2030 or Bust: Volvo’s U.S. CEO Is All In on EVs
Anders Gustafsson has been president and CEO of Volvo USA and the head of Volvo Cars Americas region since 2017. From what we can tell, he’s settled into his role and his home away from his Swedish home well. He’s gained a keen understanding of America, which he likens to a continent more than a country given the vast expanse of the U.S. and the ins and outs of making elements of Volvo’s business work in various states. We chatted with Gustafsson about a wide range of subjects, from Volvo’s aggressive electrification strategy to autonomous cars to Volvo’s Care By Volvo subscription service, and naturally, we threw in a question about station wagons for good measure.
As you’d expect, Gustafsson is bullish on Volvo’s future, but goes about it with a reasoned, thoughtful approach that underscores his extensive experience as an automotive executive with a holistic view of the industry. We caught up with him during a recent event that featured drives of the new, all-electric Volvo C40 and the XC60 T8 Recharge plug-in hybrid, two vehicles that will be key to Volvo’s short-term electrification plans.
MotorTrend: The C40 is a variation of the XC40 Recharge EV. Is that something that you will do more of in the future, develop three or four different kinds of cars off of one vehicle?
Gustafsson: I think it’s always good to go for scale where you can use the same platform. The investments in our platform are quite expensive. So if you can use a platform in different ways, it’s always good. And we have a tremendous growth agenda for the company so we need to attract different segments, different customers. So a short answer to your question, yes.
MT: With EVs like the C40, do you feel like range is still a concern for you or for your customers? Is range anxiety still a thing? Do you even care about that anymore?
Gustafsson: Of course. We listen to our customers. Normally when we have the test drive, we talk to our customers. They bring it up as an issue but then when they start to live with the car, they are getting far calmer. Eighty-five percent of the charging is done at home. So you need to practice. And I think it’s with everything. It’s the same when you buy a phone. I have three beautiful kids and they always want to have the biggest memory on the phone and they use 50 percent. So I think this is a mindset. And the development is going so fast. So let’s take this in steps and what we have seen from the first customers is that they are extremely pleased.
MT: Price is also a concern with EVs. What’s the main driver behind, say, the near-$60,000 price of the C40?
Gustafsson: The good thing with this is there’s an extremely high focus on electrification from all manufacturers as well and the only thing I’ve learned to run a business is if it’s money from a supplier point of view, they will develop it and they will compete with each other. So the technology will get better and better and better. The range will get better and better. The weight will be better and better and better because that’s just how it is. So just to remember, the first phone I had, I was forced to have wheels on the phone and now you have it in your pocket. So, to answer a question, cost will probably not go down so much, but weight and efficiency will be by far better. And then we would get scale into it. And when we get scale, then you have the kind of a benefit for the customer and also for us as a manufacturer.
Gustafsson speaks during the launch of the latest XC60 sedan at Volvo’s U.S. plant in South Carolina.
MT: Will you continue to do more traditional cars like sedans? And I’m legally required to say this as an auto journalist, will you continue to produce station wagons?
Gustafsson: Yeah. I would like to say I’m a Swede and I wouldn’t say I make all the design decisions in the company, but I can promise you that you will get what you need, that it’s going to be different shapes on it. I would like to say you’re going to be pleased.
MT: Do you think America is ready for Volvo to be fully EV in what, eight years?
Gustafsson: Yeah. I would say we aim for 50 percent by 2025. And then it’s 100 percent, 2030. If we had this discussion three years ago, we said before COVID I remember I had big meetings with our partners and also focus groups and customers there were a lot of other question marks when we launched this strategy. Now everyone’s talking about it. Then I would like to say North America, the U.S. is absolutely not a country. It’s a continent. It is different. Like I did couple days ago, I drove from Las Vegas to Palm Springs and I’ve seen places that I’ve seen on TV. So it’s good for a Swede to see how big and beautiful this country is.
So our strategy that we work with is a [plug-in] hybrid strategy, a new three-layer battery with double range and more power is really to get the customers into electrification. We take away the drama that they can find if they Google it. And they can experience how fun it is, how easy it is, and how, I would say, cheap it is if you go for electric. … But the most important thing is that the customer needs to love it. And I think if they just enjoy a full electric car, they are going to inspire themselves to take that step and take away the drama around charging capabilities. You take it in steps and it’s a place for everyone in the market. But I really, really think that this will go by far faster than we could ever imagine.
MT: How is your Care by Volvo subscription model going?
Gustafsson: So we have worked with it now for four years. We have learned. Our competitors, I think they have canceled their programs and we develop it all the time. We have found, I would say, the secret sauce, the magic around how you can use this to attract new customers. It’s 85 percent, close to 90 percent new customers into our family. And that is always a heavy cost to do that with marketing. Now we have an ownership structure that attracts those customers. And also the strength of Volvo cars is that [they are] very safe. And our cars have all the safety features that are optional for our competitors [as] standard. When we talk about safety, it’s always tough to get a value, a price value on the technology because everyone is saying their cars are safe.
I have my view on that, of course. So what we have seen, and that was really one of the reasons why we went into subscription, is that this is the first time we get the benefits out of our safety features because the insurance cost that is included in the price is by far lower because the insurance companies, they value our safety features and safety technology. So the premium goes down. Therefore we can be very competitive and also we can have a decent and good profitability around this quite unique program.
MT: Many automakers have shuttered their subscription programs as you outline. Is it because of insurance? Or dealers and how you need to navigate everything around that? Both?
Gustafsson: I would say it’s absolutely not to blame our dealers. They are fighting for what they think is the right thing to do. So, we have Care by Volvo in a lot of states but not in every state, it’s different legislation in different states. But I would say a majority of the states accept the solution and they really, really support it. And when I talk to legislators and we talk about it, what we have been able to do with this offer is that when a customer is entering our brand, the 80, 90 percent new customers, they have, of course, a track record based on their driving pattern and their historical whatever, accidents they’ve been involved in. With our technology, our insurance partner has seen that our cars are making the customers safer. That’s the reason why we have a good profitability on the structure. It was not the case in the beginning because we took the risks, but we really, really believed in this solution.
And now when we have had this for four years, now we have enough cars on the roads with this program so we can calculate and our insurance partner can calculate on it. So there you have the benefit. So I really think this is going to stay. It’s not for every car line in our program. Customers are different. But I would say I’m very, very proud of it. And the dealers, they start to learn this because a subscription is a different way of loyalty. It’s freedom for the customer to change cars often. Our customers are not into this to have a cabriolet over the summer and SUV over the winter. We are not into that. We are talking about just a different ownership model that can be evaluated together with a lease or cash or a loan, whatever. So when the customer is coming, our menu has an additional steak on the menu that no one of our competitors can provide.
MT: Speaking of safety, how far along do you feel you are in the pledge that you made for no fatalities in your cars? Are you on track?
Gustafsson: Yeah. I remember when we took the decision and first of all, there are situations that we don’t control [such as] where people go through a tough time and they decide that they don’t want to be on this earth anymore. And of course we are working with technology so we can help [keep] them [safe], too. And that is what we see in the future. The car is not always the problem, or the driver of the Volvo. It’s really the cars around our cars and the environment around our cars. So the technology that we will implement in our cars in the future, and the future is just couple of months in front of us—that is where we’re going to get a new technology.
It’s Luminar that delivers the technology in a combination of our own development in safety where we are going to make sure that accidents are not going to happen. And with that extra, extra advanced technology—because it’s very, very advanced—we are going to get even closer to the zero tolerance of casualties and severe injuries in our cars.
MT: How big of an issue do you think stuff like cybersecurity will be and how is Volvo working on it?
Gustafsson: I would say cybersecurity is as important as overall safety in our cars because it’s really connected and how we invest in our technology, maybe we shouldn’t go into all the details, but we have decided to run our cars with one central computer because then it’s easier to control. It’s just in one interface and that is controlled by us and then of course we work with partners. That’s the same value that we have. And, as you know, we have Google Android in our cars so we are going for the best related to kind of our strength to handle the threats out there. So the short is that this is as important as safety in our cars.
MT: To your point about having that one central computer that would theoretically control infotainment or advanced driving systems, is that where you guys are going?
Gustafsson: Yes. And also that customers, they will like to get upgrades on their cars. They will like to have technology maybe over shorter period. They maybe will like to have, use the word horsepower is probably the wrong word in the future, but I think you know what I mean. And also other features that they need. Now base technology is very, very expensive in the beginning when you start to develop it and then you depreciate the investments so it has to have the capabilities of upgrading and updating cars is going to give our customer a benefit. They may be going to stay in the car for a longer period so they can look at ownership and the cost related to ownership with different eyes. And that goes in line with our sustainability approach. Even if we would like to sell more cars, we also would like to do our part of trying to make this world a little bit more healthier.
MT: You mentioned Google. How has that partnership gone so far?
Gustafsson: We were the first one that launched this solution in our cars and we have learned a lot. I think Google, they have learned, too. And it’s more benefits than I would say weaknesses to the system and it’s, I would say, easier to upgrade. I think the customer is going to put even higher demand on us in the future and especially in U.S. where we know Apple is extremely strong. You need to have a solution for both. And that is what we’re going to provide our customers with.
And I would say the overall experience when you use Google and/or cards, you can control the temperature, you can use your voice for so many things and that also goes in line with your question about safety and the DNA of Volvo cars. You should use your voice, even if I’m a Swede so I’m still practicing in English, and I’m from the southern part of Sweden so sometimes I need to practice a little bit for Google to understand me.
MT: How long do you think it’s going to take until we get to the point of the car taking control of driving or some sort of bridge technology?
Gustafsson: First of all, we will take this in steps. Our discussion here about safety and the reason why that is so important for us related to our vision and to achieve that vision, we need to have technology that support the weaknesses from our own customers and drivers, but also, of course, to make sure that we can block the cars around our cars in a good way. Block, I mean, see and learn from artificial intelligence that when a football is coming out from a house or a parking place then the system should remember that probably a kid will come straight after the football. And I think that’s what we are working with. And then your question. Of course, a lot of people ask that.
No, I don’t see in front of me right now that you’re going to be able to sleep or eat a burger. That is not what we aim for. We are aiming for making our cars safer and with that solution, customers can behave and relax based on that they know the car is safe and that the technology will work extremely good in some areas and when you behave and you treat the car and use the car in a specific way. And in some areas is absolutely not a good idea. So let’s take this in steps. That’s probably the thing that we spend a lot of time, a lot of money. We have a lot of engineers working with it. And I think we work with the most advanced suppliers and developers in the world, if we talk about Luminar. I’m very, very impressed with what they’re doing. And if you talk to them, you will get a totally different answer of the date and here we will find a good solution. We will work together and hopefully we can be faster than our competitors.
Gustafsson, at left, during the launch of the latest XC60 at Volvo’s U.S. plant in South Carolina.
But at the same time I would say technology goes so fast. It’s a lot of smart people working with this and for them, it’s kind of, of course we have a solution. So let’s see. It’s going to be very interesting. We are prepared for it. Our central computer system is well prepared for it when everything is in place.
MT: If you had one thing that you could shout to the world about what you guys are doing, what would it be?
Gustafsson: I’m extremely proud that we have decided the direction of the company and that is that we aim for full electric 2030 because if you are focused and you are dedicated, you’re going to attract the best people in this industry because if all of us are believers then it’s going to happen.
MT: How important do you think it’s going to be at some point for automakers to start to work together on some kind of standardization around various systems?
Gustafsson: I really like your question. When we developed and invented the safety belt and we gave it for free to our competitors and when we gave everyone that would like to get our knowledge about safety related to pregnant mothers and so on that we gave that for free to everyone to use. It’s a reason why we should work together. Of course we should have our unique strengths in our brand and design and so on but if we should be successful to deliver in line with every company’s sustainability targets, because everyone is talking about it. 20 percent in every annual report, you put a lot of focus on your sustainability efforts.
And I would say real sustainability and work with trying to produce things better, more efficient, and cheaper then of course we should share things and we should decide the structure of charging cables and of course other technologies, phones, and technology that will help customers to be able to drive safer then we can save lives. I think it’s a no-brainer to talk about it and share. And I would say those meetings exist but everyone is eager to be better than the other and there you also have that competition. It’s also bringing sometimes the worst, but very, very often the best out of companies and people.
That’s how I look at it. The day we don’t help each other, I think that’s not a good day. We should try to help each other.
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