GOTHENBURG, Sweden — Volvo Cars is betting on hybrid crossovers to take it into an electric future that it says will take longer than expected.
The Swedish automaker will expand its lineup with new, longer-range plug-in hybrids. Meanwhile, Volvo will continue investing in its high-volume XC90 and XC60 mild-hybrids and plug-in hybrids — upgrading them with energy-efficient, high-density electric motors and more advanced batteries.
The focus on on-demand hybrid vehicles is a strategic shift for Volvo, which has pledged to sell only electric vehicles by 2030.
The automaker on Sept. 4 joined many of its competitors in backpedaling on its bold EV ambitions. Volvo said it now aims for plug-in hybrids and battery-only models to account for at least 90 percent of its sales by 2030. Automotive News first reported in July that Volvo would delay its transition to an electric-only lineup until the next decade.
“We’re making sure we’re [going to] “To keep mild hybrid and plug-in hybrid technology competitive and in range through 2030 and beyond if necessary,” Volvo Chief Commercial Officer Bjorn Annwall told Automotive News at an event here. “Leadership is about having a clear vision, but it’s also about adjusting to realities.”
The realities mentioned by Annwall include the slow adoption of electric vehicles by consumers in key markets like the US and the pressure on profits fueled by rising tariffs on electric vehicles and components made in China.
Higher U.S. tariffs on the EX90’s Chinese-made battery forced Volvo to raise the model’s price by $3,300 this summer. Volvo also delayed deliveries of the EX30 crossover in the U.S. until next year after Washington imposed a tariff of more than 100 percent on Chinese EV imports.
“For the BEV transition to ramp up, you need cost parity between BEV and ICE, and that has taken longer,” Annwall said. “Government incentives for EVs in some markets have fallen much faster and more sharply than expected.”
U.S. sales of Volvo’s first-generation electric models fell 74 percent to 1,981 in the first half of the year. In the same period, sales of plug-in hybrids rose 75 percent.
Volvo CEO Jim Rowan described the path to an all-electric future as “complex.” The transition “will not be linear — customers and markets are moving at different speeds,” Rowan said.
Volvo executives emphasized that they are not abandoning their commitment to full electrification — just waiting for the market to materialize.
“2030 is not a strategy,” Annwall said. “The strategy is to become an all-electric company. 2030 is just a point in time.”
Volvo’s new long-range PHEVs would likely be based on the Scalable Product Architecture platform, known as SPA1, that underpins current plug-in hybrids.
“SPA1 is a very flexible architecture,” said Erik Severinson, Volvo’s chief product and strategy officer. “We can continue to upgrade SPA1 to even longer-range PHEVs.”
Severinson said the electric-only range of the next-generation PHEVs would be a “significant improvement” over the XC90’s 33 miles.
PHEVs are key to Volvo’s shift to all-electric vehicles in many markets, including the U.S.
“Many people who drive PHEVs are more likely to switch to a BEV because they have learned how to charge the vehicle,” Severinson said.
Volvo’s XC90 and XC60 mild and plug-in hybrid crossovers continue to be the brand’s sales drivers, accounting for nearly 60 percent of U.S. sales in the first half of the year.
However, the models haven’t been redesigned in nearly a decade. It’s unclear whether the XC90 and XC60 will get expensive next generations now that Volvo’s shift to all-battery power has been extended.
“It would make sense to make targeted adjustments to some of the offerings,” Annwall said. “What those are and when they’ll come, stay tuned.”
But hybrid models will benefit from new longer-range batteries, energy-efficient electric motors and the technology foundation that Volvo is developing for its next-generation electric models.
“You need brain lifts instead of facelifts; that’s what consumers care about,” Annwall said. “We do a lot of the brain investment on the electrical side, and we can piggyback on that.”
That strategy is reflected in the XC90’s recent makeover. The three-row flagship, revealed on September 4, arrives early next year with an improved suspension and design cues from the battery-powered EX90.
Severinson said similar updates are planned for the electrified XC60 and XC40.
This strategy allows Volvo to “deliver a consistent and improved customer experience in our current cars without requiring major investments,” he said.
Volvo could leverage platforms from parent company Geely Group to expand its PHEV lineup, sources familiar with the plan told Automotive News in July. In late May, Geely finalized a joint venture with Renault Group to develop and build more efficient hybrid and internal combustion engines.
“We want Volvo’s core lineup to be underpinned by Volvo’s core technology,” Annwall said. “If there’s a great platform from Geely or another company that we can build a great top hat on, we can do that.”
In the short term, Volvo will maintain parallel lines of hybrid and battery-only vehicles. The product plan involves five next-generation EVs, including a low-rise ES90 sedan followed by the EX60 midsize crossover arriving in 2026.
“We will have a complete electric portfolio that will cover all the important segments we are in today and where we see growth in the future,” Severinson said.
The three unannounced electric vehicles are expected to be based on the SPA3 platform, which will debut on the EX60 and is the company’s most advanced.
The SPA3 vehicles will be equipped with Volvo’s latest-generation electric motors, developed in-house. The automaker said it is targeting 93 percent efficiency with the new motors, up from 85 percent in its first EVs and 91 percent now. The SPA3 models will have higher-density battery cells that offer longer range. The battery pack will be part of the vehicles’ body structure, reducing weight and cost and creating more interior space.
In the future, Volvo’s lineup will feature eight core models with eight-year product cycles. Each year, Volvo will launch a new model and update an existing one, the automaker said without providing a specific timeline.
“We will focus on continually improving the complexity of the variants,” Severinson said.