Volvo ditch­ing cars pow­ered just by gas

The Denver Post - - BUSINESS - By Matti Huuhtanen The As­so­ci­ated Press

HELSINKI» Volvo plans to build only elec­tric and hy­brid ve­hi­cles start­ing in 2019, mak­ing it the first ma­jor au­tomaker to aban­don cars and SUVs pow­ered solely by the in­ter­nal com­bus­tion en­gine.

CEO Hakan Sa­muels­son said the move was dic­tated by cus­tomer de­mand. It means that in two years, new Volvo ve­hi­cles will have some form of elec­tric propul­sion.

The an­nounce­ment comes as the global auto in­dus­try slowly moves to­ward elec­tric-pow­ered ve­hi­cles af­ter more than a cen­tury of us­ing en­gines that burn only fos­sil fu­els. Even though sales are a frac­tion of con­ven­tional au­tos, com­pa­nies must sell them to meet fuel econ­omy and emis­sions reg­u­la­tions. In some mar­kets elec­tric ve­hi­cles are see­ing in­creased de­mand.

Yet the tran­si­tion to fully elec­tric ve­hi­cles will take years. Al­though Tesla Inc. has an­nounced a $35,000 elec­tric car for the masses and Gen­eral Mo­tors Co. is sell­ing the all-elec­tric Chevy Bolt for a sim­i­lar price, less-ex­pen­sive hy­brids are likely to sell more at least in the short run.

Still, other au­tomak­ers are likely to fol­low Volvo’s an­nounce­ment in a few years, said Sam Abuel­samid, se­nior an­a­lyst for Nav­i­gant Re­search, with lux­ury au­tomak­ers lead­ing the way.

“I think we’ll prob­a­bly see most of the pre­mium brands do the same thing in roughly the same time frame,” he said. “More high-vol­ume main­stream brands will be a lit­tle slower.”

In or­der to meet govern­ment fuel econ­omy re­quire­ments world­wide, au­tomak­ers are de­vel­op­ing more hy­brid sys­tems. Many are 48-volt “mild hy­brids” that as­sist a gas en­gine to move a car to make it more ef­fi­cient, im­prov­ing gas mileage by 10 or 15 per­cent, Abuel­samid said.

Such sys­tems gen­er­ate enough elec­tric­ity to al­low au­tomak­ers to move func­tions such as air con­di­tion­ers and wa­ter and oil pumps to elec­tric power, get­ting rid of me­chan­i­cal belts that are a drag on the en­gine. Those sys­tems can run only when needed, sav­ing an­other 2 or 3 per­cent on fuel con­sump­tion — so a ve­hi­cle that gets 20 miles per game could get about an­other four miles per gal­lon, he said.

Euro­pean lux­ury brands such as Audi and Mercedes-Benz al­ready are rolling out mild hy­brid cars in Europe. Those sys­tems likely will be com­ing to the U.S. be­cause it’s ex­pen­sive for the com­pa­nies to build dif­fer­ent cars for dif­fer­ent mar-

kets, Abuel­samid said. Gen­eral Mo­tors and oth­ers al­ready have such sys­tems as op­tions on some mod­els in the U.S.

All man­u­fac­tur­ers are mov­ing to­ward more hy­brids, but the tran­si­tion to 100 per­cent elec­tric ve­hi­cles is still years away, said Dar­ren Jukes, head of in­dus­trial prod­ucts for the ac­count­ing firm Price­wa­ter­house­Coop­ers. “I don’t think we’re see­ing the end of com­bus­tion en­gines just yet,” Jukes said.

Fully elec­tric and hy­brid ve­hi­cle sales have risen a lit­tle since 2012 but still ac­counted for only 2.6 mil­lion, or about 3 per­cent of world­wide new ve­hi­cle sales, last year. Nav­i­gant pre­dicts that will in­crease to around 3.7 mil­lion in 2018 and to more than 9 mil­lion by 2025. That’s about 9 per­cent of sales.

Volvo, which is based in Swe­den but owned by Chi­nese firm Geely, will launch five fully elec­tric cars be­tween 2019 and 2021. Three of them will be Volvo mod­els and two will be elec­tri­fied cars from Polestar, Volvo Cars’ per­for­mance car arm. It also plans to of­fer a range of hy­brids as op­tions, ex­pect­ing to sell 1 mil­lion elec­tri­fied cars by 2025.

The com­pany said its long range mod­els could travel 310 miles on a sin­gle charge us­ing cur­rent tech­nol­ogy, but it is look­ing for sup­pli­ers of new and bet­ter bat­ter­ies.

Sa­muels­son, who ac­knowl­edged that the com­pany had been skep­ti­cal about elec­tri­fi­ca­tion only two years ago, said cir­cum­stances have changed. “Things have moved faster; cus­tomer de­mand is in­creas­ing,” he said.

Last year, Volvo sold 534,332 cars in 100 coun­tries, up more than 6 per­cent from 2015.

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