Automakers from Aston Martin to Volkswagen Group are recalibrating their electric vehicle ambitions as the technology's growth trajectory has lost some of its zoom.
Volvo Cars' EV-or-bust strategy is among the industry's boldest and one that the Scandinavian brand hasn't publicly waffled on.
Volvo Chief Commercial Officer Bjorn Annwall vowed last year that the automaker would not "sell a single car" globally that is not fully electric after 2030.
"There's no ifs, no buts," Annwall told Automotive News in June 2023.
Now, faced with slumping EV sales in key markets such as China and the U.S., Volvo's leadership could be reconsidering going all-in on battery power.
During a quarterly investor webcast, Volvo CEO Jim Rowan said he's a "huge believer in electrical propulsion," which he called a better technology than the internal combustion engine.
But Rowan acknowledged it will "take time to bridge different parts of the world for full electrification."
Kerrigan Advisors’ proprietary annual OEM Survey of over 100 executives reveals that the majority of respondents are worried about the financial impact of Chinese automakers’ growing global market share, and most expect that the EV transition to be slower than expected. The survey also queried executives on their outlooks for dealership valuations and profitability, as well as their expectations for the future of dealer networks and facility requirements.
Hybrids "form a solid bridge for our customers that are not ready to move to full electrification," he said July 18. "Our plug-in hybrids and mild hybrids remain very strong and popular with our customers, and we will continue to invest in this lineup."
Beyond 2030
Volvo's U.S. retailers said they expect to sell gasoline-power-assisted hybrid sedans, wagons and crossovers well beyond the turn of the decade.
"We will have to, or we will die," said a dealer who requested not to be identified. "Volvo has gotten way out over their skis with this EV-only strategy."
In the next decade, Volvo will focus on supplying plug-in hybrids while the EV market matures in the U.S. and elsewhere, said a person familiar with the company's plans.
"They are keeping their fingers crossed that PHEVs will start to be looked at favorably by the different governments," said the person, who asked not to be identified while speaking about internal matters.
Volvo seeks to tap platforms from parent Geely Group to expand its PHEV range. In late May, Geely finalized a joint venture with Renault Group to develop and build more efficient internal combustion and hybrid engines.
The Swedish brand also is considering updating its SPA1 platform, which supports mild- and plug-in hybrid variants of the XC90 and XC60 crossover moneymakers.
"If you redid the interior and exterior of any SPA1 car, you could ride that horse for more than a decade," the person said. "It has a great suspension and chassis; you just need to change the top hat."
According to AutoForecast Solutions, production of the flagship XC90 is expected to end in May 2030. Volvo previously said there would not be a third generation with a combustion engine or plug-in hybrid powertrain, but those plans could change.
Volvo spokesperson Russell Datz declined to comment on future product plans.
"While we firmly believe electrification is the future, this transition will not be a linear development," Datz said. "We will continue to invest across the breadth of our product range, both in new models and ongoing improvements to existing ones."
Follow the market
Volvo was early in spotting the shift toward electric mobility powered by government regulation in the U.S., China and Europe. The automaker switched to an all-electrified model lineup globally in 2019 and delivered its first EV — the XC40 Recharge P8 — in the U.S. two years later.
U.S. EV adoption continues to rise, but the pace of growth has slowed dramatically. According to Cox Automotive, second-quarter sales rose 11 percent from a year earlier after increasing 48 percent during the same period in 2023.
"It doesn't matter how many [electric vehicles] the industry wants to build," another dealer said. "You can't force EVs on a market that doesn't want them."
Volvo's EV business in the U.S. has cratered this year amid surging competition and a price war triggered by Tesla. In the January-to-June period, deliveries of the battery-powered XC40 and C40 crossovers plummeted 74 percent to 1,981.
In response, Volvo has dialed back EV supply while ramping up plug-in hybrid vehicle allocations to retailers.
"Volvo realizes it can't be successful without PHEVs and mild hybrids," a retailer said. "BEV-or-bust is not a strategy that dealers can get behind."
