Volvo not planning any more diesel launches as Geely investigates IPO
16 May 2018
Volvo has said it will never launch another diesel vehicle, joining other manufacturers in backing out of the market as sales of the powertrain continue to fall.
The new Volvo S60 sedan, set to be launched later this spring, will be the first vehicle from the manufacturer to be produced without a diesel engine, highlighting the company’s commitment to a long-term future beyond the traditional combustion engine.
All new Volvo models launched from 2019 will be available as either a mild petrol hybrid, plug-in petrol hybrid or battery electric vehicle. The move, announced in July of last year, marked the first time a carmaker had suggested it would concentrate solely on electrified vehicles. Other manufacturers are adding hybrid and electric models to their fleets, with rising CO2 levels being a leading cause. However, Volvo’s commitment was made before issues surrounding emissions surfaced.
‘Our future is electric, and we will no longer develop a new generation of diesel engines,’ said Håkan Samuelsson, president and chief executive of Volvo Cars. ‘We will phase out cars with only an internal combustion engine, with petrol hybrid versions as a transitional option as we move towards full electrification. The new S60 represents the next step in that commitment.’
One of the main factors in Volvo’s decision is the cost required to develop diesel engines. As the market falls, other manufacturers are coming to the same conclusion, with Toyota, Fiat Chrysler and Nissan all phasing out the technology across Europe.
Speaking ahead of the Financial Times’ Future of the Car Summit in London, Samuelsson added: ‘We’re not saying diesel is dirtier, but it’s more complicated and more expensive,’
Diesel engines emit less CO2 than petrol equivalents, but Samuelsson added that new petrol hybrid technology would match current diesel in CO2 output, making the engines as environmentally friendly. In addition, the costs of making diesel compliant with new emissions rules are rising, with the need for the chemical urea to be injected into the system to reduce poisonous nitrogen oxide pollution from the engines. ‘Diesel will be more complicated for more consumers, and much more expensive too,’ he said.
Last month, Volvo Cars reinforced its electrification strategy, by stating that it aims for fully electric cars to make up 50% of its global sales by 2025. The announcement was made at the 2018 Beijing Auto Show.
Meanwhile, Volvo’s owner Geely has said will only proceed with an initial public offering (IPO) if it achieves a valuation of more than $30 billion (€25.5 billion) for the Swedish carmaker, according to two people familiar with the details. The Chinese group, which also controls Lotus and black taxi maker LEVC, told banks applying to be lead underwriter on an offering that it wants to achieve a $30-$40 billion (€25.5-€34 billion) valuation for the company.