Enough luxury segment space for Volvo and Polestar

The Sino-Swedish automaker is not worried about cannibalisation risk from the EV pure play start-up

Enough luxury segment space for Volvo and Polestar
The Volvo EX90 has a third row of seats, differentiating it from the Polestar 3

Gothenburg-headquartered OEM Volvo Cars is very aware of the dangers of cannibalisation. Its new EX30, for example, targets a “brand new segment”, CEO Jim Rowan said in late October.

“I do not fear that we will cannibalise the C40 or the XC40 with that car... It is a different demographic that we operate within," the Volvo chief continued.

But Volvo, in which China’s Geely holds a substantial 78.7pc stake, is a premium Swedish brand that stresses it is “all-in” on electrification and with a goal to be all-electric by 2030. Polestar, in which Volvo holds a 49.5pc stake while Geely is the second largest shareholder, is a premium Swedish EV pure play brand.

So that begs the question of the risk of cannibalisation as both firms build out their BEV ranges. Erik Severinson, head of strategy and programme management at Volvo, tells EV inFocus that, while a relevant concern, it will not be a major issue as there is sufficient room in the premium segment for both brands to thrive.   

“A Volvo is a Volvo, and a Polestar is a Polestar,” he says. He takes Volvo’s EX90 and the Polestar 3 as examples of two cars “developed from the same base technology, but with very different target customers”.

“You have the Polestar being the pure performance car, and you have the EX90 taking the family — seven-seater, fully flat floor, versatility with loading, a lot of cargo,” Severinson elaborates.

“Just having a third row of seats in the Volvo but not in the Polestar, makes a huge difference for the customer and for how you design the car. All of a sudden, you have two completely different products based on the same platform or technology.”

The premium segment is “quite big”, Severinson notes. “There is a lot of different customers with different needs. Polestar and Volvo are tapping into different kind of customer segments.

"There is more than enough space in the premium segment for us to be able to launch products in different targets to different customers without competing,” the strategy chief concludes.

And he suggests that Volvo’s view of how it positions its products relative to launches planned by Polestar is just an extension of the “same kind of approach that Volvo takes internally”.

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Past lessons

The proof that two premium brands under the same wider umbrella can prosper can also be found in the automotive industry’s history “Others have proven that before us,” says Severinson.

The key, in his view, is that any product “has to be true to your brand and true to your purpose”. “If you do that, I think you can get a very long way in all kinds of collaborations,” he suggests.

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