Volvo’s Competition Will Push Tesla Further Ahead

3 months ago by EVANNEX 12

Tesla Model S

Tesla Model S

HOW VOLVO CAN HELP TO GROW TESLA

Does competition in the electric vehicle (EV) space mean the sky is falling for Tesla? Last week, Aaron Macleish at Learn Bonds* reported, “Volvo, the European carmaker famed for its soccer-mom aesthetic, says that it’s going to go full EV/hybrid by 2019. The move is the first by a major carmaker to commit to electric vehicles. That doesn’t mean this is going to be a bad thing for Tesla, however. If anything there’s more upside than downside.”

Volvo S90 T8 Twin Engine

Nevertheless, “There’s an important distinction to note here in the terminology used by Volvo. The firm is saying that it hopes to have a 100 percent electrified fleet in 2019. This is very far from the 100 percent electric fleet that Tesla Inc offers. That difference is more stark than it seems. Electrified refers to hybrid cars. That means that, if you buy a Volvo, you’ll still have to burn gasoline. That’s a dynamic on which Tesla still has almost the entire market beaten, but Elon Musk’s firm doesn’t even need to win outright to gain [traction] from the Volvo move.”

I’d have to agree here — having myself owned a Chevy Volt, I can tell you that plugging in every night was (surprisingly) an absolute pleasure. Waking up with a full “tank” of electrons felt fantastic, but, driving my Volt to the gas station every month or so made me feel guilty. A bit like a luddite clinging to antiquated technology. I kept thinking, time for a Tesla. This leads me to believe that plug-in hybrids are just a “gateway drug” to Tesla. Once you start plugging in, it’s hard to go back to the gas pump. The obvious next step is to go 100 percent electric.

*This article comes to us courtesy of EVANNEX (which also makes aftermarket Tesla accessories). Authored by Matt Pressman.

Volvo’s S90 PHEV sedan

So the old axiom is true — a rising tide lifts all boats. The more competitors that enter the plug-in market, the greater the public’s understanding, acceptance and embrace of EVs.

“This is where cooperation beats competition… [and] the more pure EV makers on the market, the more cars likely to be sold, and the more buyers are likely to become familiar with them. This process should help to take questions like: ‘don’t batteries explode?’, and ‘what happens if I run out of power?’ off of the table… Product familiarity [contributes to] building demand.”

In addition, as the industry moves towards EVs prices will continue to be driven down.

“Tesla can also take advantage of a common component market. This will likely get bigger and more efficient as demands for EV components grow. Think here of metals like lithium… There’s no way it’s going to be able to supply the entire market itself, however. Instead the firm’s ideal will be to have a range of EV options with Tesla always sitting at the premium level in every [auto] category.”

The premium sedan category leader, Tesla Model S

Regardless, Volvo’s move is a small step in the right direction. Although it would be preferable if Volvo went 100 percent electric in lieu of going 100 percent electrified. In the meantime, “Other would-be Tesla Inc competitors, like GM, BMW, and Audi, have yet to show willingness to build a real mass market EV and try to sell it. GM has come the closest with the Bolt, but it’s only going to produce that car in limited numbers.”

Meanwhile, top auto execs like Toyota’s North America CEO Jim Lentz reacted to the Volvo announcement like this:

“I think [Volvo] sells about 100,000 [vehicles] here in the US… When you have a much smaller portfolio of product, it allows you to concentrate in a much smaller niche of the marketplace.”

This is indicative of many top auto execs that continue to fall asleep at the wheel.

Above: How Volvo uses deceptive phrasing in their description of an all-electric future for the brand (Youtube: Taking Charge)

Aside from Volvo, why have execs at Big Auto distanced themselves from EVs? Macleish concludes, “Unless you commit to becoming a pure EV firm, selling the cars involves bad-mouthing your other products. That’s a very hard balance to strike. Tesla Inc skipped it entirely, and now Volvo is [sort of] leaving it behind. That leaves the rest of the industry, including Detroit and Germany’s greatest, way behind Menlo Park. As the market grows, it looks like Tesla will continue to lead it as a result of that gas-powered paralysis. The Volvo move is just the icing on the cake for helping Tesla achieve its goals.”

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*Source: Learn Bonds

*Editor’s Note: EVANNEX, which also sells aftermarket gear for Teslas, has kindly allowed us to share some of its content with our readers. Our thanks go out to EVANNEX, Check out the site here.

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12 responses to "Volvo’s Competition Will Push Tesla Further Ahead"

  1. Doggydogworld says:

    Ironic to include a video that calls Volvo’s press release misleading when the article itself is misleading. Volvo will not “have a 100% electrified fleet in 2019”. Only new models introduced from 2019 forward will be “electrified”. Pre-2019 non-hybrids will continue to be sold in 2019 and for several years beyond.

    The term “electrified” is also vague and misleading. My 1965 Dodge pickup had an alternator and battery. Was it “electrified”? Volvo’s new 2019 models will include mild hybrids, an open-ended term that can encompass features such as idle-stop. No reasonable person calls a normal ICE car with idle-stop a hybrid, but Volvo might. We simply don’t know at this point.

    Vague press releases mean nothing. Articles about vague press releases, if written at all, should help people to understand how meaningless the press release is instead of muddying the water further.

    1. RM says:

      Doggydogworld has it correct. Volvo promised that any NEW cars after 2019 would be electrified, not its entire fleet.

      Also note that Volvo ships ~500K / year.

    2. SJC says:

      People started saying “all electric” even though they said hybrid. Even the guy on a business channel got it wrong!

      1. john Doe says:

        yeah.. and it is surprising to see how little knowledge he has of the green shift that is going on in Europe.

        The German car industry is changing at a level where everybody is in on the move. They’re thinking of the whole package. He does not mention eMobility in EU, or the legal and infrastructure changes that is happening.
        I find that weak, and it makes him loose credability.

        As for Volvo, they have data showing how much people use the electric only, and how often the engine kicks in.
        There have also been many stories in the news, of people filling their tank less then 5 times a year. Some even just once a year.
        They charge at home, and at work.
        Probably helped by super expensive gas and diesel.

        We have many like that at work too.
        Looking out in the parkinglot I can see about 30% hybrids, 20% electric and the rest is diesel cars. Over 80% of those diesels will be electric or hybrids when they change cars, and the rest will buy a diesel or gasoline car again, usually because it is for vans driving fairly long distances, or people who wants a cheap car that can tow a trailer.

  2. Hauer says:

    No, start/stop is already part of non electrified ICEs.

    1. Pushmi-Pullyu says:

      The term “micro-hybrid” refers to gasmobiles which have some EV tech installed, such as a stop/start system. So your personal definition of “electrified” may not be Volvo’s definition.

      I agree with Doggydogworld; the term “electrified” is so vague as to be practically meaningless.

      1. Hauer says:

        Not my definition, Volvos: Their video shows the mild hybrid having a nicely sized battery in the back of the car for storing the energy gained from regen braking via the starter/generator/motor integrated into the frimt drive unit.

  3. Pushmi-Pullyu says:

    What a very, very strange article. Tesla isn’t going to feel any competition from a legacy auto maker which is just talking about producing EVs, but isn’t actually doing so. Especially not one as small as Volvo. Even if Volvo made 100% of its production plug-in EVs, that would hardly put a dent in Tesla’s potential market.

    Evannex has had some very interesting and/or informative articles. This wasn’t one of them.

    1. Nada says:

      +1
      Plus the Nissan/Renault/Mitsuibishi aliance and there 8 million sales per year have already done more for EVs than Volvo will and Nissan is aiming for 20% EV sales which is huge…
      Not to mention all of the 2020 plans by the Germans which will,also dwarf what Volvo is doing…
      Frankly I dont find Volvos anouncement that impresivie but it is awsome marketing for them so good for them…

  4. Jason says:

    When they have cars to offer for sale, that is when we can take notice. Until then we have Tesla and GM for long range EV. End of story!

    Model 3 is almost here, Nissan is yet to reveal what the Leaf 2.0 will actually do, all other manufacturers are in the same future space.
    We’ve seen VW talk, talk, talk. Every one can talk, actual products that can be purchased are all that matters right here and now. Tesla has nothing to worry about right here and now, and by all the talk and very little action it doesn’t appear that will change in the next few years.

    Even if Volvo, or any of the others, get their cars ready for sale tomorrow, they will be very high priced luxury models, basically where Tesla was 5yrs ago. VW (talk, talk, talk) says they will have something cheaper than Tesla in a few years. Hard to believe when GM can’t do it and GM don’t even have a battery supplier.

    The best thing is all this non product just gets people looking at it and they will find Tesla, GM and a very few others that are not quite there yet.

    1. Jason says:

      Should be “VW doesn’t have a battery supplier”, drafted phone!

    2. john Doe says:

      The Volvo hybrids have been for sale for at least two years.
      In Norway over 40% prefer the plug in hybrid model, even thoug it is more expensive. Due to the tax model used, it is only 14% more expensive then the D5 diesel version.

      As for the German talk.. they produce more cars then Tesla does in a year, in just 2 days.
      And they are all having growing salges.
      This will of course change when Tesla is ramping up M3 production. But still.. the overall production volume is 14 million cars a year vs at best .2 million cars a year.

      But the fact is they are coming in EVs too, but it will be more methodically and step by step. They’re following their plans.
      They could probably have released a LG car, like GM – but suppliers, and workers (and workers unions) would not be too happy about that.

      Tesla must work on their interior which is not where it should be, and not to mention noise reduction. When a VW e-Golf is much more quiet, they have to copy VW. The interior in the e-Golf is also much better. GM must also learn here, and make changes. . and start to market their car. . now, that they have very little competition. They’re loosing the advantage of being first with a long range cheap(ish) EV.

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