sale of vehicles combined with a repurchase commitment with a maturity less or equal to 12 months. NOTE 18 ACCOUNTS RECEIVABLE AND OTHER CURRENT AND NON-CURRENT ASSETS ACCOUNTING POLICIES Accounts receivables are recognised at amortised cost. An allow - ance for expected credit loss is recognised when the receivable is initially recognised. The recognised allowance for credit losses con - sists of incurred as well as of expected credit losses. A credit loss has been incurred when there has been an event that has triggered the customers inability to pay. The expected credit loss allowance is based on a multiplier consisting of average historical write-offs and forward-looking macroeconomic data. In these cases, there has not yet been any events incurred showing any inability to pay. If it has been determined that an accounts receivable is uncol - lectible, it will be written off and derecognised. It usually means that collection has been unsuccessful and an entity has no reasonable expectations of recovering the contractual cash flows on the receivable in its entirety or a portion thereof. Other non-current assets 31 Dec 2025 31 Dec 2024 Endowment insurance for pensions 367 363 Rental deposition 29 38 Other non-current assets 1) 3,826 2,583 Total 4,222 2,984 Accounts receivable and other current assets 31 Dec 2025 31 Dec 2024 Accounts receivable, non-group companies 11,463 12,989 Accounts receivable, related companies 9,778 9,791 VAT receivables 4,098 3,837 Prepaid expenses and accrued income 2) 6,568 6,947 Other financial receivables — — Restricted cash 39 120 Other receivables 2) 3) 3,059 3,761 Total 35,005 37,445 1) In 2025, Volvo Cars has adjusted the presentation of certain unused tax credits in the US, resulting in a reclassification amounting to SEK 1,099 (1,278) m, to more accurately reflect the nature of these items. Com- parative figures have been restated (prior Other non-current assets). 2) Whereof prepaid expenses and accrued income from related compa - nies amounted to SEK 1,480 (1,530) m, and other receivables to related companies amounted to SEK 423 (437) m. 3) Whereof interest-bearing receivables amounted to SEK 419 (679) m. The carrying amounts of tangible assets are tested for impairment if there are indicators of a decline in value with regards to future economic benefits related to the asset. For these calculations, cer - tain estimations must be made with regards to future cash flows, required return on investments and other adequate assumptions. The estimated future cash flows are based on assumptions that rep - resent management’s best estimate of the economic conditions that will exist during the asset’s remaining useful life and are based on internal business plans or forecasts. Future cash flows are deter - mined on the basis of long-term planning, valid at the date of prepa - ration of the impairment test and approved by management. The planning is based on expectations regarding future market share, the market growth, the products’ profitability, as well as manage - ments most current assumptions about climate related matters. During the year, Volvo Cars identified indicators of impairment for one of its cash-generating units (CGUs); the EX90 and ES90 plat - form CGU. As a result, an impairment test was performed, which led to the recognition of impairment losses across both intangible and tangible assets. The portion of the impairment related to tangible assets amounted to SEK 3,982 m and was recognised under Cost of sales. Further details regarding the impairment test are disclosed in Note 15 – Intangible assets. OVERVIEW 3 MARKET 15 OUR STRATEGIC FRAMEWORK 18 DIRECTORS’ REPORT 29 RISK 36 CORPORATE GOVERNANCE 42 FINANCIALS CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ALTERNATIVE PERFORMANCE MEASURES PARENT COMPANY FINANCIAL STATEMENTS NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS PROPOSED DISTRIBUTION OF NON-RESTRICTED EQUITY AUDITOR’S REPORT SUSTAINABILITY 130 THE SHARE 220 OUR HERITAGE 222 VOLVO CAR GROUP / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 93 ===== SIDA 94 ===== NOTE 19 FINANCIAL INSTRUMENTS AND FINANCIAL RISKS ACCOUNTING POLICIES Recognition and derecognition Accounts receivable are recognised on the balance sheet when they are issued by the Group. Accounts payable are recognised on the balance sheet when the invoice is received. Regular-way acquisi - tions of financial assets are recognised on the balance sheet upon the actual transfer, which occurs on the settlement date. Financial liabilities such as issued bonds and loan liabilities to financial insti - tutions, are recognised on the balance sheet on the settlement date. Other financial assets and liabilities are recognised on the balance sheet when Volvo Car Group becomes involved according to the contractual provisions of the instrument. Financial assets are initially recognised at fair value plus transac - tion costs, except for financial assets carried at fair value through profit or loss. In this case transaction costs are expensed in the income statement. Financial liabilities are initially recognised at fair value less transaction costs, except for those financial liabilities carried at fair value through profit or loss. For these liabilities trans - action costs are expensed in the income statement. Volvo Car Group derecognises financial assets or a portion of a financial asset from the balance sheet upon expiry, when it has been settled or when all significant risks and rewards linked to the asset have been transferred to a third party. In those cases where Volvo Car Group concludes that all significant risks and rewards have not been transferred, the portion of the financial assets corresponding to Volvo Car Groups’ continuous involvement continues to be recognised. Volvo Car Group derecognises financial liabilities or a portion of a financial liability from the balance sheet when the obligation in the contract has been settled, cancelled, or expired. Classification of financial assets Volvo Car Group classifies financial assets depending on how the asset is managed and the characteristics of the assets’ contractual cashflows. The following measurement categories are applied at Volvo Car Group: • financial assets at amortised cost • financial assets at fair value through profit or loss • financial assets at fair value through other comprehensive income Accounts receivable and other financial receivables Accounts receivable are classified at amortised cost, and are meas - ured at their nominal value, reflecting the short-term nature of these assets and the immaterial impact of discounting are recognised. Accounts receivable are presented net after allowance for expected credit loss, see Note 18 – Accounts receivable and other current and non-current assets. Customer invoices may be subject to factoring arrangements with a financial institution. In those cases, the invoices are derecognised from accounts receivable immediately upon settlement. If the credit risk has not transferred to the financial institution the receivables remain on the balance sheet and are presented as Other non- current and current financial assets. Other financial receivables presented as non-current or/and current other interest-bearing receivables and other assets, are measured at amortised cost. Deposits A deposit is a type of interest-bearing instrument held at a financial institution where funds are placed for a fixed term at a predeter - mined interest rate and cannot be withdrawn before maturity. A deposit also exist without a fixed maturity date, in which case advance notice is required before funds can be withdrawn. Deposits are measured at amortised cost. Equity repurchase agreements Equity repurchase agreements refer to arrangements where Volvo Cars accepts quoted equity securities as collateral for an invest - ment of cash. These equity repurchase agreements are measured at Aging analysis of accounts receivable and accounts receivables from related companies Not due 1–30 days overdue 30–90 days overdue >90 days overdue Total 2025 Accounts receivable gross 19,646 684 383 770 21,483 Loss allowance –201 –4 –8 –29 –242 Accounts receivable net 19,445 680 375 741 21,241 2024 Accounts receivable gross 18,950 943 729 2,291 22,913 Loss allowance –109 — –5 –19 –133 Accounts receivable net 18,841 943 724 2,272 22,780 Accounts receivable amounted to SEK 21,241 (22,780) m including a credit loss allowance of SEK 242 (133) m of which SEK 28 (37) m is related to allowance for expected credit losses. As of 31 December 2025, the total credit loss allowance amounted to 1.13 (0.58) per cent of total accounts receivable. The size and geographical spread of the accounts receivable are closely linked to the distribution of Volvo Car Group’s sales. The accounts receivable and other current assets do not contain any significant concentration of credit risk to individual customers or markets. Change in loss allowance for accounts receivable is as follows: 2025 2024 Balance at 1 January 133 126 Additions 164 20 Reversals –25 –13 Write-offs –25 –1 Translation difference –5 1 Balance at 31 December 242 133 OVERVIEW 3 MARKET 15 OUR STRATEGIC FRAMEWORK 18 DIRECTORS’ REPORT 29 RISK 36 CORPORATE GOVERNANCE 42 FINANCIALS CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ALTERNATIVE PERFORMANCE MEASURES PARENT COMPANY FINANCIAL STATEMENTS NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS PROPOSED DISTRIBUTION OF NON-RESTRICTED EQUITY AUDITOR’S REPORT SUSTAINABILITY 130 THE SHARE 220 OUR HERITAGE 222 VOLVO CAR GROUP / FINANCIALS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 94 ===== SIDA 95 =====