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Volvo Goes All-Electrified

Tesla set to get more competition

The headline "Volvo Cars to go all electric" is a bit misleading. "Volvo Cars get electrified," though not nearly as elegant, might be a better way to put it. Between 2019 and 2021, Volvo will launch three standard battery-electric vehicles plus two high-performance Polestar models, which will "be supplemented by a range of petrol and diesel plug-in hybrid and mild hybrid 48-volt options on all models," CEO Hakan Samuelson said.

Over in Silicon Valley, Volvo's announcement has helped pull Tesla's stock down like Wile E. Coyote tied to an anvil, from a high less than two weeks ago of $386.99, to $312.60, as I write this. Tesla's market cap has once again slipped below General Motors', with a share value about 13 percent lower than that all-time high from last month. [In CEO Elon Musk's defense, he once said he didn't understand why Tesla's stock was so highly valued, either.]

Tesla's slide began before the July 4 weekend when a Goldman Sachs analyst slashed the stock's six-month price target to $180, according to CNBC. Six months from now, according to Musk, Tesla will be building at least 20,000 Model 3s per month on its way to an earlier promise of 500,000 units for calendar year 2018. Musk has yet to identify a second assembly plant to help meet these goals, though rumors of a Chinese production partner, if they come to fruition, could put the fledgling automaker in a similar position as Geely's Volvo.

Samuelsson's announcement comes as no surprise to those of us who have been following Volvo's post-Ford strategy closely. A few years ago, I wrote that Volvo would have to find a new marketing message beyond its decades-old safety image as part of its resurrection.

Pretty much the first thing Volvo did when Ford sold the Swedish company to Geely in 2010 was announce that no new engine would have more than four cylinders, even for its big SUVs and sedans. By now, Volvo has cycled out its V-6 engines, and some upcoming CMA-platform models will be powered by 1.5-liter three-cylinder engines based on its latest-generation 2.0-liter turbo and turbo/supercharged four gas engines, though it's unclear whether any three-banger Volvos will come to the U.S. market. Diesels, which Volvo continues to sell elsewhere, won't.

Volvo is sharing the CMA small-car platform with Geely's new brand, Lynk & Co, which could sell the three-bangers in the U.S. some time in the future.

All these new SPA-platform (S60 and larger) and CMA models have been designed from the get-go to accommodate optional hybrid and plug-in hybrid powertrains, and the longitudinal-engine-like dash-to-axle proportions of the Volvo XC90, S90, and V90 make room for hybrid-electric hardware to fit between their transverse-mounted engines and firewalls.

Now, Volvo can claim that electrification will be standard, not an option, beginning little more than one U.S. model year away. Electrification at Volvo also means 48-volt "mild hybrid" systems, which already have hit the French roads in the new Renault Scenic and Grand Scenic. Other automakers, mostly those with large luxury models, will be joining the switch to 48 volts about the same time as Volvo, but Samuelsson's company gets the glory for announcing it first, and thus by being first to claim (after Tesla, anyway) that everything soon will be electrified.

Major automakers will begin switching to 48 volts by the end of the decade because the systems can boost fuel efficiency by 20 percent. This would be a chief tool in helping automakers reach the 2025 Corporate Average Fuel Economy standards imposed by the Obama administration, and the Trump administration's more automotive-friendly position on the standards won't trigger retrenchment on this technology, though it could mean automakers take longer to add 48-volt systems to cheaper high-volume models. The investments already are there. Volvo's advantage is that its commitment to no- or low-emissions, and higher fuel-efficiency models begun after Geely's purchase now is paying off with a full slate of new models at precisely the right time. Who can blame them for making a big deal about it now?