Best of all, Volvo will still make a profit on every model.
2019 will be a significant year for Volvo because this is when the Swedish automaker will start its EV revolution. After the next-generation V40, no new models will launch before the end of the decade, allowing Volvo to focus on electrifying every one of its existing models. By 2025, Volvo wants fully electric cars to make up half its sales. The first Volvo model to get the fully electric treatment will be the XC40, which is due to go on sale after the Polestar 2 in 2019.
Many have feared the electric XC40 won’t turn a profit for Volvo since its direct competitors have higher price tags. The Jaguar I-Pace, for example, starts at $69,500, way more than the current $38,495 price tag of the XC40. Thankfully, Volvo’s CEO Hakan Samuelsson has confirmed the XC40 will still be profitable for Volvo, despite commanding a cheaper asking price than the Jaguar I Pace. “From day one (it will be profitable). I think we will have no intention or ambition to sell electric cars with losses,” he said during an interview with Wards Autos. While reports have suggested the XC40 EV will cost between $35,000 - $40,000, Samuelsson implies it may be closer to $50,000.
When asked if Volvo can sell an EV “in the $50,000 range” at a profit, the CEO said yes: “We are planning that should be a profitable car.” It’s a stark contrast to Fiat, which loses as much as $20,000 on every 500e it sells. Of course, this is still a steep premium over the standard XC40, but it's a lot cheaper than its competitors like the Jaguar I Pace and Tesla Model X. The CEO also added the automaker will be able to profitably sell EVs because it can share development costs with Polestar. “So we can carry back the technology into Volvo and also into lower price brackets. That’s the whole idea,” he said.
And while Volvo’s fully electrified models will cost more to develop than internal-combustion-engine models, those costs will go down as the technology becomes more mainstream. By 2025, EV production costs are expected to reach price parity with ICE vehicles according to a 2017 forecast from UBS.