Volvo Plans to Go Electric, to Abandon Conventional Car Engine by 2019 – William Boston July 5, 2017 12:00 a.m. ET


CEO reiterates target of selling one million electric cars and hybrids by 2025

Volvo plans to phase out the conventional car engine, with all new Volvo models from 2019 to be either fully electric or a hybrid.

Volvo plans to phase out the conventional car engine, with all new Volvo models from 2019 to be either fully electric or a hybrid. Photo: heinz-peter bader/Reuters

By

William Boston

For Volvo the internal combustion engine has run its course.

In the face of competition from upstarts like Tesla Inc., which begins production this week of its new mass-market Model 3 electric battery-powered family car, the Chinese-owned automotive group on Wednesday said all new Volvo models from 2019 would be either fully electric or a hybrid.

Volvo is the first major auto maker to abandon the technology that has powered the industry for more than a century. Hakan Samuelsson, president and chief executive of Volvo Cars, said in a statement that the move “marks the end of the solely combustion engine-powered car,” reiterating his target of selling one million electric cars and hybrids by 2025. “When we said it, we meant it. This is how we are going to do it.”

Volvo also said it would launch five new electric and hybrid vehicles between 2019 and 2021. Two of the new models would be built by Polestar, the performance-car unit that Volvo is spinning off as a “separately branded electrified global high performance car company.” Volvo Cars would build the other three models. No further details were available.

All major auto makers are preparing for a shift to 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.

Auto executives talk about an impending “tipping point” when the costs of some electric car models are expected to fall below the cost of the conventional version of the same vehicle type. When that happens, industry executives and analysts say momentum could shift quickly in favor of electric cars.

Industry analysts estimate that rising costs of developing combustion engines that meet ever-stricter emissions regulations could make some electric models more affordable as soon as 2025. With a starting price of around $35,000, the Tesla Model 3 that launches this week is only slightly more expensive than BMW AG’s 3-Series sedan with a gasoline or diesel engine.

Volvo’s decision to accelerate the move to go electric could help it in light of a potential stock listing. Volvo, a Swedish luxury car maker that was founded in 1927, was bought by Ford Motor Co. in 1999. Ford sold the company to Geely Holding Group, a Chinese investment company, in 2010.

Struggling when Geely acquired it, Volvo has achieved a significant turnaround and is building its first manufacturing plant in the U.S.

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