Volvo’s premium strategy aims to swerve adoption concerns

The firm believes it does not need to worry about exactly how much of the market as a whole goes all-electric

Volvo’s premium strategy aims to swerve adoption concerns
The Sino-Swedish carmaker is relying on its high-end appeal

To hear a legacy OEM that has committed to rapid electrification as whole-heartedly as Sweden’s Volvo Cars say it does not greatly matter to its commercial prospects if 30pc or 80pc of the market adopts BEVs seems initially counterintuitive. For Volvo, though, it is a logical consequence of its positioning as a premium brand.

“When it comes to the size of the BEV market, we can debate whether it is going to be 30pc of the market, or 50pc, or 80pc. The only thing I know is that the BEV share of the premium market is going to be higher than its share of the total market, and we are in the premium market,” explain Bjorn Annwall, Volvo’s chief commercial officer.

“When it comes to our relative performance, we are a 1pc brand. What matters is how well we play in that part of the market,” he continues.

And it is a theme to which Volvo CEO Jim Rowan also warms. “The premium sector is very different from mass market,” he adds.

“In the premium sector, you need to remember that you are selling to a customer or a household that very often has more than one car. They may have an ICE car and they may want to have a PHEV or a full BEV car,” Rowan continues.

“We are also selling to customers in the premium EV space that very often have their own charge infrastructure. And so, the barriers to adoption become much less because they can charge at home.”

Premium globally

This belief in a differential premium BEV segment is also informing Volvo’s strategy globally. “Across many markets in Latin America and Asia-Pacific in particular, we are focusing almost fully on [electrified] cars,” Annwall says.

“That might be a bit counterintuitive, given that some of those markets are not very mature from an electrification standpoint for the total car market. But they are clearly ripe for premium electrification made by Volvo,” he continues.

“We have increased market shares and earnings in those countries. We do that by being more distinct. This is a good way forward, and I think it is a testament to the fact that it's a big difference between electrifying the full car market and electrifying a part of the premium car market, which is Volvo's strategy.

"If you are a 1pc premium brand with focus on electrification, electrification is an upside not a risk,” Annwall maintains.

This will result, he predicts, in sales of Volvo’s recently launched EX30 “over-indexing” in Asia-Pacific and Latin America, based on what Volvo sees as “early demand” for small, but premium BEVs.

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And it is also heavily influencing the firm’s approach to selling the EX30 in China, where “we are going to play it as a fully premium electrified car”, Annwall explains.

“As part of the premium electrification journey we need to do in China — given the competitiveness in the Chinese market and the lack of profitability — there is where we really value value-over-volume and really have the long term in mind to position Volvo as the premium fully electric brand. There, volume is less of the priority, it is more how we position Volvo right for the future,” he concludes.

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