Turn up at any car show around the world from Las Vegas to Bangkok, and you are likely to see Volvo brandish its loud and proud electric vehicle (EV) manufacturing credentials.
The Swedish automaker did not state that the future of land mobility would be electric in March 2021, but also defined its commitment to go fully electric and promote electric vehicles until 2030.
But the gears of that commitment, which also amounted to a gamble on the death of gas-powered cars, crumbled after Volvo abandoned it on Tuesday, more than three years later.
It is not at all about cutting its electric vehicle production targets. Many of its rivals have recently scaled back their ambitions.
In June, General Motors cut its electric vehicle production forecast, and soon after, rival Ford abandoned plans for a large, all-electric three-row SUV and postponed the launch of its next electric pickup truck. German luxury carmaker Porsche has also lowered its goal of promoting 80% battery-powered electric cars this summer.
Meanwhile, Toyota, the world’s largest automaker in terms of the number of units produced in a year, has taken a position of strategic ambiguity by gaining confidence in the long-term of electric vehicles, but missing out on the intermediate production of traditional gasoline-powered cars as well as plug-in hybrids, hybrids and electric vehicles. fuel for mobile electric vehicles.
The downgrading of EV targets by Volvo and its automaking rivals bottles down to changing market conditions and a likely misplaced optimism on consumer demand for EVs.
In the words of Volvo CEO Jim Rowan: “It is clear that the transition to electrification will be linear and that consumers and markets are moving at other speeds of adoption. »
It is because the various government subsidies for EVs that give consumers an incentive to buy them are unwinding in key markets around the world in an uncertain economic climate.
Additionally, many governments talked the talk, but have (so far) failed to walk the walk on charging infrastructure for EVs. Falling crude oil prices have also had an impact. And if that was not enough, Chinese-manufactured EVs have been slapped with import tariffs 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 broadly, the overall appeal of owning an EV has recently narrowed as those points have begun to take their toll. From a European point of view, not even the numbers lie. It was once a key market for EV sales, but customer demand is now stagnant on 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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