‘A new small SUV EV will play well for us in emerging markets like India’: Volvo Cars CEO Jim Rowan

With an eye on grabbing high market share in the nascent electric vehicle space in emerging global  markets, Swedish luxury carmaker Volvo Cars plans to introduce a small SUV within the next 12-18 months to bring in incremental buyers. What’s more, to ensure a sharper focus on some key markets like India, ASEAN and other Asia-Pacific countries, it has carved out a separate business vertical.

The new small SUV, which will be revealed in the summer of 2023, will do well in emerging markets as it will come with a new entry price point, which is suitable for markets like India and other ASEAN countries, said Jim Rowan, the global CEO of Volvo Cars, speaking to select journalists from the Asia Pacific region last week in Sweden.

“We’re starting to see more and more emerging markets embrace and adopt full BEVs. As we bring a smaller SUV, I think that’s going to help us as well and some of these markets because it’s a smaller, less expensive car and it will come with different battery sizes. A customer can choose from different range options and price points and that’s really nice. It will be a great city car as well as a highway car too,” explained Rowan.

Volvo’s new small SUV is part of the carmaker’s portfolio development plan which envisages launch of one new model every year. Volvo was amongst the first carmakers to have committed to go full electric by 2030.

On course to secure 50% global sales from EVs by 2025

Volvo, which launched the XC40 Recharge in India last year, has received an extremely strong response from the marketplace. With the addition of the new C40 crossover EV later this year in September, Volvo expects over 40-45% of its total sales to come from EVs in 2023, Autocar Professional learns. With the addition of a small SUV at the entry point and the flagship EX90 SUV at the top end of the market in the next few years, the company is well on course to fructify its plan of attaining 50% of its total global sales from EVs by 2025.

C40 Recharge is slated for launch in India in September 2023. The all-electric coupé-SUV version of the XC40 Recharge will not have an ICE sibling.

Volvo, which sold about 1,850 cars in India in 2022, expects to increase its sales by almost 50% to 3,000 units in 2023. While the number appears extremely modest, if it attains its EV sales target, it may well be the leader in the luxury EV market which is gaining strong traction.

Globally, the company has targeted sales of half-a-million EVs by 2025 and expects its CO2 footprint to reduce sharply by 40% when compared to its emission footprint in 2018.  

While the recent spike in EV battery prices is a matter of concern, Rowan expects prices to fall in the next 6-9 months and believes that the price of an internal combustion engine car will be on par with battery electric vehicles by 2025, which will trigger a significant shift towards EVs after 2025. 

Increased focus on emerging markets in Asia

As part of the organisational restructuring announced last month, essentially aimed at having a sharper focus on the key emerging markets in Asia, Volvo has also carved out China, Taiwan and Hong Kong as one region and the rest of Asia Pacific – Korea, Japan, India and Australia – as a different division.

Rowan explained, “We made some internal organisational adjustments to help sharpen our focus. That gives them a little bit more identity to drive their markets, which, of course are very, very different from China, which is a much more developed market and a high growth market. Within ASEAN or the rest of Asia Pacific, there are certain hot spots within this region, which we think we can have great success with. Some of these are countries and some cities, and that’s what the teams are working on.”

While some of Volvo’s German rivals have decided to stick with the internal combustion engine for a little while longer, the Swedish carmaker is convinced of the shift and it wants to lead the shift. It’s a move that may pose a stiff challenge for the brand in emerging markets like India which may still have a sizeable carpark of conventional internal combustion engines by 2030. Rowan says Volvo is clear on its long-term vision and the complete transition to EVs by 2030 may impact its overall market share in some markets but in the EV space, Volvo will aspire to have a higher market share.

Commenting on the India market, Rowan said, “I think in India, one of the friction factors towards BEV adoption has to be obviously the infrastructure. It will evolve quickly, starting with Mumbai and Delhi and maybe a lot of parts of the country later, and it will evolve city by city. The way in which India is governed as well that becomes a state-by-state decision in terms of budgets and so on. Therefore, it may evolve with time.”

When queried as to whether the company will explore setting up an EV manufacturing facility in India, Rowan said: “India is not a big market for us at the moment. It would be a stretch for us to have an (manufacturing) operation. There would need to be adjacency to that. We need to make sure that we can feed India and other countries, other than just India, from that location. Therefore, we need to look at the logistics and also the cost benefits versus being somewhere else in Asia. That is if we decided to do another manufacturing facility outside of China,” he explained.

The company is setting up a dedicated EV plant in Slovakia – which goes on stream by 2025 with an initial capacity of 250,000 units per annum, which can be expanded to 500,000 units.  

Is Volvo exploring a manufacturing footprint in Asia beyond China? Rowan, however, reiterated it is too early to finalise any plan. “We’re looking at the moment. And, you know, we take a huge number of different factors into consideration. Whether to do it on our own or with our (Geely) partners, we haven’t made decisions on that at this point,” he concluded.