Volvo Rolls Out All-Electric SUV Aimed at First-Time Buyers
Swedish carmaker hopes lower-priced EVs can win over cost-conscious buyers still unsure about going electric
PremiumVolvo is making a big bet that a smaller, cheaper all-electric SUV can help convince budget-minded buyers to go electric.
Volvo Cars, which is majority owned by China’s Zhejiang Geely Holding Group, unveiled the EX30 all-electric SUV in Milan on Wednesday. It is a significantly smaller SUV than its all-electric, seven-seater cousin, the EX90, which is due to start rolling out of factories next year.
Volvo hopes that the bigger model, starting at more than $109,000 in Europe and as low as $80,000 in the U.S., will compete with vehicles from Tesla and German premium brands Mercedes-Benz, BMW and Audi for well-heeled suburbanite buyers.
The smaller EX30, meanwhile, is aimed at more cost-conscious consumers, such as college grads shopping for their first new car or households that need a second car to get around town. Volvo is taking orders for the EX30 now and production will begin at its factory in China soon, executives said, with the first vehicles arriving in showrooms by year-end.
“We are fully committed, we are all-in on electrification," Volvo Chief Executive Officer Jim Rowan said as he unveiled the car.
In the U.S., the EX30 starts at around $35,000 when equipped with a lithium ferrophosphate battery, making the car a tad cheaper than the XC40 gasoline version and significantly less expensive than the electric XC40, previously Volvo’s cheapest electric car.
Volvo’s EX30 is the latest example of how carmakers are pushing out less expensive electric SUVs to tap the burgeoning demand for these vehicles and give consumers a more affordable way to wade into electric cars. General Motors has already said it is planning to release an electric Chevrolet SUV priced around $30,000, targeting cost-conscious buyers as prices soar on other plug-in models.
More expensive, higher-performance versions of the EX30 using bigger nickel manganese cobalt batteries will also be available, Volvo executives said.
The EX30 is set to go into production in China later this year and be delivered first to Europe in the fourth quarter and a little later to U.S. dealers, Rowan said.
The company hopes the new SUV can help it address one of the biggest challenges conventional carmakers face in their electric shift: To win over skeptical consumers and meet ambitious EV goals over the next few years, they have to offer more affordable cars.
“This is huge for people who don’t have kids yet, especially for people who are not yet convinced that electric cars will work for them," said Björn Annwall, Volvo’s chief commercial officer.
Last year, global sales of small electric SUVs of all manufacturers nearly doubled to 637,000 vehicles, or 9% of total electric-car sales, said Felipe Munoz, an analyst with Jato Dynamics, a consumer-research group. That makes the segment one of the fastest-growing car markets.
Volvo is building the EX30 at a Chinese factory it shares with Geely Auto to take advantage of cost savings through shared technology.
The small four-door is packed with technology, such as parking assist and sensors in the doors that warn against opening if a cyclist is riding past. The extensive use of recycled steel and aluminum helped the company cut costs. The typical array of speakers in the car doors is replaced with a single soundbar under the dashboard.
Volvo touted its Scandinavian design elements: lighting schemes in the car with names like Midnight Sun and headlights in the shape of Thor’s hammer.
Volvo’s model range is limited compared with rivals such as BMW and Mercedes, but it has been growing broader as the company stakes out positions in the developing electric-car market. It has ambitions to sell around 1.2 million cars a year by mid-decade—half of those fully electric.
Last year, it sold just over 615,000 vehicles worldwide. Fully electric vehicles accounted for about 11% of total sales.
Volvo was among the first conventional carmakers to stake its future on going completely electric, phasing out sales of new gas-powered cars with the exception of hybrids, which have both a conventional engine and an electric motor.
Just over a decade after Geely acquired the struggling Volvo brand from Ford, the 96-year-old Swedish carmaker is building cars in Sweden, South Carolina and China. The company is generating healthy profits after a successful return to the stock market in 2021.
Still, Volvo’s electric gambit comes with uncertainty. Rowan, the automaker’s CEO, has warned that the acceleration in the shift to EVs could happen too fast, spurred on in part by the Biden administration’s Inflation Reduction Act, which has provided funding to encourage green-tech investment in the U.S. The risk is that the lower profit margins automakers typically make from fully electric cars could make it difficult for Volvo and others to achieve profit targets if those EV sales become too big a share of their total sales too soon.
Another risk to profitability at Volvo and other carmakers is a potential price war spurred on by Tesla’s recent price cuts, which have been as steep as 20% on some models, according to analysts at Bernstein Research. So far, the response by Tesla’s competitors has been muted.
In an interview earlier this year, Rowan said Volvo has been able to maintain prices and that the company was benefiting from lower costs of raw materials, such as lithium, and a better supply of critical components like semiconductors.
"Exciting news! Mint is now on WhatsApp Channels 🚀 Subscribe today by clicking the link and stay updated with the latest financial insights!" Click here!
