Volvo Car USA's newest crossover signals the next chapter of the Swedish automaker's evolution.
The 2021 Volvo XC40 Recharge P8, arriving in U.S. stores early next year, is the awkwardly named vanguard of a portfolio of emissions-free models.
"Electrification by far is the highest priority in the company," Volvo Car USA CEO Anders Gustafsson told Automotive News last week.
Volvo's bet on electrification is bold: Make battery-powered vehicles account for half of its global sales by 2025, with the rest being hybrids. To get there, Volvo is adopting a two-step strategy: Push plug-in hybrids in the near term as the EV lineup — and customer adoption — evolves.
"We have decided to go in very strong with our PHEVs," Gustafsson said, noting Volvo commands a 23 percent share of plug-in hybrid sales in the U.S. luxury segment.
Volvo discontinued California sales of its T6 twin-turbocharged four-cylinder engine for the XC90 large crossover. Volvo now offers only the T5 turbocharged four-cylinder and T8 plug-in hybrid variants for the model. A spokesman would not say whether Volvo plans to drop the T6 variant across its range of sedans, wagons and crossovers.
Stringent limits on greenhouse gas emissions from vehicles in Europe and China are driving the auto industry to deploy more electrified powertrains to be able to continue selling vehicles.
"Any automaker that doesn't move aggressively to launch vehicles with at least some zero-emissions capability will simply not be competitive, at least in Europe and China," Guidehouse Insights analyst Sam Abuelsamid noted.
But the world's second-largest auto market remains skeptical of the new technology. In the first nine months, EVs accounted for just 1.6 percent of U.S. vehicle sales, according to Kelley Blue Book.
As Volvo rolls out its EVs, the focus will be on profitability over market share.
"I don't want to have price pressure," Gustafsson said. "I don't want to have the cars parked outside of any dealers."
The XC40 Recharge has received the strongest pre-launch interest from customers in a new-vehicle introduction since the second-generation XC90 launched in 2015, Volvo told U.S. retailers last week. The company declined to disclose the number of preorders.
"The XC40 [Recharge] is the perfect electrified car for the U.S. market," Gustafsson said. "We will compete directly with Tesla in a price range that's going to be competitive."