The price of crude oil has recently hit historically low levels. Manufacturers are offering incredible incentives on new vehicle purchases. And in the United States, only 1 in 273 vehicles on the road were electric-powered, passing the 1 million-unit mark in 2018. Yet, Volvo CEO Hakan Samuelsson predicted that the pandemic economical recovery will push electric vehicles into the limelight sooner than previously thought, and all but eliminate internal combustion engine-powered cars. Samuelsson said at the Financial Times Global Boardroom conference, “Electrification will go faster. I think it would be naive to believe after some months, everything will return to normal and our customers will come back into a showroom asking for diesel cars – they will ask even more for electric cars. And that is speeding up.” He also believes that any incentive programs such as a Cash for Clunkers rebate that make purchasing ICE vehicles are a frivolous exercise. “If governments subsidize a return to the old world, I think would be a waste of money. They should use the money to promote new technology as they were planning to do before corona[virus].” You’ll recall that Volvo claimed in 2017 that they would end their production of gas-only vehicles by the end of 2019. All models were expected to be either fully electric or hybrid. By Volvo’s own standard, that claim has not been met. While hybrids are available in many models, there are plenty of 2020 Volvo models that still use gas or diesel power only. Their first all-electric SUV, the XC40 Recharge, has yet to arrive at dealerships.
Samuelsson’s Basis for Prediction
Volvo’s CEO has faith in electrification, though, as the future in mobility. That may not look like the traditional car ownership, though, as his view on urban vehicle use is a departure from the norm. Samuelsson’s view on transportation in urban centers takes a shared mobility approach, which may not sit well with investors in the auto industry. “In big cities, the private car is not a very practical concept… Maybe it’s time for a new concept but I don’t think the private car can solve that really – probably more biking or walking.” How it all comes together for Volvo would then be a bit of a mystery. The carmaker has been prominent in auto retail for decades and is well-known as a builder of safe family cars and SUVs. Samuelsson’s predictions indicate he expects more EV adoption from buyers at the dealership while simultaneously moving towards less privately-owned vehicles and an increase in shared mobility.
How Predictions Like This Matter to Dealers
This prediction about exponential and rapid EV adoption might be dismissed by many in automotive retail as a radical departure, but there’s always some truth and influence behind them. Speaking of such an increase in EVs would signal that Volvo might actually have the chops to follow through, albeit on a longer timeline than Samuelsson may expect. Post-pandemic recovery efforts in automotive would be an excellent opportunity for automakers and governments to put their resources into developing cleaner, more efficient vehicles. Management, sales, and service staff would benefit by staying in the know about new tech being developed and getting excited about it. But since dealerships operate in a month-to-month structure, it’s best to stay the course and continue selling and servicing current models, staying aware of incentives, and finding a way through a financial crisis.
