STOCKHOLM: Volvo Car AB is counting on tripling sales of plug-in hybrid models this year as a way to avoid paying what could amount to hundreds of millions of euros in European penalties for the sale of its more polluting yet popular combustion-engine SUVs.
A fifth of all new Volvos sold in 2020 should be plug-ins or all-electric, compared with just 6.5% of the total last year, according to chief executive officer Hakan Samuelsson.
That would see hybrid sales rising to more than 150,000 based on the pace of growth in 2019. The company is only planning to start shipping its first fully-electric model – the XC40 Recharge – later this year.
The stakes are high for Volvo’s electric strategy because conventional SUVs made up more than half of sales last year and are largely behind the carmaker’s success since the takeover by China’s Zhejiang Geely Holding Group Co a decade ago. As Europe’s tough emissions rules kick in, the company could pay dearly.
PA Consulting Group puts Volvo’s potential fines for this year at a quarter of annual operating profit.
“Paying fines is something that just shouldn’t be in the equation, ” Samuelsson said in an interview at the company’s headquarters in Gothenburg, Sweden.
“That’s not part of our plans. We want to invest in product development, not in fines to Brussels.”
