Like other automakers, Volvo Cars has faced supply chain problems and higher costs amid soaring inflation.

The Swedish carmaker, majority-owned by China’s Geely, reported a 10-percent increase in sold cars to some 162,900 cars, and a 29-percent increase in revenue to 95.7 billion kronor ($9.3 billion).

Despite this, the company’s net profit fell to 3.98 billion kronor, compared to 4.5 billion a year earlier.

The company said its efforts to reduce costs had started to materialise in certain areas but said it might have to look to further cut expenditure.

“Given the long-term nature of the headwinds our industry is likely to face, we are also evaluating the need for further targeted cost actions that are sustainable over time and that will contribute to our growth,” CEO Jim Rowan said in a statement.

Electric cars accounted for nearly one in five cars sold in the first quarter, according to Volvo, more than double the sales of the same period a year earlier.

“We remain resolute on our journey towards becoming a fully electric carmaker by the end of the decade,” Rowan added.

At the same time, electric vehicles was a sector that also saw higher production costs, with the automaker noting that the “costs for lithium have skyrocketed 800 percent over the last two years”.