Volvo Set To Challenge Tesla For Electric Car Supremacy

Volvo XC40 Recharge
XC40 Recharge. Image: Volvo

It is not a Swedish trait to be confrontational, so one might have missed the challenge Volvo recently issued to Tesla Motors and all the other producers of electric vehicles: the Chinese-owned Swedish brand intends to be a dominant player in the EV space. Volvo has said its goal is to generate 50 percent of global sales from fully electric cars by 2025, and it has entwined that effort into the altruistic goal of achieving a 50 percent reduction in tailpipe carbon emissions per car between 2018 and 2025.

Undoubtedly Volvo and its executives are sincere in their desire to protect the planet, but at the same time, their goal means they aim to be a major competitor in the electric vehicle market. The question is: can the acknowledged vehicle safety leader accelerate its nascent electric-vehicle portfolio past Tesla and other brands that are already established in the EV market?

Last year Volvo Cars set a sixth consecutive global sales record, breaking the 700,000-cars-sold mark for the first time in its 93-year history. The company recorded sales of 705,452 cars in 2019, an increase of 9.8% compared to 2018, solidly outgrowing the overall market across all regions. So doing some simple math, Volvo has implied it will sell 350,000 electric vehicles or more in 2025. In other words, Volvo aims to reach Tesla Motors’ current level of EV sales from a standing start in just five years.

Volvo Cars’ initial entry into the pure-EV market will be the XC40 Recharge, a vehicle that debuted globally with much fanfare in Los Angeles late last year. Based on the popular XC40 compact SUV, the XC40 Recharge is the company’s first-ever fully electric car and the first model of Volvo’s Recharge sub-brand.

In total Volvo has announced that it will introduce five full-electric (battery-electric) vehicles between 2019 and 2021. Three of these cars will be Volvo branded models and two will be Polestar-branded performance cars. Volvo noted that the new models will be supplemented by an array of plug-in hybrid and mild-hybrid options on all its models, but make no mistake — Volvo Cars has committed to selling something on the order of 350,000 pure EVs by 2025. That is a very tall order for a company that hasn’t sold its first battery-electric vehicle yet.

As daunting as that goal is, Anders Gustafsson, head of the Volvo Car Group within the Americas region and president and CEO of Volvo Car USA, not only seems untroubled by the effort that will be needed but also feels that the effort will, in the end, be a giant positive for the Volvo brand worldwide.

“If you have something that is a very, very strong statement that everyone agrees is the right statement, we would like to use that as a competitive advantage,” he told forbes.com. “Safety is really a competitive advantage, and now we’re going to focus on the more environmental aspect that the signals to our competitors let’s start the game.”

Gustafsson cited the success Volvo has enjoyed from its longstanding reputation as a leader in vehicle safety technology as a proxy for what leadership in electrification and green transportation could mean for the brand. And he makes his plea personal.

“I’ve worked at Volvo my whole life, and the reason why I started to work with Volvo was the safety approach,” he said. “Everyone knows that we invented the [three-point] safety belt and everyone talks about that and that we gave it for free to our competitors because we need to save lives.”

Gustafsson believes by assuming a leadership role in sustainable mobility that doesn’t damage the environment the automaker can attract additional vehicle sales and, importantly, top automotive industry talent. He will also oversee an alteration in Volvo’s product mix that is designed to point buyers toward “electrified” mild-hybrid, plug-in hybrid and pure-electric vehicles.

“We are transforming our company through concrete actions, not symbolic pledges,” said Håkan Samuelsson, Volvo chief executive. “So at Volvo Cars we will address what we control, which is both our operations and the tailpipe emissions of our cars. And we will address what we can influence, by calling on our suppliers and the energy sector to join us in aiming for a climate-neutral future.”

As a relatively small automaker, some might find it difficult to imagine that Volvo can cause a major pivot in the industry. Even when Volvo sales are combined with the sales of its parent, China’s Geeley, the combination doesn’t break into the top 10 among the world’s automakers. Yet observers think Volvo is well-positioned to be an environmental and EV leader.

“Leadership in electric vehicles and in efficient vehicles dovetails nicely with Volvo’s conservative brand image, building on a longer history of corporate citizenship which respects community and environment,” said Stephanie Brinley, principal automotive analyst, IHS Markit.

Brinley also agrees with Gustafsson that Volvo’s well-known and highly regarded interest in vehicle safety positions it well to take on the environmental challenge.

“Volvo’s reputation for safety may help overcome potential concerns some drivers might have over safety of battery electric vehicles,” she told us. “In addition, valuing safety and also valuing care for the environment are concerns that can go together for customers.”

Source: Forbes.com

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