CEO hints that Volvo will be the first leading carmaker to abandon diesel

17 May 2017

17 May 2017 In an interview with the German newspaper Frankfurter Allgemeine Zeitung (FAZ), Volvo Cars CEO Håkan Samuelsson said ′From today’s point of view, we will not develop any new generation diesel engines.’ If this strategy is pursued, Volvo will be the first leading carmaker to abandon diesel engine technology. The current diesel engine generation was only introduced in 2013 and will be developed further in order for Volvo to meet the EU brand-average limit of 95g CO2/km which will be phased in from 2020. Although Samuelsson did not provide a date as to when diesels could disappear from Volvo’s range, the current generation is expected to survive until 2023. However, the financial expenditure required to invest in the next generation of diesel engines is deemed to be too expensive to justify it. According to the FAZ article, ′The Volvo CEO divides the future of the engine into two stages: the one to 2020, which is based on the limit of 95 grams of carbon dioxide per kilometre average agreed in the EU. And the phase thereafter, in which other requirements are likely to come into play.’ Samuelsson believes that the 95 gram limit cannot be reached without diesel but the treatment required to achieve increasingly lower nitrogen oxide emissions is so expensive that it is no longer economically viable even in larger, more expensive and, in turn, more profitable vehicles. The comments by Samuelsson follow shortly after the news broke last week that Volvo’s electric vehicle (EV) strategy will focus on plug-in hybrid technology but the carmaker also aims to launch at least one fully electric car before the end of the decade. Volvo is aiming squarely at the premium end of the market, with Samuelsson saying ′It must be acknowledged that Tesla has managed to offer such a car for which people are queuing. There should also be space for us in that segment, with high quality and attractive design.’ However, according to Reuters, ′a Volvo spokesman said on Wednesday that Samuelsson had been discussing options rather than a firm plan to stop the further development of diesel engines.’ Samuelsson himself has also been keen to reiterate the commitment to diesel, at least in the short term. In a statement emailed to Reuters, he said: ′We have just launched a brand new generation of petrol and diesel engines, highlighting our commitment to this technology. As a result, a decision on the development of a new generation of diesel engines is not required.’ Volvo’s presence in China, bolstered by its parent Geely, and in the US, where diesel plays an increasingly negligible role may have contributed to the carmaker’s move away from diesel. Diesel remains important to the brand in Europe (the vast majority of its XC90 SUV models remain powered by diesel for example), but this is naturally expected to change as diesel demand continues to shrink in the core European markets. A further consideration is that Volvo would struggle to invest in multiple powertrains as well as autonomous vehicle development. Essentially, smaller players such as Volvo abandoning diesel could accelerate its demise but there is also a risk to OEMs’ volume and scale if they cannot successfully substitute diesel volume with petrol or electric powertrains. Photograph courtesy of Volvo Car Corporation

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