On July 5th I commented on the Volvo hype in Volvo Goes All Electric – Well Not Quite.
On July 7th the Wall Street Journal chimed in with Volvo Discovers Electric-Vehicle Hype
The most popular article on the Journal’s website on Wednesday was headlined “ Volvo to Switch to Electric, in First for Major Auto Firm.” On its front page the next morning, the New York Times declared Volvo “the first mainstream automaker to sound the death knell of the internal combustion engine.”
Well, not exactly. By 2019, Volvo said all its cars would be hybrids or gas-electric hybrids or “mild” gas-electric hybrids—i.e., most will continue to have internal combustion engines.
“This announcement marks the end of the solely combustion engine-powered car,” is how Volvo chief executive Håkan Samuelsson actually put it (emphasis added).
Volvo, unlike just about every major car maker, doesn’t even have an electric car in the market today. Its big winner is a luxury SUV, a gasoline-powered vehicle whose top-of-the-line model is further enhanced, yes, by a supplemental electric drive.
The hybrid version of the XC90 comes with a $75,000 price tag: A customer who wants a hybrid is also presumed to want the 19-speaker, 1,400-watt sound system, the self-parking package and every other option Volvo can stuff into a $75,000 SUV.
Therein lies the real point. Volvo’s announcement signals nothing about the electric-car future and everything about Volvo’s niche marketing.
But something else is also going on. Volvo is still run out of Sweden. Its chief is Swedish. But the Volvo car business has been owned by China’s Geely since 2010.
Volvo’s biggest market now is China. Starting in 18 months, China’s auto makers will be subject to an increasingly onerous California-style “zero-emission vehicle” mandate.
To repeat a sore point, if the goal is to reduce greenhouse gases, passenger cars are not the place to aim. Electricity production is.
China’s real goal here is to reduce its strategic vulnerability to imported oil. By mandating a switch to electric cars, it’s essentially mandating a switch to a domestic fuel in plentiful supply, coal. An eager convert is the city of Taiyuan, capital of China’s coal belt, which enacted a rule requiring local taxis to be all-electric by 2021.
As part of declaring its energy independence, especially its independence from the U.S. Navy, guardian of the Middle East oil routes, China also is seeking to capture world leadership in lithium-ion technology. Its electric-vehicle mandate includes a requirement that manufacturers use only locally made batteries.
This is the China, by the way, that the media has been trying to turn into the world’s conscience on global warming since Donald Trump removed the U.S. from the Paris climate agreement.
Not even China, by central command, will be able to make mass adoption of electric cars economically viable, at least not without resort to massive mandates, subsidies and other distortions that bring their own problems.
To reduce dependence on oil, China will burn more coal to power electric cars that supposedly will reduce greenhouse gasses and the environmentalists cheer.
I think electric can work in cities but I am not sure by what date.
Autonomous truck driving on highways will happen long before any major move by the public towards electric, barring government mandates of course.
Mike “Mish” Shedlock