Volvo CEO on Automaker’s Plans to be All Electric by 2030

Volvo Cars Chief Executive Officer Hakan Samuelsson discusses the automaker’s plan to move to all-electric vehicles by 2030. He speaks on “Bloomberg Markets: European Close.” Watch or read the transcript below.

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Host: Look, you’re trying to get out in front in this process of shifting to EVs, what advantage does that give you being kind of out in front of other companies?

Samuelsson: It gives us the advantage to continue growing very rapidly. And then we see the market, especially the premium segment, moving into electrification. So we are firm believers that the future premium cars will be electric. That will be a growing segment. And we want to be in that growing segment. And that’s why we decided we have to move more decisively and faster into electrification.

Host: Does that mean that you get out of countries that don’t want all electric vehicles?

Samuelsson: No, not necessarily because we are a small player in the premium segment and of course, electrification will be slower in some countries, but by 2030, we are still believing that there will be a premium electric chair of that market where we will be positioned. And so I don’t think we need to exit any markets, but we will focus on the dielectric elastomer that will be available everywhere.

Host: Why do you think electric is the way to go? I ask this question genuinely, everybody at the moment seems to be pointing us in that direction. Government in particular around the world seems to be saying that the electric vehicles are the way to go. Are you are you in any way concerned that governments are mandating a solution rather than mandating an objective, i.e. reducing emissions? European governments in particular don’t have a particularly good track record when it comes to power trains. We all remember what happened with diesel.

Samuelsson: Yeah, I agree on that, but we don’t feel in any way dictated towards electrification. I think that governments have the right to approach. Let’s do something about the climate challenge. And really, if you want to participate that from the car industry, then electrification is the right way to go. And then in that way, of course, we are doing that. But more important is we are listening to our customers. Electric cars are very attractive. And there is more and more demand for all electric cars. And so I believe also this is a way, really to strengthen the value-based of our brand. It has been safety for many, many years, and we believe that sustainability will be a very natural addition to our brand and increasing our value base because values will be important for customers and people working for us. What I did notice that when I think the question with EVs now becomes. The only way for cars, for example, hydrogen fuel cells is going to be a lot greener?

Once you can really get green hydrogen, you don’t have to mind stuff like cobalt, for example. Also, what we learned in Texas with the deep freeze is that you just can’t plug-in everything. Are you putting all the eggs in just one basket and you end the industry, quite frankly. And now we believe it’s absolutely the best solution. I mean, first of all, you have to go out from a renewable energy is going to be wind, hydro or solar. But then you can choose either you charge a battery or you convert it into hydrogen. If you convert it into a hydrogen burning fuel cell, you have a lower total efficiency. So I think the best way of utilizing electric power is to recharge the battery and drive electric. So that is our cause or way forward. But of course, is good with alternative and competition. And we are quite sure about the battery electric vehicle as this the right solution. What about the batteries? What are they going to come from? Is there going to be enough of them? Is the technology advancing fast enough? Do we need to move to solid state batteries? The whole question around batteries seems to be absolutely pivotal at the moment. And I do wonder where the value is going to lie in this whole process. That’s absolutely right. There I mean, the first step is for us, of course, to secure the capacity and the volumes we need that have already done. But the next step is, of course, to really secure the production process, the supply chain, and really do that in a good way, in a sustainable way, compliant way. But then the third step is really to improve the efficiency of batteries and they will be more efficient even if we don’t go to solid-state. I think that’s the solution. It will come one day, but is probably on the other side of the 2030 to be open. But there will be continuous development of batteries. Then in five years from now, they will have a much higher capacity on their lower cost. So I quite convinced about that.

Host: Talk to me about the workforce that you may have to shift. Making EVs is very different than making gasoline powered diesel powered car. What do you have to do to your workforce?

Samuelsson: I would say it’s not that big influence. It’s more related to the combustion engine. And we already carved out our combustion engine business, including R&D. And we’ll bring that into a joint company with League so so we can fully concentrate on the electric cars. But if you have done that, the people you need to assemble the car or develop them, make them even safer, more comfortable, it will be rather unchanged. So I don’t see really a big impact for our employment. It’s more for a supplier, the supplier base, for the combustion engine business.

Host: You’re also changing your relationship with your dealer network, and that appears to be to get closer to the customer, you want to own that relationship with the customer rather than the dealer network owning that relationship with the customer. A, how do you think the dealer network is going to react to this? Because there’s a lot of value that will be destroyed from that point of view. And what do you see your relationship with the customer being going forward? A lot of data companies obviously use the data from companies, from their customers to get closer to them. What exactly are you going to be getting from customers in terms of changing this relationship?

Samuelsson: First, I think it’s you have to express it correctly. I mean, we have no ambition to take over the complete relationship with the customers directly. That would be impossible, but it would also be impossible for our retailer to maintain it. That’s absolutely their prime business, because in the future, we need three components to build a really strong customer relationship. One is really powerful online tools to for online ordering and so on. I think that’s something we need to do. We need also strong customer care centers for customer to call in and get assistance or advice. That’s something we need to do also centrally. But of course, very important in the future is the partners, the retailers, the road to really build the face to face relationship with the customers. So we should do this together. So I think you should not express this, that we are going to take over, that we will do it together. And if we do that in the right way, we will have a very strong competitive factor, especially they’re building the loyalty and this high quality service where we definitely need our partners. So this is something we will do together. And I would say if we don’t do that in a good way, our customers will turn to other actors who are ready to deliver the service. The on line transparency and the clear product offering is something that customers are expecting.

Host: Forgive the repeat question, but I guess I just don’t get it, because if you’re going into the direction of online and sort of the idea of fixed vehicle prices, how do you work with the dealers to make that work for them?

Samuelsson: I mean, the customers will look at the offer on our site because there, you will see very transparently real prices and natural preset prices, which customers really are expecting to see. You will see the product offering. And you can also order the car if you want to from home. Most customers will probably walking into the showroom and ask for assistance doing that. And once you have ordered the car online, it will, of course, be delivered to the dealer of your choice. And they will do exactly as today the handover of the car explaining all features and they will take care of the service. So I think you shouldn’t make this into a very radical change. It’s still something we will do with our partners, but we are living up to expectations and requirements from our consumers. They want more transparency. They want to have a much more hassle free experience getting a car.

*Bloomberg contributed to this content.

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