Volvo to Export Electric Cars From China

Print Email

Volvo will both make electric cars in China and export them to other markets. The decision pushes Volvo beyond two important milestones. It becomes another manufacturer that will challenge Tesla Inc. (NASDAQ: TSLA) and other global car companies that want a piece of the growing electric car market. And it will become one of very few companies that make cars in China for export purposes.

Volvo Cars announced:

The all new model will be based on Volvo’s Compact Modular Architecture (CMA) for smaller cars, and will be available for sale in 2019 and exported globally from China, Volvo said.

The decision to make its first electric car in China highlights the central role China will play in Volvo’s electrified future and underlines China’s growing sophistication as a manufacturing centre for the automotive industry.

“Volvo Cars fully supports the Chinese government’s call for cleaner air as outlined in the latest five-year plan. It is fully in-line with our own core values of environmental care, quality and safety,” said Håkan Samuelsson, chief executive of Volvo Cars. “We believe that electrification is the answer to sustainable mobility.”

China’s problems with the auto industry include the need to curtail growing and dangerous air pollution. The pollution has become so bad in some cities that they have to throttle car traffic, which threatens overall sales. Volvo means to improve its standing in the People’s Republic via the sale of zero-emissions vehicles.

Volvo Cars is owned by Zhejiang Geely Holding Group. Local car makers sell their products almost exclusively in China. These companies do not rely on sales in other markets the way that every other major manufacturer does. They do, however, have plenty of sales opportunities. Total car sales in China topped 24.3 million last year. This compares to slightly more than 17 million in the United States.

Volvo is a well-known brand outside of China, which also makes it unique among locally owned car brands. Volvo was started in Sweden in 1927 and has gone through several owners, including Ford Motor Co. (NYSE: F) from 1999 to 2010. Volvo recently returned to the U.S. market with well-reviewed luxury cars and crossovers.

Volvo enters a very crowded electric car market. Tesla says it will sell 500,000 cars within three years. It is being chased by virtually every other large car company in the world.

Zhejiang Geely means to make Volvo a major global brand again. It has chosen two unusual means to do that, via China exports and a major foray into the electric car market.