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Volvo Goes All-Electric, Bids Farewell to Internal Combustion

Jeff Siegel

Written By Jeff Siegel

Posted April 1, 2024

I used to joke about how one day, internal combustion vehicles will only be found in museums.  And while we are decades away from that happening, we’re about to see the first example of this come to fruition. 

Last week, we got word that Volvo (OTCBB: VLVLY) just completed its final diesel-powered passenger vehicle, and that vehicle is being sent to a museum.

Pretty crazy!

Worth noting, half of the company’s sales from 2012 to 2016 came from diesel-powered vehicles.  So the fact that the company is no longer making these vehicles in an effort to transition to an all-electric lineup is pretty jarring.

Indeed, I knew this day was coming, but to see it actually happen is a completely different thing. 

As a side note, the factory where these diesel cars were made has officially transitioned to an electric motor factory for the company’s new electric car lineup. 

When Volvo first announced its intentions to go all-electric, former CEO Håkan Samuelsson said that in order to remain successful, the company needs profitable growth, so instead of investing in a shrinking business, Volvo would choose to invest in the future – electric.

While some folks still question the transition from internal combustion to vehicle electrification, I maintain that legacy carmakers unwilling or unable to get into the electric vehicle game will crumble. 

Of course, this does present an interesting question.

Even if legacy carmakers in Europe and the U.S. go fully electric, will they be able to compete with China?

In terms of bringing affordable electric cars to the masses, no automaker in the U.S. or Europe has been able to come close to what’s being pumped out of the Middle Kingdom.

I wrote about this recently, noting that China’s BYD Corp. (OTCBB: BYDDY) is now selling a $10,000 electric car.  No US or European automaker can accomplish anything close to that.  Which is why such high tariffs have been put on these vehicles.

While we can’t know how long those tariffs will stay in place (although I believe they’ll be in place for a very long time), we do know that in order for legacy carmakers to gain more market share, they’re going to have to figure out how to bring more affordable EVs to market. 

I believe Volvo fully understands the production cost advantages that exist in China, which is why the company’s EX30 is being partially built in China on a platform developed by Geely (OTCBB: GELYF), the seventh largest automaker in China that happens to be a majority shareholder of Volvo. 

To be sure, the EX30 is no slouch.

It’s a small SUV, but comes with all the bells and whistles you would expect from the carmaker.

It’s pretty slick-looking, too. 

ex30

 

And at $35k, it’s relatively affordable.

Still, I maintain that it’s going to be the sub-$30k EVs that really move the needle in the U.S. and Europe.  The carmakers that I believe will have those market-ready in the next few years include GM (NYSE: GM), Nissan (OTCBB: NSANY) and Stellantis (NASDAQ: STLA).  

GM will likely take the lead, though, as Stellantis and Nissan still don’t seem to have an affordable EV with a range exceeding 200 miles.  And that really will be the deal-breaker for most car buyers in the U.S.

Outside of South Korea, the U.S. remains the one EV market that cannot thrive in the absence of a 200-mile range vehicle – minimum.

The next iteration of GM’s Chevy Bolt is expected to deliver ranges exceeding 250 miles, and still come in at around $30k.  If it can still qualify for state and federal tax credits, that could bring the price down to between $15,000 and $22,500.

Make no mistake: at those price points, GM could ultimately end up selling more EVs than Tesla, which has long been the leader in the space.

Now if Uncle Elon can bring to market a $25,000 EV, which he has stated the company will do, that could change the game a bit.  But until we see some evidence of that actually happening, my money is on GM to dominate the low-cost EV market in the U.S.

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