Volvo Makes a Shocking Announcement
On the 20th (local time), Volvo made a shocking announcement about ‘this.’ It is about their diesel engine models. At an event held in New York on the same day, a high-ranking official announced that they would soon discontinue the production of diesel engine models.
Some argue that there is still demand for this announcement and that it is premature. However, they seem to have been preparing for a long time, as they are firm in their decision. So, let’s look at Volvo’s plan to discontinue its diesel models and see what it entails.
Starting from Next Year
The discontinuation will happen sooner than expected. A Volvo official stated that by early 2024, no Volvo diesel engine vehicles will be produced. They also added that by around 2030, almost all the vehicles they produce will be electric cars.
The industry has been showing signs of this decision since November last year. In November last year, Volvo sold its stake in an internal combustion engine development company. They indicated they would no longer allocate a budget for developing new internal combustion engines. Returning to the present, Volvo stated that their decision demonstrates how rapidly the automotive industry and consumer demand are changing amidst the climate crisis.
Volvo’s Short-lived Diesel Strategy
Just four years ago, Volvo, like other companies, relied heavily on diesel as their main product in Europe. However, they are now taking a completely different approach than the emerging presence of electric cars. Especially considering the existence of diesel plug-in hybrids alongside regular models, Volvo’s diesel growth seemed to have a long future.
But reality turned out differently. Changes in demand, stricter emissions regulations, and electrification issues have entirely reversed the situation. In particular, the fact that gases like nitrogen oxides (NOx) emit more and hurt air quality in urban areas further narrowed the room for diesel. As a result, most of the vehicles currently being sold in Europe are either fully electric or plug-in hybrids.
Regarding this, Volvo stated, “Diesel was as important to Volvo in the European market as bread and butter.” However, they added, “As we aim to become a climate-neutral company by 2040, we have decided to discontinue the production of diesel models.”
Volvo, “Concerns? What’s that?“
Volvo also expressed hope that their decision to discontinue the production of diesel models will also impact the electrification of other competing companies. They also stated that they do not consider the idea of ‘complete electrification’ as a risk.
On the contrary, a high-ranking official stated, “Electric powertrains are the future of Volvo Cars.” They further explained their vision: “We will continue to focus on creating a premium pure electric vehicle portfolio that plays a key role in responding to climate change.”
Meanwhile, it seems that their strategy is not just an empty promise. Earlier this year, Volvo launched its most affordable electric car, the EX30. The starting price of the EX30 is about $34,950. The large electric model, EX90, will be introduced in India early next year. In addition, Volvo plans to secure at least six EV models, including an electric version of the XC60 and a new minivan, EM90, by 2026.
It is still unknown whether Volvo’s plan to discontinue the production of diesel models includes countries outside of Europe. However, as many countries show a movement towards ‘diesel phase-out,’ it is only a matter of time before the scope expands. With the ‘discontinuation of diesel model production’ potentially significantly impacting the automotive industry, what changes can we expect in 2024?
By. Kwon Yong Min (capress@capress.kr)
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