Volvo said electric vehicles made up more than a third of the company’s new car sales in the European Union, which has roared past China as the world’s biggest plug-in market.
Volvo Cars, the Swedish auto maker owned by China’s Zhejiang Geely Holding Group, was one of the first well-known Western brands to shift its focus to making electric cars, at the expense of the internal combustion engine. Others have joined the fray, including Volkswagen AG and, last week, General Motors Corp.
That tilt is now paying off on Volvo’s home turf, where the strategy coincided with an aggressive push by EU officials to promote EVs. After early skepticism, European car buyers are warming up.
Håkan Samuelsson, Volvo’s chief executive, said Thursday the company is on track to shift half of its sales to fully electric vehicles by 2025. Volvo launched its first battery electric car last year, the XC40 compact SUV, and plans to launch another fully electric car this year.
The company said it sold 115,436 plug-in electric cars world-wide last year, about 17% of its total sales of 661,713 vehicles. In Europe, plug-ins accounted for 36% of total sales, driven by sales of the XC40 battery electric model, and the XC60 and V60 plug-in vehicles.
Volvo’s shifting electric fortunes illustrate broader changes in the global automotive industry. In major markets around the world, countries with strong emissions regulations and incentives aimed at boosting EV sales have pushed the industry to develop electric and other low-emission vehicles. Those vehicles are now seen by many car buyers as an acceptable alternative.
While China took an early lead in promoting electric cars, European manufacturers stepped up efforts over the past two years to meet tougher European restrictions on greenhouse gas emissions. A number of EU member states, especially Germany, the bloc’s biggest auto market, introduced hefty consumer incentives to purchase electric cars, and manufacturers such as Volvo launched new electric models.
The combination of regulation, incentives and public acceptance sent purchases of new electric cars in Europe last year to 1.4 million, from 595,000 the year before, according to EV-volumes.com, a research group that tracks electric car sales. Sales of EVs in China came in at 1.3 million, up from 1.2 million the year before.
Plug-in electric vehicles accounted for 12% of all new-car sales in the EU last year, according to Jato Dynamics, a research group. Europe’s share of global electric vehicle sales, meanwhile, nearly doubled to 43% last year, according to EV-volumes.com. China’s share fell to 41%, from 59% in 2019. The U.S. share, largely reflecting Tesla Inc.’s domestic sales, was 10%.
Felipé Munoz, an automotive analyst at Jato, called the European result significant in light of the still-slim offering of electric car models in the market compared with conventional gasoline and diesel models with strong reputations and history. The uptick in sales reflects the flood of tax incentives and cash subsidies for consumers.
“Throughout the year, strong efforts by European governments have aided the growth for the models,” Mr. Munoz wrote in a research paper.
Sales of electric cars in the U.S. lag well behind Europe and China, but a renewed focus on fighting climate change by the Biden administration could shift the balance more toward the U.S. in the coming years. The U.S. is the world’s second-biggest market for new car sales, behind China.
GM, the biggest U.S. auto maker, announced last week that it would shift entirely to electric cars by 2035, highlighting the acceleration of the transformation of the automotive industry.
Electric vehicles accounted for 8% of Volvo’s new-car sales in the U.S. last year, and Mr. Samuelsson welcomed what he called “positive signals” from the Biden administration regarding EVs.
“If the new administration pushes electric cars that will be good for our company,” he said.
Write to William Boston at [email protected]
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