Like many established “old-school” automakers, Swedish automaker Volvo committed in 2021 to transforming its lineup of luxury sedans, SUVs, and station wagons into electric cars.
The company committed to phasing out “any car in its global portfolio with an internal combustion engine, including hybrids,” making a bold claim that buyers would shift from their gas-guzzlers to the plug as time passes and technology improves.
💸💰Don’t miss the move: Subscribe to TheStreet’s free daily newsletter💸
“There is no long-term future for cars with an internal combustion engine,” then-Volvo Cars CTO Henrik Green said in 2021. “We are firmly committed to becoming an electric-only car maker, and the transition should happen by 2030. It will allow us to meet the expectations of our customers and be a part of the solution when it comes to fighting climate change.”
Despite introducing five electric models to its global lineup, the automaker got the memo that not all its buyers were on board with the EV future. Citing “changing market conditions and customer demands,” Volvo announced in September 2024 that it would pull the plug on its ambitious EV plans.
Now, the company says it aims for 90 to 100% of its 2030 global sales to consist of what it calls “electrified cars,” plug-in hybrids, and fully electric cars, what it defines as “in essence, all cars with a cord.”
“We are resolute in our belief that our future is electric,” Volvo Cars CEO Jim Rowan previously said in a statement announcing the move. “[…] However, it is clear that the transition to electrification will not be linear, and customers and markets are moving at different speeds of adoption. We are pragmatic and flexible, while retaining an industry-leading position on electrification and sustainability.”
Volvo CEO: No more government EV subsidies
In light of U.S. President Trump rolling back government support for EVs and EV-supporting infrastructure, Volvo Cars CEO Jim Rowan told Business Insider after the automaker released its full-year 2024 results on February 6 that he wasn’t on board with government money supporting the EV industry.
“I don’t subscribe to the fact that government should give incentives for people to buy EVs,” he said. “I think governments have got enough to spend money on, in terms of healthcare and education, that they shouldn’t need to subsidize industries.”
“I would like to see them do more about infrastructure to encourage people to buy EVs, or tax incentives, but I’m not a proponent of actual subsidies themselves.”
Shortly after taking office on January 20, Trump signed a series of executive orders that included intent to shut down what he long-touted as the “Biden EV Mandate,” effectively ending any programs or rules that would promote the adoption of electric vehicles in the United States; including the $7,500 tax credit granted by the Inflation Reduction Act signed by the former President.
Rowan’s stance is fiercely in line with that of Tesla CEO Elon Musk. Previously, the now-Department of Government Efficiency leader defended on his social media platform X (formerly known as Twitter) that a move to kill the tax credit wouldn’t be against his interests.
“In my view, we should end all government subsidies, including those for EVs, oil, and gas,” Musk wrote in reply to a post that questioned his support for something ‘against his own self-interest.’
Related: Tesla faces big challenge in key markets
Data shows that government EV subsidies work, and not just in America.
In Musk’s interest and his government efficiency angle, it is true that government subsidies that help buyers purchase electric vehicles do use a lot of taxpayer money. According to the latest data from the IRS and the Treasury Department, as of October 2024, more than $2 billion was handed out in the form of EV tax credits through the Inflation Reduction Act to subsidize the purchase of other people’s EVs.
However, subsidies have been shown to increase domestic EV appetite in some of the biggest EV markets beyond the United States. In Germany, sales of EVs dipped by 27.4% after the government removed a €4,500 (about $4,700) purchase incentive on EVs in December 2023.
However, some countries have adopted more ‘full-circle ideas.’
In Norway, one of Sweden’s neighbors, 88.9% of vehicles sold in 2024 were fully electric, but they have managed to make the package sweeter by providing a sweeter post-purchase experience.
Norway doesn’t charge any value-added tax (VAT) or import duties on EVs, fees that can make up a third to about a third of the price of a new car in the country. Furthermore, after purchase, EV drivers do not pay any tolls on their highways or parking fees at the meters.
What’s more, EV owners who live in or near Norway’s largest city, Oslo, are allowed to drive their EVs in the bus lane. Try doing that in New York City.
More Business of EVs:
- Tesla threatened with 100% tariffs in Canada over Musk’s Trump support
- Three big takeaways from Tesla’s latest earnings
- Popular Kia EV faces massive recall over dangerous safety issue
Meanwhile, Volvo is selling more EVs, and has more on the way
The Volvo CEO’s remarks about subsidies come after the automaker announced a second consecutive year of growing sales. Last year, it delivered 763,389 cars worldwide, an 8% increase from 2023.
Volvo says that deliveries of its fully electric cars increased by 54% to 175,194 units or 23% of its 2024 sales, which it claims “was the highest share among all legacy premium carmakers.”
Considering its combined plug-in hybrid and EV sales, it accounted for 46% of total shipments last year. Though these are positive figures, it warned that the increase in competition and lower demand will make it very hard to match the streak of success in 2025, citing challenging market conditions.
However, Volvo’s ambitions aren’t being dampened.
This year, the automaker plans to expand its plug-in and EV lineup with five new models. Two existing models are marked for a refresh, while on Feburary 10, it plans to reveal the EX30 Cross Country, a more rugged version of Volvo’s smallest electric crossover. Volvo also plans to release the ES90; its first electric sedan, as well as a long-range plug-in hybrid for the Chinese market.
Additionally, the Swedish automaker plans to build and test prototypes of another fully electric model, the EX60. The crossover, which is set for a 2026 release, is aimed to compete with Tesla’s bestselling Model Y.
Volvo is owned by Chinese automaker Geely, which is traded on OTC markets in the United States as (GELYF) .
Related: Veteran fund manager issues dire S&P 500 warning for 2025
