Volvo becomes latest carmaker to scale back electric ambitions

Sweden-based Volvo Cars has eased off on its pledge to stop selling cars with internal combustion motors by 2030, saying slow rollout of places to charge up and withdrawal of purchase incentives will leave room for a few cars that still need fossil fuels.

Volvo Cars, part of China's Geely Holding, now foresees a model lineup at the end of the decade that's at least 90% electric cars and has widened that to include both battery-only and plug-in hybrids that combine battery power with an internal combustion engine.

On top of that, up to 10% could be a “limited number” of mild hybrids, which mainly run on internal combustion and store electric power from braking in a 48-volt battery to assist acceleration and improve fuel economy.

The company said it was adjusting to “changing market conditions and customer demands.”

“We are resolute in our belief that our future is electric,” CEO Jim Rowan said in a statement. “However, it is clear that the transition to electrification will not be linear, and customers and markets are moving at different speeds of adoption.”

The push into electric cars is driven by European limits on emissions that end sales of internal combustion cars by 2035, with a possible exception for those running on carbon-neutral fuels. The regulatory push is part of efforts to meet goals to reduce greenhouse gas emissions under the 2015 Paris accords aimed at combating climate change.

But the uptake of electric cars has hit headwinds. Germany suddenly dropped purchase subsidies at the start of this year, and construction of places to charge away from home have lagged. That pushes consumers toward internal combustion or hybrids that can make it home on the fuel-powered motor in case the battery gets low.

In July 2024, registrations of battery only cars in Europe declined by 10.8% to 102,705 units, with their total market share slipping to 12.1% from 13.5% a year before, according to the European Automobile Manufacturers’ Association.

Volvo also cited “uncertainties” around recent new tariffs on electric vehicles made in China. The U.S. has imposed a new 100% tariff that blocks most Chinese cars, while the European Union has added tariffs of 17.4% to 37.6% though it is not collecting them as it seeks a trade unerstanding with China. Higher tariffs could mean higher prices as cheaper Chinese EVs are kept off consumer markets.

Volvo is the latest carmaker to scale back electric ambitions. Mercedes-Benz said its goal of 50% of its cars having electric motors by 2025 would slip to 2030, while Ford Motor Co. has delayed or dropped electric models and cut back on investments in electric production and technology.

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