Volvo to Go Electric-Only and Shift Sales Online From 2030

(Bloomberg) -- Volvo Cars set an ambitious goal to only sell battery cars by 2030, accelerating its plans after sales of electric vehicles surged.

The Chinese-owned Swedish brand is rolling out a new lineup of electric cars and unveiled its second battery-only model, the C40 Recharge, on Tuesday. Going one step further than recent rivals' decisions on EVs, Volvo's electric vehicles will be available for sale only online, the company said in a statement.

“Going electric will strengthen our brand, it means going into a growing segment,” Chief Executive Officer Hakan Samuelsson said in an interview. “Combustion cars are a shrinking segment.”

Volvo's move follows rivals including Jaguar Land Rover, General Motors Co. and Volkswagen AG announcing plans to electrify their offerings. In addition to tough emissions regulation, incredible valuations garnered by EV-only newcomers have been a wakeup call to accelerate the pace of change to survive industry upheaval.

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The decision also comes days after Volvo and Geely Automobile Holdings Ltd., both owned by parent Zhejiang Geely Holding Co., dropped a plan to merge to instead deepen ties to quicken the pace of development. The pair will share vehicle platforms, software stacks and advanced connectivity, and will hive off their powertrain activities into a separate unit.

With the support of its Chinese owners, Volvo has ramped up investment in electric cars since 2017, when it first said it was planning to phase out vehicles that rely on combustion engines. Still, the company has only one fully electric model under its own brand name on the market, the compact crossover XC40 Recharge. In addition, Polestar, which is jointly owned by Volvo and Geely, launched its challenger to Tesla Inc.'s Model 3 in 2019.

Volvo has previously said it will plough roughly 5% of annual revenue into research and development, and that amount will be enough to finance the EV push, Samuelsson told reporters. The company sold more than 660,000 cars last year and reported full-year revenue of 263 billion Swedish kronor ($31.2 billion).

The C40 Recharge, sitting lower than the XC40 Recharge with a sloping roof, is the first Volvo that'll have no combustion sibling and will sell online only. It'll be built on the same platform as the XC40 and feature a range of 420 kilometers (261 miles).

The car will enter an increasingly competitive segment, going up against a slew of new battery-powered models such as Audi's Q4 e-tron Audi, BMW's iX3 and Ford's Mustang Mach-E.

“A growing segment will always attract newcomers,” said Samuelsson.

By 2025, Volvo expects half of the cars it sells to be fully electric and the other half to be hybrids, including so-called mild hybrids that don't feature a plug. Volvo has been selling cars online as part of its Care by Volvo subscription offering in since 2016.

The Care by Volvo concept will now be expanded to include outright sales, with a package for maintenance, roadside assistance as well as insurance. By 2025, about half of all purchases are expected to be made online, said Lex Kerssemakers, Volvo's head of commercial operations. That's up from as much as 15% currently in the markets where Volvo offers its subscription service.

All online purchases will be completed at a non-negotiable fixed price through Volvo's own website, while dealers remain as part of the sales, service and delivery process, Volvo said.

“This is about bringing the online and offline experience together,” said Kerssemakers. “Set prices will help save people hopping from one dealer to the next.”

©2021 Bloomberg L.P.