Volvo's New Strategy Splits East and West
It's hard to argue Volvo hasn't done well under the patronage of Geely. The Chinese automaker purchased the Swedish company in 2010 and took an admirably hands-off approach. They essentially wrote an $11 billion check, telling the company to be the best Volvo they could be. Compared to their last full year under Ford's ownership, Volvo has seen global sales double, revenue nearly triple, and EBIT go from a ~$1 billion loss to a $1.2 billion profit.
After abandoning an all-EV future two years ago, Volvo's latest strategy includes a goal to be the "leading premium car brand". The new EX60 compact electric SUV is off to a strong start, both critically and in terms of market response, and that's the tip of the iceberg; it will be followed by the smaller and more EX50 next year. They've also updated the no-longer-doomed-to-extinction XC60 and XC90 to include PHEVs with class-leading electric range that's over double that of last year's models.
The new plan draws a significant line between strategies for western markets (North America and Europe) and eastern markets (China). Each market will sell "locally produced" models, which will reduce Volvo's exposure to tariffs. Across the board, Volvo has significant targets for shared components and supplier leverage to reduce costs, targeting an 8% EBIT (from last year's 3.5%).
There's some good news for enthusiasts, too. If you're a fan of Volvo's legendary station wagons, there's a hopeful line indicating "new low & high body types". They've also promised a fresh new design aesthetic, to be previewed in a concept next year. Finally, Volvo has indicated that, following the lead of competitors like Audi and Mercedes, we'll see more physical controls in future Volvos, rather than leave everything on the screen.
The West gets seven new cars (a combination of EV and hybrid) and Volvo's HuginCore tech stack, likely leveraging Volvo's new SPA3 platform to start. Those new models will be larger in the US (and we've already rumors of an XC/EX100 flagship SUV), while Europe gets a "full BEV lineup" by 2030.
In contrast, the East gets six of their own new cars leveraging Geely architectures and components, with a separate "Eastern tech stack" (Geely's EEA). The focus will be on "spacious cars with advanced tech", with PHEVs deployed for larger vehicles.
We've seen a taste of this strategy with the new XC70, a China-specific midsize two-row SUV built off Geely's Scalable Modular Architecture. It appears Volvo is pulling all the right levers to address the changing automotive landscape, and I certainly look forward to seeing their next-generation products.
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