Should Volvo Cars Proceed to go fully electric by 2030

Sustainability

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Word count:1792

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Contents
Introduction......................................................................................................................................2
Background Information.............................................................................................................2
Concept........................................................................................................................................2
Objective and Methodology.......................................................................................................3
Force Field Analysis...........................................................................................................................4
STEEPLE Analysis.............................................................................................................................6
Product Perception Map....................................................................................................................8
Conclusion...........................................................................................................................................9
References........................................................................................................................................11
Source Document 1..........................................................................................................................13
Source Document 2..........................................................................................................................19
Source Document 3..........................................................................................................................22
Source Document 4..........................................................................................................................24
Source Document 5..........................................................................................................................27

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Introduction
Background Information
Volvo Cars, founded in 1927 in Sweden, has been focused on going fully electric
internationally by 2030 (Volvo Cars Corporations, 2022). In 2010, Volvo was acquired by
Geely Holding, where Volvo Cars was performing as a “loss-making” car manufacturer
(Fung, 2021). Since then, Volvo Cars has seen strong sales, where over 500,000 cars were
sold in 2015 (Wikipedia contributors, 2024). In 2019, Volvo started its production of electric
vehicles (EVs) with the Volvo XC40 Recharge (Volvo Cars Corporation, 2024). Towards
2030, Volvo Cars is pledging to only produce fully electric cars and no longer produce any
carbon-emitting or hybrid cars (Source Document 1). Through this, they will additionally be
focusing towards being carbon neutral in 2040 (Volvo Cars Corporation, 2024b). Being a
premium-priced car company, Volvo Cars has positioned itself as a leader in automotive
safety, sustainability, luxury. The move toward electric vehicles is a natural extension of the
brand's commitment to innovation and the environment however might pose risk to the
sustainability of Volvo Cars.

Concept
Volvo Cars' decision to go fully electric can be beneficial or detrimental to the business. This
report will consider the sustainability of this and how this decision can have an effect in the
long term. As current customers of Volvo Cars are purchasing either Hybrids, EVs or Internal
Combustible Engines (ICE). The transition might affect Volvo’s market share, where there is
an uncertainty in consumer adoption to having only EVs available. The sustainability of
Volvo Cars’ decision is affected by both external and internal factors. This includes
competition, revenue streams, market demand, and technology. It is important to focus on
Volvo’s Triple Bottom Line (People, Planet, Profit). People focuses on the stakeholders
affected by this decisions such as employees and customers. In respect to Planet, it is clear
that following through with this decision will benefit the environment, reducing CO2
emissions. Finally, Profit will focus on how this decision has an impact on Volvo Car’s
economic performance. To answer the research question, the sustainability of Volvo Cars
will always need to be considered as it needs to ensure Volvo Cars will not suffer an overall
loss through the decision that can be concluded.

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Objective and Methodology
This report will evaluate if Volvo Cars should continue to go fully electric. This links with the
concept of “sustainability” in determining how this will impact the business in the long term.
The discussion is based on the Annual and Sustainability Report 2022 in combination with
an article from the World Economic Forum on how Volvo is planning to go fully electric by
2030. Additionally, this report will use Volvo Cars’ Financial Data with the Forbes’ article
Volvo Cars Outlook Deteriorating As Profit Dives. Finally, a survey conducted by the
researcher through contacting Volvo customers at a dealership. The aim is to respond to the
question: Should Volvo Cars proceed to go fully electric by 2030?
Table 1 – Supporting Documents

Title of Supporting Documents Source Weblink

1. Annual and Sustainability Report 2022 Volvo Pages 5, 12, 14, 35, 78
https://vp272.alertir.com/afw/files/press/volvocar/20
2303076447-1.pdf
2. Volvo is planning to go fully electric by World https://www.weforum.org/agenda/2021/03/volvo-
2030 Economic planning-fully-electric-2030/#:~:text=The
Forum %20Chinese-owned%20company%20Volvo
%20has%20said%20its
%20entire,CO2%20emissions%20targets%2C
%20such%20as%20Ford%20Motor%20Co.
3. Key Financial Data Volvo https://investors.volvocars.com/en/financial-
information/key-financial-data
4. Volvo Cars Outlook Deteriorating As Forbes https://www.forbes.com/sites/neilwinton/
Profit Dives 2022/11/20/volvo-cars-outlook-deteriorating-as-
profit-dives/?sh=735c399a9c73
5. Survey of Volvo Customers Report’s N/A
Author
Table 2 – Tools

Tool Purpose
Forcefield Analysis To compare restraining and driving forces of
Volvo’s decision to produce purely EVs.
STEEPLE Analysis Compare external factors in relation to
Volvo Cars’ sustainability.
Product perception map Plotting the price ranges on the quality of
cars.

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Force Field Analysis

0 Sourced from the Electric Vehicle Council Journal How electric vehicles reduce greenhouse gas emissions
(Electric Vehicle Council, 2019)
1 Sourced from ABC News article on Electric vehicles 14 per cent of global new car sales, but less than 4 per

cent in Australia: IEA (Purtill, 2023)

2 Source Document 1
3 Source Document 2
4 Source Document 4
5 Sourced from InsideEVs webpage on how EVs Are Still 45% More Expensive To Make Than Combustion-
Engined Cars (Ruffo, 2020)
6 Source Document 2

Using the Force Field Analysis, electric vehicles producing zero carbon emissions considers
the triple bottom line as the environment (planet) will benefit whilst also giving Volvo an
ethical customer perception. This ensures sustainability within the environment. However,
with this, the cost in which to do that is higher affecting the profitability of Volvo. When this is
paired with Source Document 4, Volvo is vulnerable (demoted from positive) in which it is
likely it cannot provide ‘positive free cashflow forecast’ until 2025. If Volvo were to go ahead
with committing their sustaining their profitability might be an issue. On the other hand,
Volvo Cars can expect an advantage by fully converting to capitalise on the current growth of
electric vehicles, similarly seen in Source Document 1 (106% increase of fully electric cars in
the market globally). Even considering that electric vehicles do make up a small percentage

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of global car sales, with a high growth rate and an unlikeliness to plateau (due to imperative
to address climate change from Source Document 1), there is strong potential to profit from
this. On the downside, with other premium car manufacturers seeking to capitalize, it makes
it more difficult for Volvo to enter, especially with Tesla that naturally has a reputation for
electric cars unlike Volvo. Conversely, Volvo Cars can utilise its expertise and experience in
this field having owned a fully electric car company (Polestar). Through this, it allows for the
business to share resources (manufacturers, employees, materials) and merge ideas and
business culture, thus reducing costs and aligning with the triple bottom line (People). This
also makes up for potential loss of ICE specific employees through the likely increase of
employees within Volvo’s BEV factories. Additionally, wireless upgrades allow for customer
satisfaction as larger issues with the product can be solved without payment and thus
sustaining the customer base of Volvo Cars.

The Force Field Analysis suggests that Volvo Cars should proceed with becoming fully
electric by 2030 to stay sustainable. This is because the total driving factors (16) outweigh
the total restraining factors (13). However, the Force Field analysis in itself is limited by the
assumption that electric vehicles produce zero carbon emissions may overlook factors such
as emissions generated during electricity generation or battery production if not sourced
renewably.

STEEPLE Analysis
Technology (EV Law (The West Environment (Our Social (Inspire
Magazine) Australian) World In Data) Advanced
Transportation)
 There are  The  Currently,  “Men make
unsustainabl European over 34 up 75% of

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 e batteries in Commission billion tonnes individuals
electric has of CO2 is who
vehicles such proposed an produced purchase
as lithium ion effective ban (Ritchie & battery-
batteries on fossil-fuel Roser, electric
sourced from vehicles by 2024). vehicles
mining 2035,  1/5 of CO2 is (BEVs).”
(Adams, accompanied due to (Dhadmin,
2024). by a transport 2023)
commitment (Ritchie &  ‘”People
to charging Roser, aged 55+
infrastructure 2023). make up
(Australian, 53.6% of
2021). BEV
owners.”
(Dhadmin,
2023)
 “Those
earning
$100,000+
annually
make up
57% of BEV
owners.”
(Dhadmin,
2023)
A partial STEEPLE was completed to focus on major external factors that have an impact on
Volvo’s decision to become fully electric regarding its sustainability.

Technology: Volvo Cars are primarily focused in remaining sustainable across the triple
bottom line. When it comes to batteries of Volvo Cars, they have capitalized on this through
creating a joint venture between itself and Northvolt under the name NOVO Energy (Source
Document 1). This in itself mitigates potential competitive advantages from other
businesses. It additionally allows Volvo Cars to take a proactive stance in ensuring that its
supply chain is sustainable. With a long term aim of being carbon neutral globally, by
ensuring that the supply in which provides materials for the vehicles is made sustainably
allows for Volvo Cars to be a market leader in sustainable mobility solutions.

Law: Volvo’s decision to become fully electric can benefit them, as other car manufacturers
might have to legally sell only electric cars in certain regions where sales volumes are high
due to ban proposals on fossil-fuelled vehicles. For example, The West Australian Reports
that the European Commission is planning on banning these vehicles by 2035. As this ban
could potentially follow in other regions, planning to convert to only EVs might be fruitful and

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even allow Volvo to be sustainable in the long term. As seen in Source Document 2, Volvo
face other car manufacturers racing towards being fully electric before the ban such as Ford
and Jaguar.

Environment: The annual CO2 emissions in the world are high, causing climate change. EVs
do not produce this greenhouse gas, whereas ICE cars do. If Volvo commits to selling only
electric cars, there will be a decrease in CO2 emissions and help maintain the environment's
sustainability. As transport is the reason behind a fifth of carbon emissions, Volvo can help
decline this. This aligns with Volvo’s Sustainability Mission and their commitment to the
environment. In source document 1, Volvo Cars describes the phasing out of internal
combustion engines as imperative when responding to climate change which helps address
their triple bottom line of planet.

Social: The main demographic of EV buyers are middle-aged men who make over $100,000
annually. However, Volvo Cars’ demographic, according to Source Document 5, has or
favour Hybrid cars, with Electric cars being the least owned (8/40). Thus showing that the EV
demographic is likely a smaller part of Volvo Cars’ customer base. Furthermore, regardless
of the ownership, more than 50% of Volvo Cars’s customers felt positive about the decision
to go fully electric. This is a clear indicator that customers have somewhat of an adoption of
Volvo Car’s commitment to becoming fully electric in 2030. Thus, despite not having a mainly
EV-focused demographic of customers, Volvo Cars’ customers are accepting of this change.

Product Perception Map

This product perception map will be created with the Source Documents 5, 3 and Pricing
from the Volvo website (Volvo Cars Corporation, 2023).

Quality High
EX90

XC60
7 XC90
XC40
 V60

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Currently, majority of sales volume comes from mild hybrids, their normal hybrids (PHEV),
ICE and then EV. In 2022, according to Source Document 3, Volvo Cars’ sold over 342,000
mild hybrid cars, which accounts for more than half of the total sales volume for that year
(615,121 cars). This can be supported by a survey, in which the majority (50%) have a
hybrid car (if they did not own a Volvo car, a Car type was favoured). It is important for Volvo

Figure 1: Graph 1: Revenue vs Sales Comparison. Graph 2: PHEV to BEV ratio. (Source
Document 1)

Cars to be aware of this in order to ensure that customers are not dissatisfied with Volvo
Cars and maintain sustainability. Additionally, the majority of cars within collection are
SUV’s, which is also the top 5 highest quality of cars (evaluated from the survey and
average unit sales of each car), with EX90 being predicted to be at the top left according to
the survey and source document 4. Whilst only two electric cars are available to purchase,
they are usually 10% of the sales shares, where in the first quarter of 2023 made 18% of
sales (Source Document 3). Additionally, Source Document 1 indicates that there is a
decrease in overall ICE sales by 13% comparatively to the 58.6% increase of BEV. Whilst
this occurred, the overall units sales decreased. However, Volvo reached an all-time high
revenue (Source Document 1)

From this, it can be assumed that the increase in BEV sales led to an increase of revenue
for two reasons. Firstly, as seen in the product perception map, the two electric cars listed
has a higher price then half of the Volvo car models. Secondly, between that year, BEV
volume % has increased by 7%.

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Conclusion
In conclusion, Volvo Cars should continue to commit to producing fully electric cars in 2030
as it will likely sustain the business to remain profitable in the long term. Considering the
triple bottom line, the planet benefits from reduced CO2 emissions, profits show to increase,
and people have a high acceptance of Volvo Cars being purely electric. However, the
majority of Volvo’s customers purchase variants of hybrid cars. Thus, it is suggested that
Volvo should release a special final line of hybrid cars before 2030 to meet customer needs
or have a transition phase. As seen in the tools, there is a growth in EV purchases and
technology which could benefit Volvo Cars if they stay committed. Volvo Cars will need to
differentiate from its competitors in order to remain ahead of other car manufacturers
through innovations. Overall, Volvo Cars can expect to remain, if not improve, their current
position through this change.

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References
Adams, H. S. (2024, February 28). How Batteries for Electric Vehicles can be more

Sustainable. EV Magazine. Retrieved February 1, 2024, from

https://evmagazine.com/articles/how-batteries-for-electric-vehicles-can-be-

more-sustainable

Australian, W. (2021, November 10). Climate change: Car firms to phase out fossil

fuel by 2040. The West Australian. Retrieved February 1, 2024, from

https://thewest.com.au/news/climate-change/climate-change-car-firms-to-

phase-out-fossil-fuel-by-2040-c-4502508

Dhadmin. (2023, April 6). Who Owns EVs Today? EV Ownership Trends and

Changes 2021 EV Consumer Behavior Report Rundown - Inspire: Advanced

Transportation. Inspire: Advanced Transportation. Retrieved February 1,

2024, from https://inspireadvancedtransportation.com/industry/who-owns-evs-

today-ev-ownership-trends-and-changes-2021-ev-consumer-behavior-report-

rundown/

Electric Vehicle Council. (2019). How electric vehicles reduce greenhouse gas

emissions. Electric Vehicle Council, 2.

https://www.climatechangeauthority.gov.au/sites/default/files/2020-06/

Updating%20advice%20submissions/035%20-%20Electric%20Vehicle

%20Council%20Submission.pdf

Fung, D. (2021, November 2). Volvo stock goes public after Geely agrees to loosen

grip | CarExpert. CarExpert. Retrieved February 28, 2024, from

https://www.carexpert.com.au/car-news/volvo-stock-goes-public-after-geely-

agrees-to-loosen-grip

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Purtill, J. (2023, April 26). Electric vehicles 14 per cent of global new car sales, but

less than 4 per cent in Australia: IEA. ABC News. Retrieved February 1, 2024,

from https://www.abc.net.au/news/science/2023-04-27/electric-vehicle-ev-

sales-increased-globally-2022-iea-outlook/102266800

Ritchie, H., & Roser, M. (2023, December 28). Cars, planes, trains: where do CO2

emissions from transport come from? Our World in Data. Retrieved February

1, 2024, from https://ourworldindata.org/co2-emissions-from-transport

Ritchie, H., & Roser, M. (2024, January 22). CO₂ emissions. Our World in Data.

Retrieved February 1, 2024, from https://ourworldindata.org/co2-emissions

Ruffo, G. H. (2020, September 17). EVs are still 45% more expensive to make than

Combustion-Engined cars. InsideEVs. Retrieved February 1, 2024, from

https://insideevs.com/news/444542/evs-45-percent-more-expensive-make-

ice/

Volvo Cars Corporation. (2023). Volvo Driveaway Calculator. Volvo Cars. Retrieved

February 23, 2024, from https://volvocaraustralia.com.au/driveaway-price-

calculator/

Volvo Cars Corporation. (2024a). Our heritage | Volvo Cars. Volvo Cars. Retrieved

February 28, 2024, from https://www.volvocars.com/au/v/our-heritage

Volvo Cars Corporation. (2024b). Sustainability is as important to us as safety |

Volvo Cars. Volvo Cars. Retrieved February 28, 2024, from

https://www.volvocars.com/intl/v/sustainability/climate-action

Wikipedia contributors. (2024, February 20). Volvo cars. Wikipedia. Retrieved

February 1, 2024, from https://en.wikipedia.org/wiki/Volvo_Cars

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Source Document 1
Volvo Cars Corporation. (2022). ANNUAL AND SUSTAINABILITY REPORT 2022.

Retrieved February 1, 2024, from

https://vp272.alertir.com/afw/files/press/volvocar/202303076447-1.pdf

(next page)

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16
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Source Document 2
Carey, N., & Soderpalm, H. (2022, May 20). Volvo is planning to go fully electric by

2030. World Economic Forum. Retrieved February 1, 2024, from

https://www.weforum.org/agenda/2021/03/volvo-planning-fully-electric-2030/

#:~:text=The%20Chinese-owned%20company%20Volvo%20has%20said

%20its%20entire,CO2%20emissions%20targets%2C%20such%20as

%20Ford%20Motor%20Co.

19
20
21
22
Source Document 3
Volvo Cars Corporation. (2023). Key financial data. Investors. Retrieved March 1,

2024, from https://investors.volvocars.com/en/results-and-reports/key-

financial-data

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24
Source Document 4
Winton, N. (2022, November 20). Volvo Cars Outlook deteriorating as profit dives.

Forbes. Retrieved February 1, 2024, from

https://www.forbes.com/sites/neilwinton/2022/11/20/volvo-cars-outlook-

deteriorating-as-profit-dives/?sh=735c399a9c73

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26
Source Document 5

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