In 2020, Volvo made a bold announcement: by 2030, all its vehicles would be fully electric (BEVs). However, at the global reveal of the 2025.5 XC90—a model available in mild hybrid (MHEV) and plug-in hybrid (PHEV) versions—the automaker has adjusted its course. Volvo now states that internal combustion engines will continue to be a part of its lineup through 2030 and beyond.
Volvo CEO Jim Rowan explained the reasons for this pivot: “The market has changed. EV subsidies have been removed, trade tariffs have skyrocketed, and demand for electric vehicles has slowed.” He noted that the current landscape—where tariffs on Chinese imports to the U.S. have climbed from 2.5% to 102.5%—has forced Volvo to rethink its approach. Rather than sticking rigidly to the all-EV strategy, the company is adapting to new market realities.
That being said, Volvo remains committed to electrification. In fact, by 2030, 90-100% of its sales are expected to be vehicles with a plug, including both BEVs and PHEVs. PHEVs, while still equipped with internal combustion engines, benefit from improved battery technology, extending their electric range. Interestingly, more than half of the miles driven by Volvo PHEV owners are already powered by electricity.
Volvo’s continued investment in hybrid technology reflects a more flexible approach to sustainability, one that acknowledges the challenges of the current market while still pushing towards a greener future. The internal combustion engine is not making a comeback, but it’s clear it won’t be disappearing anytime soon either.
How many more manufacturers will also “adjust their strategy”…. i.e. go back on their words now that they realized that the demand, infrastructure and technology just isn’t there yet?