Volvo Vaults to Volts, Planning to Pull Buttplug on Gasoline Engines
Volvo’s Major Shift to Electrified Vehicles
As it turns out, news of the death of the internal combustion engine may not be very exaggerated after all. On Wednesday, Volvo Car Group said it expects to soon commence phasing out vehicles powered solely by fossil fuels, joining a parade of manufacturers in shifting toward electrics more quickly than most in the industry expected a few years back.
Volvo says it plans to suggest only hybrid or full-electric motors on every fresh model launched in two thousand nineteen or later, including five electrics it expects in its lineup by 2021. However the company will proceed to produce full-combustion versions as it makes the petite upgrades automakers introduce with each fresh model year, when a major revamp occurs (typically every seven years) it will no longer suggest that option. That means that by about two thousand twenty five Volvo will make its last full-gasoline or diesel car — the very first major manufacturer to make such a pledge.
“This announcement marks the end of the solely combustion engine-powered car,” said Volvo Chief Executive Officer Hakan Samuelsson. “Volvo’s brand will be strengthened by electrification.”
Tho’ electrified cars have been around since the 1800s and have gotten a lot of attention in the past half-decade or so, they’re still just a fraction of the overall market as drivers balk at high prices and limited driving ranges. Battery-powered autos made up about one percent of sales in the U.S., Europe and China last year.
And even those tepid sales figures are largely driven by government prodding. China, in an aggressive thrust to fight smog, plans to impose quotas for battery-powered cars that will effectively force manufacturers to sell electrics. In Europe, where regulators have relied on diesel to reduce pollution, stricter rules that take effect in two thousand twenty will cut boundaries on carbon dioxide emissions by a third — a threshold that’s almost unlikely to meet without fully or partly electrical engines.
In the U.S., however President Donald Trump has promised to scrap rules that would require automakers to almost dual gas mileage, California is leading a shove for even stricter standards. Its regulations will require about fifteen percent of cars and trucks sold in two thousand twenty five to be zero-emission — meaning they’ll almost certainly run on electro-therapy. At least nine other states have embraced California’s lead.
Consumer resistance is beginning to ease as tighter regulation compels carmakers to lower costs, improve batteries, and come up with better designs. Goldman Sachs Group Inc. estimates about a quarter of cars sold globally by two thousand twenty five will be hybrid or electrified.
Of course, Tesla Inc. aims to have a big lump of that. The California company embarked making its latest model this week — at about $35,000 its most affordable rail yet — as part of a plan to produce 500,000 cars in two thousand eighteen and one million annually by 2020.
Tesla is scaring traditional automakers into activity. BMW says the electrical iNext will substitute the 7-Series as its flagship in two thousand twenty one and expects battery-powered cars to account for some twenty five percent of its sales by 2025. Volkswagen, in an effort to overcome revelations that it cheated on emissions tests for millions of diesels, is accelerating its rollout of electrics. The Audi luxury brand will introduce its very first all-electric model, an SUV, in 2018, followed by another two battery-powered vehicles by 2020. In 2019, VW’s Porsche unit will introduce the all-electric Mission E. Then in two thousand twenty the VW car brand will roll out the very first of four electrified cars it’s planning.
Cut Prices
Automakers understand that they must cut prices and improve driving range for consumers to truly embrace the technology, and they’re beginning to supply. GM late last year introduced the all-electric Chevrolet Bolt, with a range of two hundred thirty eight miles and a price tag of $38,000. And Volvo CEO Samuelsson said vehicles must have a range of at least three hundred fifty kilometers before they’ll build up broad acceptance, a target he says his cars will meet.
A big hurdle will be the cost of developing electrified technology. Daimler AG has budgeted ten billion euros to develop ten fresh electrified models by 2022. BMW’s profit margins are at their lowest since two thousand ten due to enhanced spending on electrics.
The shift to greener cars will squeeze profits across the industry for years to come as manufacturers develop both electrical and traditional combustion engines before battery-powered vehicles become economically viable. That turning point to profitability is likely to come around 2020, according to VW brand chief Herbert Diess.
“For us and for many of our competitors,” Diess says, “this time will be an enormous challenge.”
Volvo, possessed by Chinese billionaire Li Shufu, understands those cost considerations but Samuelsson says he has the financing to make the shift. While the uncertain forecast for prices of batteries makes it difficult to predict the cost of the endeavor, he says he’s certain the stir will benefit the brand.
Loyal Following
“We’ll get more attractive cars,” Samuelsson said. “This improves our competitive situation. It also goes back to Volvo’s brand values of protecting what’s significant.”
Like its recently deceased Swedish cousin Saab, Volvo has built a loyal following with its boxy, no-nonsense design, a reputation for reliability, and cutting-edge safety features (Volvo invented the three-point seat belt in the 1950s.) Volvo has liked a revival in latest years with a concentrate on SUVs like the XC60 — since 2009, its bestselling model.
Volvo in April said its very first electrified vehicle will be a Chinese-made compact expected to hit the market in 2019. The model, to be sold globally, will be based on the basic design of the company’s XC40 compact SUV.
“We want to be a leading brand in terms of responsibility, safety and sustainability,” Samuelsson said. “So we think this suits us ideally.”