Volvo just announced that all of its new cars will be either electric or hybrids by 2019, with plans to launch five new electric models in the next few years.
Volvo CEO Håkan Samuelsson said the company sees demand for electric cars going up, so it’s giving customers what they want.
But there’s another business reason for Volvo’s decision, according to Jonathan Gitlin, an automotive editor at Ars Technica. Tougher emissions standards will go into effect in Europe and China over the next few years.
“It’s going to be extremely difficult to reach the new emissions targets with just the conventionally powered internal combustion engine,” Gitlin said.
By switching to electric cars, Volvo is also following through on a commitment it made to lower its cars’ carbon emissions. That could be good branding, said Michelle Krebs, an analyst with Autotrader.
|Volvo America’s CEO on the future of self-driving cars|
|Tesla and SolarCity $2.6-billion deal will create an Elon Musk megacompany|
|The market for electric buses is speeding right along|
“Volvo was always known for safety. However, everybody else caught up and now this will…make Volvo different from all other manufacturers,” Krebs said.
The competition might also be giving Volvo the motivation it needs to roll out these changes. Tesla is expected to release its Model 3 — the company’s first mass-market electric car — as soon as Friday.
“[It] aims to sort of do what the Ford Model T did to the internal combustion engine car,” said Jonathan Frewin, a business reporter for the BBC. “And certainly I think Tesla has been put a little bit on notice by this announcement from Volvo.”
But don’t expect this decision to spell the end of gas-only engines. Krebs said electric cars are still a small percentage of car sales. And until there’s better infrastructure for them, things are likely to stay that way.
Correction (July 8, 2017): A previous version of this story misidentified the CEO of Volvo. The text has been corrected.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.