Volvo Unveils Plans to Have Models Electrified from 2019

On Wednesday, Volvo Car Group unveiled its plans to have all new models from 2019 fully electric or hybrids, making it the first of the world’s traditional car makers to pull the plug on cars powered only by a combustion engine.

The Chinese-owned automotive group said that they will continue to produce pure combustion-engine Volvos from models launched before that date, but said it would introduce cars across its model line-up that ranged from fully electric cars to plug-in hybrids.

In the face of competition from upstarts like Tesla, which begins production this week of its new mass-market Model 3 electric battery-powered family car, Volvo said it would launch five fully electric cars between 2019 and 2021. Three will be sold as Volvos, and the other two will be sold under the performance e-car unit that Volvo is spinning off as a “separately-branded electrified global high performance car company”, Polester. Also,  it will launch petrol and diesel plug-in hybrids and so-called mild-hybrid cars, cars with a small petrol engine and large battery.

Last month, Volvo said it would reshape its Polester business into a standalone brand aimed at competing Tesla and the Mercedes AMG division.

“This is about the customer,” said Volvo Cars president and chief executive Hakan Samuelsson in a statement. “People increasingly demand electrified cars, and we want to respond to our customers’ current and  needs. You can now pick and choose whichever electrified Volvo you wish.”

“These five cars will be supplemented by a range of petrol and diesel plug in hybrid and mild hybrid 48-volt options on all models,” he added.

“This means that there will in future be no Volvo cars without an electric motor.”

Volvo has invested heavily in new models and plants from being bought by Zhejiang Geely Holding Group from Ford Motor Co in 2010. It has headquarters in Torslanda, Gothenburg, and has a factory there as well as in Ghent, Belgium and Chengdu, China. It is establishing a niche in a premium auto market dominated by a larger rivals such as Daimler’s Mercedes-Benz and BMW.

Volvo has sold plug-in hybrids for several years, with the XC90, S90, V90 and new XC60 range offering T8 ‘Twin Engine’ versions that allow some pure-electric operation, with zero tailpipe emissions. However, this  announcement is a very significant one , and will give Volvo one of the widest range of electrified cars of any company.

All major automakers are racing to develop electric vehicles, but the challenge for the industry is to get the timing right because of the industry’s typically long product cycles that involve years of research and development before a vehicle rolls off the assembly line.

Volvo’s decision to raise the move to go electric could help in light of a potential stock listing. Volvo has achieved a significant turnaround and is building its first manufacturing plant in the U.S.

The U.S. was Volvo’s fastest-growing market last year, posting an 18% increase in sales to 82,726 vehicles, driven by the popular XC90 luxury sport-utility vehicle.

Volvo reported a 67% increase in net profit to 7.5 billion Swedish kronor, or $880 million, in 2016 on revenue of 180.7 billion kronor, up to 10% from the previous year. The Swedish company’s global sales grew 6% to 534,332 vehicles last year. That put it on track to achieving its sales target of 800,000 vehicles by 2020.

“This announcement marks the end of the solely combustion engine-powered car,” said Samuelsson.

“Volvo Cars has stated that it plans to have sold a total of one million electrified  cars by 2025. When we said it, we meant it. This is how we are going to do it.”

Meanwhile, by 10:00AM GMT+2, Volvo AB traded 0.89%, or 1.30, to 146.60 SEK. It opened in 145.40 SEK, with a session high of 146.90 SEK, and a session low of 145 SEK. Its market capitalization was 312.13 billion, with a P/E ratio of 21.12, and a dividend yield of 2.22%.

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