Show up at any auto show around the world, from Las Vegas to Bangkok, and most likely to see Volvo touting its electric vehicle (EV) production credentials.
Not only did the Swedish automaker declare the future of ground mobility was electric in March 2021, it also outlined a commitment in to go fully electric and sell only EVs by 2030.
But the practicalities of that promise, which also amounted to a gamble on the death of gasoline cars, crumbled after Volvo abandoned it on Tuesday, more than three years later.
This is by no means about reducing EV production targets. Many of its rivals have also recently scaled back their ambitions.
In June, General Motors cut its EV production forecast, and a short time later, rival Ford scrapped plans for a giant all-electric three-row SUV and postponed the launch of its next electric pickup truck. German luxury carmaker Porsche also scaled back its target of promoting 80% battery electric vehicles this summer.
Meanwhile, Toyota, the world’s largest automaker in terms of the number of units produced in a year, has pursued a position of strategic ambiguity by imposing its religion on the long-term electric vehicles, but missing out on the intermediate production of traditional gasoline cars as well as plug-in hybrids. hybrids and electric vehicles. fuel for mobile electric vehicles.
The reduction of electric vehicle targets by Volvo and its automotive competition is due to changing market conditions and likely misplaced optimism about consumer demand for EVs.
To quote Jim Rowan, Chief Executive of Volvo: “It is clear that the transition to electrification will not be linear, and customers and markets are moving at different speeds of adoption.”
This is because government subsidies on electric vehicles, which incentivize consumers to buy them, are being phased out in key markets around the world amid a doubtful economic climate.
In addition, many governments have spoken out, but (so far) they have managed to establish a charging infrastructure for electric cars. The fall in crude oil costs also had an impact. And as if that wasn’t enough, Chinese-made electric vehicles cars have been hit by import duties in many parts of the world.
Among marquee auto brands, these tariffs put Volvo – majority-owned by Chinese car giant Geely – directly in the firing line. Primarily because it uses factories in China, the company will face the consequences of tariffs on imports of Chinese-made EVs in key European, U.S. and Canadian demand centers.
More generally speaking, the wider appeal of owning an EV has of late diminished as these factors have begun to take their toll. From a European standpoint, even the figures don’t lie. Once considered a key market for EV sales, consumer demand is now stagnating in the old continent.
The latest data from the European Automobile Manufacturers Association (ACEA) released on August 29 makes sober reading for electric vehicle enthusiasts. It appears that battery-powered electric vehicles accounted for 12% of the European Union car market in July, up from 13. 5% last year. In particular, new electric vehicle registrations fell by 10. 8%. More automakers are expected to stick with Volvo as the electric vehicle market comes to grips with the truth in 2024.
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