√Volvo targets price parity between electric and petrol cars in 2025

The global boss of Volvo claims petrol and electric cars could reach ‘price parity’ in 2025 or 2026 – well ahead of other industry forecasts.

Chinese-owned Swedish car maker Volvo says it is aiming to achieve ‘price parity’ – equal pricing – between petrol and electric cars by the middle of this decade due to declining battery costs and cheaper alternative battery chemistries.

Volvo Cars CEO Jim Rowan told investors last week the company “aims” to lower the price of its battery packs below $US100 ($AU155) per kilowatt-hour by 2025 or 2026, to achieve price parity with petrol cars.

“We need to get price parity between BEV (battery-electric vehicle) and ICE (internal combustion engines) as quickly as possible. We think we’ll get there by mid-decade, around 2025,” Mr Rowan told investors, according to a report by Automotive News Europe.

If Mr Rowan’s claimed timeline holds true, it would align with Volvo Australia’s planned shift to an electric-only model range from 2026 – four years before Volvo plans to axe petrol cars globally.

The only Volvo currently available with petrol and electric power is the XC40 small SUV – and there’s a price difference of $9000 between the most expensive petrol and cheapest electric models, or $20,000 between the cheapest versions of each.

The just-revealed Volvo EX90 seven-seat SUV is priced from £96,200 ($AU174,000) in the UK – about 50 per cent more than the cheapest seven-seat petrol XC90, or 15 per cent more than a top-of-the-range XC90 plug-in hybrid.

The Volvo Cars CEO’s comments are in contrast to those of Renault boss Luca de Meo, who told Automotive News Europe last month price parity between petrol and electric cars is “not … getting close”, due in part to rising material costs.

“I can come up with better battery chemistry and better power electronics, but these gains would be erased when the price of cobalt doubles in just six months,” Mr de Meo told the publication.

Experts quoted by Automotive News said higher profit margins of luxury car brands allow them to reach price parity faster, by reducing the profit they make on electric vehicles to lower their showroom prices.

Speaking to Automotive News Europe separately last week, Mr Rowan said: “We think we get [to price parity] … around 2025, where there’ll be enough technology that’s driving down cost on the battery.

“Technology will drive range up. Less batteries, but more range, at less cost — we’ll get there.”

These technologies may include, according to Mr Rowan, “the addition of LFP [lithium iron phosphate batteries] on certain cars” – as used by the entry-level Chinese-built Tesla Model 3 and Model Y, plus China’s BYD Atto 3 and MG ZS EV.

Volvo electric-car batteries are currently produced by China’s CATL – which also builds the LFP packs for the base Chinese-made Tesla Model 3, which research by UBS bank analysts (via Automotive News) found to be the cheapest of any electric car, at $US131 ($AU204) per kilowatt-hour.

The Chinese-owned, Swedish car maker will also lower the price of entry into its electric-vehicle (EV) range with a smaller SUV beneath the XC40, expected to wear the EX30 name.

Due in Australia and Europe next year (and teased last week), the EX30 is expected to use an electric-car architecture developed by parent company Geely, and have a smaller footprint than the 4.4m-long XC40.

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