Volvo Will Produce Only Electric and Hybrid Vehicles by 2019

By Juan Cole / Informed Comment

The Swedish auto manufacturer Volvo, owned by the Chinese automotive corporation Zhejiang Geely Holding Group Co., Ltd, has abruptly decided to produce only electric, plug-in hybrid and “mild hybrid” vehicles by 2019, only two years from now, the Associated Press reports.

Le Monde called the announcement “a coup for Elon Musk, the billionaire entrepreneur who pioneered the idea of mass market electric cars. When he announced his goals, he was thought eccentric. And now with Volvo’s announcement, he looks like a prophet. It is true that Tesla has increasing competition, but the electric automobile sector also has enormous room to grow, so that lots of competitors can all make money. It is the companies that continue to produce only gasoline and diesel engines that will be in the biggest trouble.

Swedish CEO of the Volvo division, Håkan Samuelsson, says that only two years ago, he and his board had severe doubts about electric cars, but that the situation has changed rapidly. My suspicion is that Geely, which is big on electric cars in China, pushed Volvo in this direction.

Another big change in my view is battery cost and capacity. I drove a Chevy Volt for years, but it only got 40 miles or so to a charge. That was all right for me, since Ann Arbor is a small town. But most people needed more. And now they can have it. Elon Musk’s Tesla 3, to be rolled out at the end of July, and Chevrolet’s Bolt, can both get 250-300 miles on a charge, and they each cost around $35,000 (the same as the old Volt, which had a much more limited range). In the U.S. at the moment, purchasing a Tesla 3 or Bolt will get you a $7,500 Federal tax rebate, making the cars affordable to middle class families. The cars are perfect for commuting or in-town use, and if you needed to go a longer distance, Tesla has fast charging stations around the country, or you could just rent a vacation car.

By the way, nowadays EV’s have great pick up. People have asked me if you have trouble merging. No, you don’t have trouble merging.

Samuelsson at Volvo wants to push for even cheaper batteries, and as more auto firms go electric, the research and development funding for better batteries will soar.

All electric cars emit less carbon dioxide, a toxic greenhouse gas, than gasoline and diesel cars, even if they are charged in states that depend heavily on coal and natural gas for electricity production. Many owners of electric cars, however, pair them with rooftop solar panels, which reduces the pay-off period for both items. Likewise, driving an electric car in states like Iowa, California and Idaho, which depend heavily on renewables, guarantees that they will be less carbon intensive.

Sweden itself has made big progress in cutting CO2 emissions, and plans to be carbon-free by 2045.

Volvo also wants its manufacturing plants to be net carbon zero by 2025.

Volvo buyers are more typically upper middle class or wealthy, so they can afford the electric version. Volvo sells 500,000 cars a year. About 88 million cars and light vehicles are sold annually worldwide. However, so many of those are sold in China, and given that China and India are so increasingly dedicated to pushing electric vehicles, the Asian market may drive the whole industry in the direction of electric cars much faster than anyone now realizes.

Electric car purchases could also encourage adoption of rooftop solar. The pay-off time for both the car and the panels is brought down substantially if you combine the two. I know what not having an automobile fuel bill is like, and let me tell you, it is very gratifying.

The U.S. imports 10 million barrels a day of petroleum, most of it from Canada, Saudi Arabia, Venezuela, Mexico, and Colombia. Saudi Arabia is a religiously intolerant absolute monarchy that has begun throwing its weight around in very unpleasant ways. Venezuela is unstable. Do you really want to be beholden to other countries for your transportation? Do you really want to donate to the Saudi cause?

Not everyone can afford an electric car and solar panels. Those who can afford them, and who have a choice the next time they make a purchase, should go green. They’ll save money and they’ll make our country more secure, and they’ll de-fund some sketchy suppliers like Saudi.