Volvo CEO predicts EVs will cost less than petrol cars

Volvo chief executive Håkan Samuelsson says electric vehicles will “most probably” cost less than petrol cars within five years, as the Swedish automaker claims its EVs are already turning a profit.

Speaking to reporters during a briefing in Stockholm, Samuelsson said the company’s current electric vehicle lineup is profitable and contributing to overall business success.

“Our company’s more profitable now as we have EVs,” Samuelsson said. “If we did not have EVs we would be less profitable.”

The comments contrast sharply with struggles elsewhere in the industry, including Ford’s reported $19.5 billion loss on its electric vehicle push.

Samuelsson acknowledged that Volvo’s EVs currently operate on slimmer margins than petrol vehicles, but emphasised they remain profitable rather than loss-making ventures.

“So far, our present electric cars have a lower margin, I think, that’s no secret, but they are profitable,” he said. “We are not paying to get them,” referring to building and selling electric cars at a loss like some competitors.

Manufacturing innovations driving cost reductions

The CEO pointed to manufacturing advances in Volvo’s latest electric model, the 2027 EX60, as key to improving profitability. The vehicle introduces cell-to-body integration, mega castings, and in-house developed motors.

Samuelsson said these changes are bringing cost parity between electric models like the EX60 and their petrol equivalents.

“If you have compromises and, I mean, battery, for example, if you put in the battery in an extra aluminium box and the battery modules are is also in a battery box, so you have, like, a Russian doll… you hear it doesn’t sound very cost efficient,” he said.

“So now we put the cells directly into the body of the vehicle, that is going to bring down the cost.”

The larger EX90 model does not yet match the profit margins of the petrol-powered XC90, Samuelsson noted, but it remains profitable.

Battery technology developments key to future costs

Samuelsson identified falling battery costs and improved vehicle architecture as the primary drivers for making EVs more cost-competitive.

While acknowledging that solid-state batteries are often seen as the “holy grail” of battery technology, he cautioned against waiting for future developments.

“There is always a grass greener on the other side, but I think if you wait for that you probably will not be in the market anymore,” he said. “Right now I think it’s a long, long wait for solid-state batteries to come.”

Instead, Samuelsson pointed to developments in current battery chemistry, including greater use of lithium iron phosphate (LFP) batteries with lower raw material costs, even if they sacrifice some range.

“On the range, you will reach a level where you stop talking about it, and then you could instead lower the cost,” he said.

The predictions could have significant implications for New Zealand’s EV market, where cost remains a key barrier to adoption despite government incentives and a growing charging network.