It’s been nearly a decade since Håkan Samuelsson joined Volvo at a point where the automaker was struggling to regain its footing. The Swedish automaker had only recently been sold off by Ford to the ambitious Chinese startup Zhejiang Geely Holding Co.
Under Samuelsson, Volvo reversed its fortunes, both improving sales and market share as well as repositioning itself as a leader in automotive safety. Now, the 70-year-old executive wants to add “sustainability” to Volvo’s core brand values. This week, the carmaker announced plans to migrate to pure battery-electric vehicles by 2030. In the process, Volvo also plans to shift to an online-only sales model as new electrified vehicles come to market.
The announcement came just weeks after Volvo and Geely scuttled what was expected to be a full merger of the two companies.
TheDetroitBureau.com spoke with Samuelsson about Volvo’s electrification plans, the aborted merger and the executive’s own feelings about the transformation of the company he joined in 2012.
Going all electric
TheDetroitBureau: A number of automakers, including General Motors, now plan to go all electric. How much of this was driven by changing consumer demand? And what role did increasingly stringent emissions legislation play? Britain, for example, recently announced plans to phase out gas and diesel engines by 2030.
Samuelsson: In the 1970s we ran an ad (in the U.S.) that said it shouldn’t take an act of Congress to make cars safe. It shouldn’t take an act of Congress to make cars sustainable. We started to make cars safe before the legislation came in and made it an advantage. And we started to do that with sustainability before the legislation. Later, (legislation) will come and push the late movers into sustainability. But, if you really want to have an advantage, you need to move faster.
TDB: You’ve been hinting for months that it was just a matter of time before Volvo would go all electric. What were you waiting for?
Samuelsson: Going all electric by 2030 is a very bold strategy which we believe is absolutely the right one. We started out thinking we needed electric variants, including all-electric vehicles and hybrids. But what matured in our mind is that it’s really about making sustainability as much a part of our brand as safety. We decided to make it part of our purpose, not just a car with an electric motor. It’s very natural that customers who are attracted by safety will be attracted by sustainability. It (also) is good when we want to attract capital and want to attract new talent (to work for Volvo). More and more people want to work for companies with the values they share.
TDB: From an automotive perspective, 2030 is just around the corner. All the investments you made in conventional powertrain technology are now, theoretically, obsolete. How much of a financial impact will that have?
Samuelsson: Not that severe, I would say. The combustion engine we will move into a legacy company to place full concentration on electrification. Already, back in 2015, we developed our scalable architecture (a vehicle platform in auto-speak), the SPA. It will have a second life as SPA2 when we electrify it for cars we will launch in a year or so. Then look at 2025 and 2026. (Volvo also has a second EV platform now for small cars like the C40 Recharge announced this week.) In the future we will have a different type of platform to build all sizes of cars we need. That’s what we’re starting to develop on common ground with (Chinese parent) Geely.
Working with Geely
TDB: Let’s talk about Geely. You had been looking at possibly taking the relationship further and actually merging the two companies. Why did you decide not to do that?
Samuelsson: We looked very closely how could we combine the companies to get synergies and make us stronger. And, basically, we had two options. One would be a financial merger. But, when you do that you lose momentum. We have two companies, very proud of our brands and growing very rapidly. So it would be rather risky to bring the two together and lose motivation. Volvo needs to stay in the eyes of the consumer as absolutely Swedish, and Geely needs to stay with their identity. That led us to the conclusion we better have two separate companies or we risk losing more than we gain.
We can still do a lot on the cost side, especially when you focus on new technology like autonomous drive systems and common software, battery cells, of course. That is really where you have the future synergy. It’s a really good balance.
TDB: What’s the relationship, then, between the Polestar brand (spun off last year) and Volvo going forward? Both will be electric brands. What’s the differentiator?
Samuelsson: Polestar was, of course, earlier with electric. But it’s more difficult to identify a brand as ‘all electric’ because all brands will be ‘all electric.’ Polestar should be a more progressive brand, a bit more premium than Volvo, which is still a family brand, and should have new features unless they are safety features which are likely to be seen first in Volvo.
Moving to online sales
TDB: You talked about going to an entirely online retail model as you electrify. How does that work?
Samuelsson: We’re not talking about online sales where you order online and pick them up at the factory gate, something independent of retailers. That will never happen. What’s important is to really give the customers the transparency with very easy to understand product offerings. We will work with much more predefined cars you can choose and if you want to customize that car we build that (to order). We will use already (set) prices that you can only achieve online. But the retailers have a very important role, of course, still delivering the car and explaining it. And they will be compensated, exactly as today.
TDB: Will this vary country to country and, in the U.S., where we have some of the most confusing franchise laws?
Samuelsson: From country to country there are principally different solutions. In Europe you could do direct invoicing and compensate dealers for the work they do. In the U.S., because you have the franchise laws, the dealers have to be part of the transaction. The car is sold to the dealer and then the dealer sells the car to the customer – though the customer will never perceive that. The customer will press a button that says “Buy,” and the car will arrive at the dealership of his choice. It is perceived as online sales but is totally within the franchising laws.
If you want to test drive them, walking into the nearest dealership, personnel will sit down with you and assist you and then type in all the order data and press the “Buy” button together. I think if we do this correct(ly) we could offer something absolutely best in class, combining online transparency with high quality local customer care.
TDB: How does it feel, right now, running a company like Volvo on the edge of what is probably the most profound change the automobile industry has had in this lifetime?
Samuelsson: It’s really exciting. I’ve been now nine years (with Volvo) and before that with the automotive industry in Germany. It’s nice to work for this crown jewel of Sweden and put it on a future track. It’s a good usage of everything I learned from the car industry over many, many years. I’ve always been a person who is not so fond of administrating and doing more of the same. I’ve always been challenged to find how to do things better. Here we are in a period where a lot of things can be done better.