Thomas Lee:
Volvo officials believe the company’s background gives it an advantage in building self-driving cars.
The first thing I said to Volvo USA CEO Lex Kerssemakers after meeting him for lunch Thursday was my memory of Volvo cars growing up in the 1990s.
“Those things were boxy yet indestructible,” I said. “Volvos could take a pounding and still keep ticking.”
I meant it as a compliment, but it was probably not the first thing Kerssemakers wanted to hear about his vehicles. After ceasing production in the United States at the height of the financial crisis eight years ago, Volvo has remade itself into a producer of premium hybrid cars. Still sturdy — but a lot prettier.
“The era of the boxy car is over,” Kerssemakers sniffed. “Safety does not need to be boring.”
In any case, Kerssemakers is already eyeing a much bigger improvement to Volvo cars, beyond mere aesthetics: He wants to build vehicles that will eliminate deaths and serious injuries. To do this, the company announced Thursday that it wants to have self-driving cars on the road in five years.
Of course, everyone from Google to Ford have been developing autonomous cars. But Volvo thinks that its artificial intelligence technology, combined with the company’s impeccable reputation for safety, will give it the edge in the market. Uber in San Francisco plans to test self-driving cars made by Volvo.
“We investigated car accidents for 30 years, and we know the cause is human error,” Kerssemakers said. “Autonomous vehicles are essential to eliminating human error. You need competence, and we have the competence to build the cars. We have so much experience.”
That Volvo is selling any type of vehicle in the United States these days is a small miracle. Amid the financial crisis of 2008, Ford, which then owned Volvo, looked to unload the brand and slashed its workforce as it faced mounting losses.
Given the financial situation, “it didn’t make a lot of sense to sell a lot of cars,” Kerssemakers said. “We always wanted to stay in the United States but we could not afford it.”
But under the ownership of Zhejiang Geely Holding Group in China, which acquired Volvo in 2010 for $1.8 billion, the company has aggressively re-entered the U.S. market as a luxury carmaker, led by the XC90 model. Volvo even built a $500 million plant in South Carolina that will pump out 100,000 vehicles by late 2018.
Last year, Volvo sold 70,000 vehicles in the United States, a 24 percent jump from 2014. U.S. sales now account for 14 percent of Volvo’s revenue of $19 billion.
By taking the lead in autonomous vehicles, Kerssemakers said, Volvo can eventually capture a 1 percent share of the U.S. market.
Volvo’s five-year timeline for self-driving cars puts it roughly on pace with such competitors as Ford, whose CEO announced plans last month to start selling autonomous cars in five years. Palo Alto’s Tesla Motors is already selling luxury cars equipped with its Autopilot system, which can steer and change lanes at freeway speeds, and Tesla plans to include some level of self-driving capability in all its cars.
According to a recent survey by Kelley Blue Book, 63 percent of Americans believe that roadways would be safer if autonomous vehicles were standard. Still, people are wary of the technology.
“Much is still unknown about fully autonomous vehicles, including how they would react in emergency situations,” said Karl Brauer, senior analyst for Kelley Blue Book. “Automakers will need to address hesitant drivers in order to be successful.”
That’s where Volvo’s reputation for safety can really make a difference. You might be more willing to try an autonomous vehicle if you know that five of the company’s 2016 model cars earned a top rating from the Insurance Institute for Highway Safety.
“Things could always go wrong,” Kerssemakers said. “But it’s in our highest interest to make sure things don’t go wrong.“
San Francisco Chronicle staff writer David R. Baker
contributed to this report.