Volvo expects half its sales to be pure electric vehicles by 2025

Swedish luxury carmaker Volvo targets to sell one million electrified cars by 2025 when half of all the cars it sells globally are expected to be full electric models, a top company official said. Being the first luxury carmaker to announce its intention of shifting its focus away from diesel and towards electrified vehicles, Volvo Car, owned by Chinese carmaker Geely, looks to partly electrify its entire fleet by 2019 through hybrid versions.

The company plans to revamp its entire portfolio by rolling out a range of mild-hybrids with a 48-volt battery, plug-in hybrids, and electric vehicles, starting 2019, said Henrik Green, senior vice-president, research and development, at Volvo Car. “We anticipate a big turn starting with 2021,” Green told ET in an interview. “We are rolling out our first full battery electric vehicle in 2019 with the Polestar, which will still be a niche, (but) after 2021, it will become bigger with Polestar 2 followed by Polestar 3,” he said. “Eventually, by 2025 you could see half of our vehicles sold being fully electric.”

While Polestar 1 will be a highperformance vehicle, Polestar 2 and Polestar 3 will be more affordable and come in hatchback and crossover avatars. As awareness of climate change pushes carmakers to offer alternative fuel sources to power vehicles, Volvo Car hopes to leverage its early-mover advantage in electric and hybrid car space to increase its share in the luxury car market dominated by German companies Mercedes Benz, Audi, and BMW.

According to Green, the imme diate option in the drive towards a cleaner world is plug-in hybrid vehicle (PHEV) and the next step is battery-operated electric vehicles.

For him, the biggest enabler is falling battery costs. He expects the price of batteries to soften by 5-10% every year and once the price reaches $100 per megawatt hour, the electric vehicle market will be as competitive as a cleaner diesel car for future. Volvo sold 5.71 lakh cars in 2017, up 7% from the previous year. Electrified vehicles accounted for about 10% of individual car lines such as XC90, V90CC and XC60.

The company has strategically decided not to invest in new generation diesel engines; instead, it will utilise that money in the electrification of cars.

The company feels petrol hybrid is an ideal alternative to diesel vehicles, and it addresses the issue of particulate matter. With battery costs falling, a petrol hybrid will deliver lower emission and higher mileage in line with diesel vehicles. Green said Volvo is open to partnering battery makers, adding that securing lithium reserves for future will become a strategic decision.

"We are not acquiring any mines, (but) the supply of lithium is a strategic question we need to look at,” he said. “There will be other compositions along the way, but lithium will continue to be a predominant source.” Volvo admits there are infrastructure challenges and the company has explored possibilities of swappable batteries, wireless charging, and fast chargers. "The most suitable solution is a fast-charging of 30-40 minutes,” Green said. “Wireless charging is convenient but it is slow, and swappable batteries are cumbersome. If there is a quick charging solution available in 30-40 minutes, then swapping is not needed,” he said.