Volvo Cars’s aggressive push to go all electric by the end of this decade, is expected to expand the company’s U.S. operations significantly over the next several years, according to the President and CEO of Volvo Cars USA.
Anders Gustafsson told Yahoo Finance Live that Volvo planned to double or triple the size of its South Carolina manufacturing plant, to meet growing demand for electric vehicles.
“We have had 100% growth [in the U.S.], the last five years, and we are planning for another 100 in the upcoming years,” he said. “We will go from quite low production capacity to the highest capacity ever in the U.S. market. Therefore, we need to recruit more colleagues, more resources.”
The Chinese-owned Swedish brand set an ambitious goal to only sell electric cars by 2030, as it unveiled Tuesday its second battery-only model, the C40 Recharge. While that model will be manufactured in Ghent, Belgium, Volvo’s next generation EV, the XC 90 SUV, will be manufactured in South Carolina for the U.S. market, Gustafsson said.
The company’s announcement comes as rival carmakers accelerate their transition to electric. General Motors (GM) recently announced its goal to sell only emission free vehicles by 2035, while Ford (F) aims to go all electric in Europe by 2030.
Volvo’s EV target is by far the most aggressive, given that the company has only delivered one fully electric vehicle to market, until today. It expects half of the cars it sells to be fully electric by 2025, with the other half to be hybrids.
“It's very very tough to be kind of a number one or be good at two tasks at the same time. That's the reason why we will leave the development of combustion engines and go for a full focus on all our engineers into electrification,” Gustafsson said. “This is a very, very competitive industry.”
As part of its shift in strategy, Volvo’s EVs will only be available for sale online. In a statement, the company said it will invest heavily in its online sales channels, and "radically reduce complexity" in its product offer. While the company has been selling cars online since 2016, as part of its Care by Volvo subscription, it plans to expand its digital services to include sales, insurance, maintenance, and roadside assistance.
“The most important thing for us is to do what our customers are asking for,” Gustafsson said, adding that the company was simply “taking away the unhealthy part of our business.”
The electrification of vehicles has accelerated as carmakers and drivers look to break with fossil fuels, to address the urgency of climate change. The adoption has been particularly significant in Europe, which recently overtook China as the largest EV market in the world. Sales of battery-powered vehicles more than doubled in the region last year, according to Schmidt Automotive Research.
Much of that growth has been attributed to aggressive government incentives. While EV adoption in the U.S. has lagged behind China and Europe, Gustafsson said Volvo would not rely on incentives to accelerate sales in the country.
“We cannot run our operations based on support from governments. I think they should help us with the infrastructure of charging and we've been very very clear that we need help,” he said. “To be competitive you need to work with efficiency, you need to reduce selling costs, and that's the reason why we're so focused on online.”
The announcements on Tuesday came just days after Geely, scrapped plans to merge with Volvo, and instead focus on electric and autonomous driving technology.
Akiko Fujita is an anchor and reporter for Yahoo Finance. Follow her on Twitter @AkikoFujita