Transportation

Volvo’s head of sustainability on why the brand tweaked its ‘EV or bust’ strategy


Earlier this month, Volvo became the latest automaker to announce that it was delaying its plans to sell only electric vehicles. The decision was a reflection of the stark reality of the market: the demand was just not there.

“We reduced the ambitions we had set to go 100 percent electric by 2030,” Vanessa Butani, head of global sustainability at Volvo, said in an interview. “We’re pushing that back a bit, not committing fully to a year right now, because we see that even though we’re fully ready to do it, the market’s not really with us.”

“We’re pushing that back a bit, not committing fully to a year right now”

Several years ago, automakers were tripping over themselves in a rush to declare their intentions to go all in on EVs. Volvo was among the most aggressive, setting the deadline of 2030 for its switch to an EV-only brand.

“Instead of investing in a shrinking business, we choose to invest in the future — electric and online,” then-Volvo CEO Håkan Samuelsson said in a statement.  

That commitment was reinforced as recently as last year, with the brand’s chief commercial officer, Bjorn Annwall, telling Automotive News that Volvo would have an all-electric lineup globally by 2030, “no ifs, no buts.”

Volvo head of sustainability Vanessa Butani.
Image: Volvo

Well, Volvo appears to have found a few buts. The company is now saying that it will rely on a mix of hybrids and battery electric vehicles to reach its new goal of selling “90 to 100 percent… electrified models” by 2030. Carbon neutrality for the whole company, including its factory operations and supply chain, will be reached by 2040. Butani calls this “adjusting our ambitions a bit.”

The adjustment is the result of months of declining customer interest in EVs, leading to slower growth in sales than originally predicted. Just 22 percent of new-vehicle shoppers told JD Power this past month they were “very likely” to consider an EV for their next new-vehicle purchase, a 4.2 percent drop from a year ago.

“We want to go electric,” she said. “We know that’s the right thing to do, and we need collaboration in our industry and outside of our industry to make sure that that happens.”

Butani says efforts by governments to promote EVs have been insufficient. “Governments are taking back incentives,” she said. “Infrastructure isn’t being rolled out fast enough.”

“We need collaboration in our industry and outside of our industry to make sure that that happens”

While it’s true that EV charging infrastructure improvements have been uneven, customers are reporting that it’s getting better. Another JD Power survey last month recorded a 10-point increase year over year in customer satisfaction with public DC fast charging stations.

And Butani’s complaint about governments revoking incentives calls to mind the adjustments around eligibility for the federal EV tax credit. Volvo lost eligibility after the passage of the Inflation Reduction Act in 2022, which mandated that electric vehicles and batteries be manufactured in the US in order to receive the credit. Since then, many manufacturers have said they would build EV battery factories in the US in order to qualify — but Volvo, which is owned by China’s Geely, has not.

The company’s Chinese ownership structure is also proving to be its own barrier. Volvo was planning on releasing its compact EX30 SUV at the highly attractive starting price of $35,000 in the US this year. But the Biden administration threw a wrench in those plans when it announced its intention of quadrupling tariffs on Chinese-made EVs to 100 percent. The EX30, which has been enormously popular in Europe, is built in China, with the initial slate of US-bound units expected to come from the Zhangjiakou factory.

Now, Volvo is scrambling to shift production to Europe, meaning the EX30 likely won’t make it to the US until late 2025.

The tariffs have been keeping Volvo “on its toes,” Butani said, and serve as a stark reminder why it’s important to cite production facilities close to where you are selling your vehicles. “Tariffs are tough, of course, and they do have an impact,” she added. “It’s another way of making it more challenging.”

Challenging, but not impossible. Volvo is still a leader in sustainability, Butani said. And the “adjustment,” as she calls it, will only result in a 5–10 percent change in emissions reductions. So, instead of 40 percent emissions reduction per car by 2025, it will be 30–35 percent reductions. Likewise for 2030, where it will be a 65 percent reduction in per-car emissions, as opposed to the original target of 75 percent.

“It’s a small adjustment,” she said. “And we’re still committed.”



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