Volvo has announced it will stop making cars powered by combustion-only engines by 2019. It’s a shockingly smart, if somewhat risky strategy.
The Swedish carmaker once made quirky sedans (my parents owned a 244 just like this one) and built a reputation for safety, then transitioned to a more mainstream, if somewhat uninspiring luxury brand. Ford bought it for $6.5 billion in 1999, and sold it for only $1.8 billion a decade later, after helping crash US sales by more than half.
It’s not Swedish anymore — Geely Automobile Holdings of China owns it, and started manufacturing certain models there in 2013 — and safety may not be the same selling point once all cars can drive themselves.
So it’s going to try to become a green-only brand, kind of like Tesla but appealing to a more diverse array of customers. It’s betting that it can capture buyers who want to wean themselves from fossil fuels, but may want do it with with varying degrees of fervor.
It’s a smart, bold strategy.
It recognizes the fact that combustion engines are going to be around for a long time, primarily because 1) they work reliably, 2) they’re efficient at moving mass from one point to another, and 3) there’s an established infrastructure for building, powering, and servicing them, those side-effects of planet despoliation notwithstanding.
For the foreseeable future, the vast majority of vehicles sold in the world will run on fossil fuels.
Most of the major car brands make some sort of hybrid and/or EV, but they seem somewhat like add-ons to their combustion-only offerings, kind of like Coke offering another variation soda pop for consumers who want no calories, less caffeine, and fewer bubbles.
Purists can find the car of their choice, but few carmakers seem terribly motivated to help everybody else make those decisions. The Conventional Wisdom is that certain people may want to buy green cars, but that’s no reason to actively try to sell them to everyone else who might not.
Volvo is effectively telling the marketplace “you’re going to want to kick your fossil fuels habit at some point, and we’re the brand that will take you on that journey.”
It could open up amazing opportunities for the company to break out of the prison of selling fashion and tech, and give consumers visibility into its R&D and manufacturing. Imagine giving consumers the opportunity to buy vehicles from an entire company that is focused on operating in the most green ways possible; every tidbit of news could feed and support that positioning.
Then, it could convert the traditional “good, better, best” model/price lineup invented by GM in the late 1920s with a ranking of green-ness, and giving customers the chance to select add-ons that increased that value (instead of simply upgrading, say, their audio systems).
Think Tesla pioneering electric, only more and different engines packed into more models that ideally sell to more people. Oh, and those green cars will drive themselves autonomously (Volvo has been aggressively experimenting for years).
It’s also a risky strategy.
Consumer affection for combustion engines may be more intractable than we think, or there could be some breakthrough in transportation tech that leaves the company in the dust. People may simply not like the design of its cars (giving up iconoclastic quirky for generic luxury sleek didn’t go over too well).
But addressing the emergent post-fossil fuels future like the other car makers — as if it’s one of many consumer “options” along with all-weather packages — sure looks like a dumb, risky misread not only of what’s going on, but what’s to come.
Daring to stand for something might be the most reliably sensible thing to do.