CEO says current hybrid is ticket to full electrification

06/28/2022

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Anders Gustafsson — Foto: Silvia Zamboni/Valor

Volvo is the leader in the fully electric car segment in Brazil, with 39% of this market from January to May. About a year ago, the company decided to abandon the sale of combustion-powered cars in Brazil and to offer only hybrid and fully electric cars. And at the end of 2021, it announced an investment of R$10 million to expand the installation of public battery charging points, mainly on highways.

A few days ago, the CEO of Volvo Cars Americas, Anders Gustafsson, visited Brazil. Among the work commitments, in a meeting with dealers, the also executive in charge of the Americas operations since 2017 and still the CEO of Volvo Cars in the United States heard what he hears in every country he visits: there is a shortage of cars. It is a problem that frustrates him. But there is nothing to be done while the shortage of semiconductors persists. In his conversation with Valor, he takes the cap of a water bottle and compares: “Without this little piece, this bottle of water is useless.”

Read below the main excerpts of the interview:

Valor: Volvo decided to sell only electrified vehicles in Brazil. What has been the consumer’s reaction?

Anders Gustafsson: Many people told us that it would be too early to make this decision. There was a fear of lack of infrastructure. But we are seeing that consumers are adapting much faster than we could have imagined. Our customers are affluent and like what gets them into technology. Getting out ahead of the rest was a risk. But it is easier to win if you are the first.

Valor: In Brazil, there is a lot of talk about starting the electrification process with hybrids. What is your opinion?

Mr. Gustafsson: We see our hybrids as the ticket to the world of electrification, which gets you addicted. I remember how pleased my wife was when she started charging the car and later saw that she could monitor the charge level on her cell phone. I have three children. The youngest is extremely annoyed when she hears the noise of a combustion engine.

Valor: So, sustainability is already a sales appeal for electric cars?

Mr. Gustafsson: It is growing. And it happens the same way for all of us. We are all talking about it. I often say that when you get sick, nothing is more important than getting healthy. And I think the same is true for sustainability. We see what is happening in the world. We see diseases that we have never experienced before, and the power of nature is quite unique.

Valor: You are the CEO of Volvo in the USA, where the government has bold plans for electrification. How has this process been?

Mr. Gustafsson: In the end, it is always the consumer who decides. But incentives can lead customers to a faster transformation. Today we have electrification with financial support for the consumer in the U.S., and the government will provide additional financial stimulus to accelerate the process. There will also be lots and lots of money for infrastructure; and not just in California. The combination of the financial support and the existence of infrastructure will certainly increase interest in electrification in the United States.

Valor: And how are the tests with autonomous cars going over there?

Mr. Gustafsson: All brands are testing autonomous cars and we have advanced in the development with our partners. Probably in two months we will talk more about it.

Valor: Brazil is a country with an unstable economy. Do factors such as inflation and high interest rates worry a luxury brand like Volvo?

Mr. Gustafsson: I am not happy about it. But we are a strong brand, with a strong product portfolio. We only absorb one part of the industry, which is the premium segment. We don’t compete with conventional brands. We run a business that is healthy. When the market falls, we normally gain market share. And if the market grows, we have our cycle of new products.

Valor: Do you plan to increase the offer of products in Brazil?

Mr. Gustafsson: In the next two years, we will launch two new models in segments where we are not today. We will have a new fully electric SUV. We are moving forward with cars in new segments. This is how we grow profitably.

Valor: Volvo chose not to have a plant in Brazil. Could this change someday?

Mr. Gustafsson: We are a listed company and, therefore, we need to ensure return to shareholders. We make decisions based on what we need. We are growing and the structure will change if necessary. But first of all, we need to achieve volumes.

Valor: And how does Volvo face the shortage of semiconductors?

Mr. Gustafsson: It is frustrating because we could sell 100% more. But we don’t have cars. Our suppliers are trying to do their best. A lot of them happen to be in Asia. And they were under tremendous pressure last month. But now the factories are opening again and production is back to levels to meet our expectations.

Valor: Has the issue of chip shortage taught any lessons?

Mr. Gustafsson: We have the metal, we have the batteries, we have the technology, but without this little piece we cannot make the cars. It is amazing. My wife and I often buy things at IKEA [Swedish brand that designs and sells ready-to-assemble home accessories]. She always asks me to assemble them, but I end up asking her for help because, based on my gender, I never read the instructions. I always try without reading instructions. Then I end up leaving some piece out. This ruins my day. That is how I feel now at work about the lack of semiconductors.

Valor: There has always been an over-dependence on supply from Asia…

Mr. Gustafsson: Yes, and it was painful. But now the US government and several other countries are working with incentives to attract the semiconductor industry so that this does not happen anymore. The semiconductor needs to be made in a very strict environment, with a lot of investment.

Valor: Going back to electrification, although brands like Volvo are investing in public charging points, Brazil still lacks infrastructure. Doesn’t that affect your plans?

Mr. Gustafsson: I am happy when I see our charging stations and when I see that our competitors use them. Why do we have to wait for the government to fix everything? If we all invest in infrastructure it will be much easier to sell more electric vehicles.

Valor: But the lack of infrastructure still makes the consumer afraid of buying a 100% electric car…

Mr. Gustafsson: It is all a matter of changing habits. When I had to go on a strict diet, the first month was difficult, the second month was too. Today, it’s not anymore. I hate going to the gym. But I started going 30 minutes a day. And now I feel bad when I don’t go. With electrification, it is the same thing. The consumer will learn to change habits. Let’s be honest: how often do we drive the car until we get the full range of the fuel we have? Or: how much percent of the cell phone memory do we use? I really hope that the consumer will start to think differently about electric cars.

*By Marli Olmos — São Paulo

Source: Valor International

https://valorinternational.globo.com/