Volvo to phase out petrol-only cars

First ma­jor car­maker to forgo tra­di­tional en­gines

Kuwait Times - - BUSINESS -

Swedish car­maker Volvo Cars said yes­ter­day it plans to phase out pro­duc­tion of con­ven­tional petrol-only cars from 2019, with all new mod­els to be ei­ther elec­tric or hy­brids. The Gothen­burg-based group is the first ma­jor man­u­fac­turer to elec­trify all of its mod­els and to set out a roadmap for the grad­ual end to the in­ter­nal combustion engine, a cen­tury and a half af­ter it was in­vented.

Volvo, owned by China's Geely, said it plans to launch five fully elec­tric mod­els be­tween 2019 and 2021, three un­der its own brand and two un­der the Polestar brand, as well as a range of hy­brid mod­els. Polestar is a sub­sidiary spe­cial­iz­ing in high-per­for­mance elec­tric ve­hi­cles and is a ri­val to Cal­i­for­ni­abased Tesla, which is about to launch pro­duc­tion of its first lower-priced car, "Model 3". "This an­nounce­ment marks the end of the solely combustion engine-pow­ered car," Volvo Cars pres­i­dent and chief ex­ec­u­tive Hakan Sa­muels­son said in a state­ment.

A Volvo Cars spokesman said the first fully elec­tric car would be man­u­fac­tured in China, and that the pro­duc­tion lo­ca­tion of the other four was yet to be de­ter­mined. The car maker, which posted record sales in 2016, noted that "con­sumers are in­creas­ingly pleased with elec­tri­fied cars" and that it in­tends to re­spond to the grow­ing de­mand for cleaner and less pol­lut­ing ve­hi­cles. A Volvo Cars spokesman said the com­pany would con­tinue to man­u­fac­ture ex­ist­ing petrol or diesel-only mod­els launched be­fore 2019, but they will grad­u­ally be re­placed by hy­brid and fully elec­tric cars.

'High cli­mate tar­gets'

The an­nounce­ment comes a week af­ter Geely un­veiled a re­search and in­no­va­tion cen­tre in Gothen­burg, fo­cus­ing on the de­vel­op­ment of elec­tric ve­hi­cles. "When we said it, we meant it. This is how we are go­ing to do it," Sa­muels­son said in the state­ment. In an in­ter­view with the Ger­man daily Frank­furter All­ge­meine Zeitung (FAZ) in May, Sa­muels­son had said he did not want to de­velop a new gen­er­a­tion of diesel en­gines be­cause of the high costs of stricter reg­u­la­tions.

EU leg­is­la­tion, which sets manda­tory emis­sion tar­gets for cars, stip­u­lates that, by 2021, the emis­sions of all new mod­els and cars must not ex­ceed 95 grams of CO2 emis­sions per kilo­me­ter on av­er­age. Fail­ure to com­ply would re­sult in a fine. In Swe­den, the gov­ern­ment plans to raise the tax rate on CO2 emis­sions in 2018, which would lead to a five­fold in­crease in the rate for some cars.

In con­crete terms, that would trans­late into in­creas­ing taxes to 630 eu­ros ($713) per year for an owner of a Volvo V90 T5 4WD and to more than 1,500 eu­ros for an owner of an SUV BMX X6 M, ac­cord­ing to cal­cu­la­tions by spe­cial­ist mag­a­zine, Tekniken­sVarld. Pro­po­nents of the eco tax ar­gue that this is a mar­ginal cost com­pared to the pur­chase price of these high-end mod­els, which re­tail at be­tween 60,000 and 100,000 eu­ros.

"We have high cli­mate tar­gets in Swe­den (and) the trans­port sec­tor must change di­rec­tion," Swe­den's in­dus­try and in­no­va­tion min­is­ter Mikael Dam­berg told AFP. Clean en­ergy "is com­pletely nec­es­sary to man­age cli­mate chal­lenges," he added. In 2016, new reg­is­tra­tions of all elec­tric and hy­brid cars amounted to 433,847 across the whole of the EU, al­most three per­cent of the to­tal reg­is­tra­tions.

Jump in reg­is­tra­tion

Elec­tric car reg­is­tra­tions jumped by seven per­cent last year com­pared to 2015. Reg­is­tered plug-in hy­brids rose by 3.9 per­cent and non-recharge­able hy­brids by 27.3 per­cent, ac­cord­ing to the Euro­pean As­so­ci­a­tion of Automobile Man­u­fac­tur­ers (ACEA). Volvo aims to sell one mil­lion elec­tric cars be­fore 2025, when it wants its pro­duc­tion op­er­a­tions to be­come "cli­mate neu­tral".

Since Geely bought the brand from the Amer­i­can Ford in 2010, Volvo Cars has seen a dra­matic turn­around. In 2016, its net profit al­most dou­bled to over 600 mil­lion eu­ros. There have been spec­u­la­tions in fi­nan­cial me­dia for sev­eral months about pos­si­ble stock mar­ket list­ings for Volvo in Hong Kong, Stock­holm and Lon­don. Volvo Cars has not com­mented on such claims. Its de­ci­sion to grad­u­ally shift to elec­tric or hy­brid cars was on Wed­nes­day met with mixed re­ac­tions from an­a­lysts. —AFP

STOCK­HOLM: Volvo Cars CEO Hakan Sa­muels­son dur­ing an in­ter­view with TT News Agency at Volvo Cars Show­room. — AP

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