The launch of the Volvo EX90 was not only the presentation of the new Volvo SUV, the first of its electric vehicles built on a platform made to measure for the occasion. It also became the perfect setting to discover the most ‘Nostradamus’ facet of Jim Rowan: the CEO of the Swedish brand believes that It won’t be that long (as many think) for an electric car to cost the same as a combustion one.
In this bold information “so much” is three years. Jim Rowan sees the price parity between battery vehicles and diesel or gasoline vehicles closer than others, and he confessed as much to Automotive News Europe: “We believe that we will reach that equality in 2025. At that time there will be enough technology to reduce the cost of the battery and increase its autonomy. There will be fewer batteries, but they will have a longer range and they will be cheaper.”
Volvo believes that the smallest models of its range will also help to reduce the price of electric ones. Not surprisingly, its next battery model will be a small crossover that will be located below the Volvo XC40 and Volvo C40.
CATL, one key
It should be noted that, as reflected Automotive News Europethe price of batteries has dropped between 80 and 90% in the last decade. A trend that has been broken in the last two years when the cost has risen again due to supply chain difficulties and the growing demand for raw materials from an industry that is rapidly electrifying.
To deal with this (and the 26% rise experienced, also, by electric car engines in 2021 according to the data provided by Interact Analysis), CATL has taken action on the matter. Volvo’s battery supplier has made LFP (lithium iron phosphate) batteries more affordable: the package used by the China-built Tesla Model 3 is the most affordable at $131 per kWh. Volvo’s goal is for its batteries to reduce that number to less than $100 by 2025-26.
Real goal or mere illusion?
Jim Rowan’s position contrasts with that of some brands that expect just the opposite: more expensive batteries and raw materials that will drive up the prices of electric cars. Along this path goes the vision of Luca de Meo, who at the Paris Salon stated: “I don’t see that this parity is close. I can find better chemistry for the battery or better electronics for the power, but we would lose what we save when the price of cobalt doubles in six months.”
Is Volvo’s goal realistic? The truth is that yes because it is a premium brand and, according to analysts, they have more flexibility: they can reduce the margins of electric vehicles to offer parity to the consumer. In the segments where Volvo competes it is possible, but in other more conventional ones they do not have that advantage when it comes to working.
