Volvo Car AB expects the profitability of its electric cars to improve in the coming months because of lower raw-material costs and higher prices for its latest models.

The automaker forecast “solid” double-digit retail sales growth for the full year on rising demand for EVs, assuming there are no further supply-chain disruptions. Its second-quarter operating income missed analyst estimates due to high lithium costs.

“Raw material prices are expected to continue to fall in the second half of this year, which should benefit us from a cost perspective,” Chief Executive Officer Jim Rowan said in a statement Thursday.

The automaker controlled by China’s Zhejiang Geely Holding Group Co. plans to sell only fully electric cars by the end of this decade — a push that requires major investments. Its ambitions hit a speed bump earlier this year when Volvo Car postponed production of its flagship electric SUV, the EX90, to the first half of next year from the fourth quarter due to issues with software development.

The company has high hopes for the EX30, a compact battery-powered sport utility vehicle it unveiled last month.

Volvo Car reported operating income of 4.99 billion kronor ($486 million) for the second quarter. Analysts had projected a 5.29 billion-kronor result. The company cited high costs for lithium, which was sourced when prices peaked late last year.

Sales in the period beat expectations after EV shipments surged 178% and output improved because of better access to parts.

--With assistance from Rafaela Lindeberg.

(Updates with retail sales outlook in second paragraph.)