Volvo says all of its 2019 models will have electric drive, making it the first big auto company to switch from traditional internal-combustion engines.
“This announcement marks the end of the solely combustion engine-powered car,” chief executive Håkan Samuelsson said in a statement. “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.”
Samuelsson’s strategy, in a nutshell, is to begin with a few pure electric models and a larger number of hybrid-electric ones. True, every vehicle will run, at least in part, on electrons, but some will also include either the vestiges of an internal combustion engine—in a so-called plug-in hybrid, where the engine is basically just a range extender—or a beefier one, in a mild hybrid.
But by 2019 five new models will run purely on electricity, from either batteries or some other form of stored electric power, such as fuel cells. Two of those all-electrics will be high-performance models to be sold by Polestar, a Volvo subsidiary built in response to Tesla’s challenge. BMW has something like it in the form of BMW i, a brand rather than an independent subsidiary.
Volvo is based in Sweden, but it’s owned by Geely, a Chinese multinational. And China has done more than any other big car country to subsidize electric drive, with some 200 entities now chasing the technology. That’s too many, the government now appears to think, given that it cut subsidies by 20 percent earlier this year and is taking further steps to weed out the startups that haven’t delivered much on their promises.
It could be that the Chinese want to concentrate electric drive in the hands of a few big players that would then benefit, as much as possible, from economies of scale. Battery prices are falling, and though the total ownership cost of an electric model is still high, it’s coming within reach of the internal combustion–powered competition.
Today the plug-in hybrid version of the Volvo XC90 SUV has a suggested retail price of US $67,800, or about $18,000 more than the gasoline-powered version. And that doesn’t include a tax credit worth as much as $4,600. Also, the watt-hours it drinks cost less per trip than the equivalent energy in gasoline.
The real cost benefits will come when the engine finally makes its final bow. Then cars will come with just one power train rather than two, and it will be by far the simpler one, and thus cheaper to maintain. That, and the magic of mass production, will bring the cost of owning an electric car down to that of a conventional car, if not lower, even without the subsidy. According to researchers at the Swiss bank UBS, cost parity could come as early as next year in Europe, and by around 2025 in the United States.