Is there anything new to report on the planned merger of Volvo and Geely Automobile?
No, but we still believe this would be a very powerful and future-oriented combination.
It would make Geely Auto and Lynk & CO global brands. It also would create very attractive business opportunities for Volvo retailers outside of China, while giving Geely Auto and Lynk & CO something that all Chinese brands need if they want to expand, which is an established service network.
When do you foresee talks resuming?
We will come back to this topic during the latter part of this year.
Is Volvo in position to reach its target of having electrified models account for 20 percent of its worldwide volume this year despite the pandemic?
Yes. In the first half 14 percent of the cars we sold globally were hybrids. In Europe, it was close to a quarter of the cars we sold [24 percent, up from 9 percent in the first half of 2019]. That target definitely has not been halted by the pandemic. Customers are asking for advanced electric cars.
Has Volvo’s profitability suffered as it has transitioned away from a heavy reliance on diesels in Europe?
Revenues [from the sale of plug-in hybrids] have covered the material cost increase from moving to electrification. Long term, what would be really bad for your profitability is trying to sell those old-school cars.
What is the biggest change at Volvo since Ford Motor sold the company to Zhejiang Geely Holding a decade ago?
Back then we were a Swedish company building cars in Sweden and Belgium and exporting them around the world. That is not the definition of a really global company. To be a global company you need an international, diverse leadership team, you need a presence around the world, which we now have with our new plants in China and the U.S. and our software development operations in Mountain View, California. If you are not global, I don't think you will not be successful.
Why does Volvo need to cut 1,300 white-collar jobs in Sweden?
It's a competence shift that we need to undertake to adapt to the changes in our industry. If we say that we want to lead in electrification but we have no programs to bring in new competence, and we are not scaling down on what we no longer need then we would not be credible. That is why all combustion engine production will be moved to a new, stand-alone unit with Geely. [Additionally, Volvo recently invested 600 million crowns, about 57.9 million euros, into a battery development lab in Torslanda, Sweden].
Why didn't Zenuity, the automotive software joint venture between Volvo and Veoneer, succeed?
As time passed we found we were going in different directions. They were focusing on ADAS [advanced driver assistance systems] based on smart cameras and decentralized units. What we now know is that to be really safe you need lidar, cameras and radars and they have to be sensor fused into a centralized vision computing system. Our SPA2 architecture was designed for this. Now that Zenuity is a stand-alone unit within Volvo it is fully concentrating on that next-generation autonomous driving and ADAS. However, all functionality will not be available on day one. It also might not initially work in all types of weather, but the system will get smarter and smarter as time goes by because of over-the-air updates.
With this be a Level 3 or Level 4 system?
What’s more important than Level 3, 4 and 5 is what you write in the car’s owner’s manual. If you want to sell something that offers unsupervised driving, it has to be safer than a normal car. This is something the new cars will be designed for when it comes to their computing platform, hardware and devices. The question is when exactly will the software be ready. That is something we will come back to later, but it's coming because I'm absolutely convinced it's a very attractive product that would make a premium car much more valuable.
How important have partnerships been to Volvo?
They have been absolutely crucial. To be a fast mover you need to have competence in a lot of new areas. That means you have to be humble enough to admit that some things you should not try to develop in-house. And, we probably shouldn’t try to create the specs and then ask a traditional supplier to do it. An example is the Android infotainment system in the Polestar 2 [and soon to be offered in the full-electric XC40]. If you didn't believe in partnerships before, you would change your mind when you experienced the quality of the voice recognition and navigation systems from Google’s Android operating system. It is just better. That's because they specialize in this. Why not work with them if it means we will have a better navigation system and better voice control? It's just like we know that a sound system from Bowers & Wilkins is much better than Volvo Premium Sound.
Is this also true for creating autonomous cars?
When it comes to autonomous driving we have Nvidia processors; Luminar is an important partner for lidar; and now we are working with Waymo on robo-taxis. Partnership are absolutely the right way to go. If don't have the competence you shouldn't even try. We have enough to do with our core business.