Volvo Electrifies with Electric and Hybrid Vehicle Announcement

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Swedish carmaker Volvo is betting the farm on electric vehicles.

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In an announcement this week, Volvo cars said beginning in 2019, it will no longer launch new car models powered only by an internal combustion engine. According to the Financial Times, pure and electric hybrid cars will be the only game in town for the Swedish carmaker.

Following hot on the heels of Tesla’s launch of its most affordable mass-produced Model 3 — which, since March last year, has taken nearly 400,000 pre-orders, a remarkable vote of confidence in what has become one of the most exciting brands in the automotive industry — does Volvo’s announcement spell the end of the internal combustion engine?

Regardless of the headlines, Volvo is not turning its back on petroleum and diesel engines just yet.

Reading between the lines, the pledge is to launch five new models between 2019 and 2021, all of which will have petrol and diesel hybrid options, plus electric vehicle EV) versions, not five new models which are EV only. Although Volvo is owned by Chinese manufacturer Geely — and as such does not have to report to shareholders on a quarterly basis, giving greater flexibility to invest today for the longer term — the Swedish carmaker is still not saying it can achieve this on its own.

Rather, Volvo’s announcement is saying to the market it is seeking cooperation among battery manufacturers and infrastructure providers to provide solutions to the two biggest challenges EVs face: limited range and limited charging infrastructure.

The first challenge, range, requires continued massive investment in research and development to drive down battery costs and increase power density. The latter challenge requires a massive investment, not just in charging points, but also in configuring electricity grids to cope with demand if EVs achieve scale.

Volvo’s Chinese ownership probably influenced these strategic goals in another way.

According to the Financial Times, last year China delivered 361,000 plug-in cars — an astounding 85% increase from the year before, making China the world’s largest market for EVs. With Beijing fighting pollution on every front, its subsidy of EVs has considerable logic, which is no doubt driving Geely and Volvo’s plans to play a big part in this rapidly growing sector of the Chinese market.

The Electric Revolution

Volvo is not alone in its goals. Over the last year, manufacturers such as Volkswagen, General Motors and Mercedes have announced similar plans to increase the percentage of their range met by electric propulsion systems.

But all these announcements should be taken with a grain of salt.

The advantages afforded by new technologies, like regenerative breaking and acceleration assist, are rapidly driving the integration of technologies developed for the EV market.

However, they are being incorporated to enhance the performance of internal combustion engines, too. These “mild hybrids” are really the future of the automotive market over the next few years.

Further breakthroughs in battery technology and considerable investment in charging infrastructure are needed before pure EVs make a significant headway outside of city centers, even though EVs are fast approaching an inflection point at which the consumer cost of ownership for EVs falls below that internal combustion engine vehicles.

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