Volvo has revised its ambitious plan to go fully electric by 2030, a goal it set just three years ago. The Swedish automaker, now majority-owned by China’s Geely, announced that instead of selling only electric vehicles (EVs), it will also continue to offer hybrid models as part of its lineup through the end of the decade.
The company now aims for 90 to 100 percent of its global sales to consist of electrified cars, including fully electric vehicles and plug-in hybrids, with mild hybrids making up the remaining percentage.
Adjusting to Market Realities
The decision to scale back its electrification targets reflects the challenges currently facing the EV industry. Volvo cited several factors, including changing customer demand, the slow rollout of EV charging infrastructure, and new tariffs on electric vehicles made in China, where many Volvo models are produced. These factors have complicated the company’s ability to meet its original goal of becoming a fully electric automaker by 2030.
“The transition to electrification will not be linear, and customers and markets are moving at different speeds of adoption,” said Jim Rowan, CEO of Volvo. “We are pragmatic and flexible, while retaining an industry-leading position on electrification and sustainability”.
Despite this shift, Volvo remains committed to the long-term vision of full electrification and aims to achieve net zero greenhouse gas emissions by 2040. The company has already launched five fully electric models, including the EX40, EX30, and EX90, and has several more in development. However, the revised goal reflects a more cautious approach, recognizing that global markets are not moving toward EV adoption as quickly as originally anticipated.
EV Infrastructure and Consumer Concerns
One of the primary hurdles for Volvo and other automakers is the slower-than-expected expansion of charging infrastructure. While President Biden’s Bipartisan Infrastructure Law of 2021 set aside $7.5 billion to build 500,000 EV charging stations across the U.S. by 2026, progress has been sluggish. By early 2024, only a small fraction of these stations had been built.
This delay in building out charging networks has directly affected consumer confidence. A recent study by J.D. Power found that over half of potential buyers were hesitant to purchase an EV due to concerns about charging availability. Other common reasons for not buying an electric vehicle include the high upfront cost, range anxiety, and the time it takes to recharge the battery.
These challenges have been compounded by the removal of government subsidies that were initially offered to incentivize EV purchases. In many markets, the absence of such incentives has made electric cars less attractive, particularly given their higher prices compared to gasoline-powered vehicles.
Industry-Wide Shift: Volvo Not Alone
Volvo’s decision to scale back its EV goals is not unique. Other major carmakers have also been adjusting their strategies in response to similar market conditions. Ford, for example, recently scrapped its plans for an all-electric three-row SUV and postponed the launch of its next electric pickup truck. General Motors has also reduced its EV production goals, reflecting a broader trend in the industry as manufacturers face challenges in scaling up electric vehicle production. Renault also said earlier this year “we’re not on the right trajectory to achieve 100% electric cars by 2035.”
Volvo’s adjustments align with this broader industry shift. Automakers are being forced to balance their long-term sustainability goals with short-term market realities, including fluctuating demand for EVs and the high costs associated with transitioning to electric-only fleets. For many companies, including Volvo, hybrid technology offers a temporary solution, allowing customers to experience the benefits of electric driving without the same range or charging limitations of fully electric vehicles.
Volvo’s Updated Strategy
Although Volvo’s 2030 plan now includes hybrids, the company remains optimistic about its electrified future. By 2025, it expects between 50 to 60 percent of its global sales to come from electrified vehicles, which includes both fully electric cars and plug-in hybrids. The company is also updating its carbon reduction goals to reflect its revised timeline. Volvo now aims to reduce per-car CO2 emissions by 65 to 75 percent by 2030, compared to a 2018 baseline. This is slightly lower than its previous target of a 75 percent reduction.
In addition to developing new fully electric models, Volvo will continue to improve its plug-in hybrid offerings. These hybrids allow customers to drive on electric power for shorter trips while maintaining the flexibility of a traditional gasoline engine for longer journeys. According to Volvo’s data, about half of the miles driven by its plug-in hybrid customers are on electric power, highlighting the appeal of this technology for those who are not yet ready to commit to fully electric vehicles.
Tariffs and Global Trade
Volvo’s decision to include hybrid models in its 2030 lineup is also influenced by the imposition of tariffs on EVs produced in China.
Tariffs on electric vehicles made in China have recently been imposed by the U.S., European Union, and Canada, citing unfair trade practices and government subsidies that give Chinese manufacturers a competitive edge.
While the company has been shifting production to other locations, many of Volvo’s EV models are produced in Chinese factories, and these tariffs are expected to raise the prices of its vehicles in key markets, making it harder to compete with domestically produced cars.
These tariffs are part of a larger trend of increasing trade tensions between Western countries and China, with the automotive industry being a significant battleground. For Volvo, which relies heavily on its Chinese manufacturing base, these new trade barriers represent a considerable obstacle to its electrification strategy.
Volvo’s Long-Term Commitment
Despite the headwinds, Volvo remains confident in its long-term vision. The company plans to introduce a complete lineup of fully electric vehicles before the end of the decade, and executives believe that as charging infrastructure improves and consumer confidence grows, the market for EVs will expand. Volvo is positioning itself to adapt to these changes, ensuring that it has a flexible approach to electrification that can respond to both consumer demand and regulatory pressures.
In the short term, however, the company’s revised 2030 target is a reflection of the current realities of the global auto market. While the dream of a fully electric future remains intact, Volvo’s decision to maintain a mix of EVs and hybrids demonstrates the complexity of navigating this transition. As the industry continues to evolve, Volvo’s strategy of balancing ambition with pragmatism could prove to be a model for other automakers facing similar challenges.
Volvo CEO Jim Rowan said: “As I have said before: business is not a game of perfection, it’s about continuous progress and adaptation.”