Volvo had been the clearest and most direct of all automakers about switching to a purely electric lineup. Less than a year after getting the XC40 Recharge to market, on March 2, 2021, the company wrote that it “intends to only sell fully electric cars and phase out any car in its global portfolio with an internal combustion engine, including hybrids.” Two years later, with the C40 on dealer lots and the EX90 and EX30 in the pipeline, CFO Bjorn Annwall removed the wiggle room of “intends” by pledging Volvo won’t “sell a single car” that isn’t purely electric after after 2030, emphasizing the target to Automotive News with, “There’s no ifs, no buts.” Problem is, there are always ifs and buts, and Volvo might be the next automaker needing a tactical retreat to deal with them. After speaking to members of Volvo’s U.S. dealer body, Automotive News reports a softening of the 2030 target.
The most Volvo has said publicly came from CEO Jim Rowan, who told analysts during a recent investor webcast that because the EV transformation is going to take time to scale, hybrid powertrains could “form a solid bridge for our customers that are not ready to move to full electrification.” According to AN, an anonymous insider said plug-in hybrids could take the lead for the next 10 years as global governments and global markets align on electric vehicles. If this turns out to be the case, Volvo would join a strengthening trend as automakers rush to develop hybrids and PHEVs to launch in the next three years.
Volvo would also be well positioned for the turn, considering buyer sentiment to the hybrids and PHEVs it’s sold for many years now. The SPA1 platform supporting every Volvo with an internal combustion engine remains sound. Given development dollars and improvements in battery technology, there’s no reason Volvo couldn’t ride an evolution of the architecture into the next decade, and it can also take advantage of platforms and toolkits from parent company Geely. Only a year ago, Geely and Renault agreed on a joint venture to invest 7 billion euros for researching new technologies to make non-hybrid and hybrid gas engines more efficient.
This is clearly what U.S. dealers want based on their comments to AN, one retailer going so far as to say, “We will have to [stick with hybrids], or we will die.”
Short term, Volvo’s enduring the same pain felt by other automakers. Sales have been hammered by slowing EV growth, resulting in large year-over-year EV sales declines for several OEMs, on top of the price pressures initiated by Tesla’s occasional steep promotions. The EV market has grown 11% this year, a long way from the 48% growth rate over Q2 of 2023. On top of all that, tariffs in Europe are affecting Volvo’s Chinese-built EVs, Swedish engineers are still finding enough items to debug in the EX30 that Volvo’s given some European buyers refunds, and Volvo was late getting the EX90 off the line at the South Carolina plant, all of which exacerbates the previous pains.