Volvo Car AB is counting on tripling sales of plug-in hybrid models this year as a way to avoid paying what could amount to hundreds of millions of euros in European penalties for the sale of its more polluting yet popular combustion-engine sports utility vehicles (SUVs).
A fifth of all new Volvos sold this year should be plug-ins or all-electric, compared with just 6.5 percent of the total last year, according to chief executive officer Hakan Samuelsson. That would see hybrid sales rising to more than 150,000 based on the pace of growth last year. The company is only planning to start shipping its first fully electric model — the XC40 Recharge — later this year.
The stakes are high for Volvo’s electric strategy because conventional SUVs made up more than half of sales last year and are largely behind the carmaker’s success since the takeover by China’s Zhejiang Geely Holding Group Co (浙江吉利控股集團) a decade ago. As Europe’s tough emissions rules kick in, the company could pay dearly. PA Consulting Group puts Volvo’s potential fines for this year at a quarter of annual operating profit.
“Paying fines is something that just shouldn’t be in the equation,” Samuelsson said in an interview at the company’s headquarters in Gothenburg, Sweden. “That’s not part of our plans. We want to invest in product development, not in fines to Brussels.”
The CEO pointed to Volvo’s goal for half of all cars sold in 2025 to be all-electric and the rest plug-in hybrids. It is to relaunch its battery-powered range under the “Recharge” moniker, and while the volume of the electric XC40 will be modest this year, Volvo has the capacity to produce “tens of thousands” next year, he said.
The question for Volvo and other conventional manufacturers selling cars in the EU is whether consumers will buy into the plans. Rival automakers including Daimler AG’s Mercedes-Benz, BMW AG and Volkswagen AG’s Audi are also rolling out battery-powered models. The threat of penalties for the companies, dubbed “the 2020 CO2 cliff” by Evercore IS auto analyst Arndt Ellinghorst, comes at a tricky time, when the region’s market is expected to shrink.
PA Consulting Group earlier this month warned that the EU could inflict 14.5 billion euros (US$16.1 billion) in fines on the region’s 13 largest carmakers for surpassing carbon dioxide targets. The penalties will be calculated on the basis of the average emissions of new car registrations. For Volvo, they could reach 382 million euros by next year, based on the assumption that only 14 percent of its sales will be all-electric or plug-in hybrids, the consultancy said.
Volvo’s bet on plug-ins comes despite criticism of the technology for being a half-measure that does not go far enough in reducing emissions, especially as some users run them on fossil fuels without charging the battery. European sales dropped in the first nine months of last year, but according to a report by BloombergNEF are expected to rise quickly this year due to new models on the market and the emissions crackdown.
Volvo’s own studies indicate its plug-ins run on battery 40 percent to 50 percent of the time. The company plans to promote recharging by paying owners’ electricity costs.
“We don’t feel that there’s any reason to feel guilty about plug-in hybrids,” Samuelsson said. “Plug-ins are necessary for the transition, but it’s also a more long-term solution for those who may not have adequate access to charging.”
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
Hong Kong authorities ramped up sales of the local dollar as the greenback’s slide threatened the foreign-exchange peg. The Hong Kong Monetary Authority (HKMA) sold a record HK$60.5 billion (US$7.8 billion) of the city’s currency, according to an alert sent on its Bloomberg page yesterday in Asia, after it tested the upper end of its trading band. That added to the HK$56.1 billion of sales versus the greenback since Friday. The rapid intervention signals efforts from the city’s authorities to limit the local currency’s moves within its HK$7.75 to HK$7.85 per US dollar trading band. Heavy sales of the local dollar by
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
RSS