Volvo said it is on track to balance the costs of electric and fuel-burning vehicles by 2025, along with eliminating reliance on internal combustion engine development.
Commercial Director and Deputy Managing Director of the company Bjorn Annwall said auto expert that, unlike some brands that have persisted in developing internal combustion engines, Volvo’s commitment to become a battery electric vehicle company by 2030 means it has the potential to balance costs by the middle of the decade. century.
“I think it’s really important that you get the cost parity between the BEV [battery electric vehicle] and ICE,” Mr. Annwall said.
“Our entire engineering roadmap is aimed at precisely that by the middle of this decade, the cost of BEV will be equal to that of ICE. And that’s why we need to work on optimizing the whole process in a different way to solve that problem.
“That said, it’s probably easier to achieve for a premium automaker than a mass producer. That’s why it can happen much faster for Volvo, as I said, we’re a relatively small brand, so of course we can push this faster than we can. with a cheap mass-market brand with a different brand positioning. But I am sure we will get there.”
Electric vehicles typically have a higher upfront cost than comparable internal combustion engine vehicles, and much of that additional cost is due to the large battery underneath.
Volvo previously said it aims to achieve a battery pack cost of $100 per kilowatt hour (kWh) by 2025-26, even as raw material costs rise. CATL-derived lithium iron phosphate battery in Tesla Model 3 is currently the world leader in affordability according to a recent analysis, with a cost of $131 per kWh.
There is currently a gap of about $20,000 between the most affordable gasoline-powered versions XC40 and its electric XC40 Recharge, though there are also specs differences that blur the comparison.
As Mr Annwall said, it’s easier for Volvo to achieve cost parity than other established automakers with its premium position. But it also shows how companies like Toyota, which take a less rigorous approach, may have a hard time transitioning to full electrification in the future.
These legacy automakers will likely continue to develop internal combustion engines for a large number of markets, while still focusing on electrification for others.
It also suggests that we won’t see EVs as cost-effective for the average consumer for some time due to a lack of electric vehicle companies looking to serve the low-end consumer market.
