Volvo’s electric shift gives Tesla a shock

Volvo’s electric shift gives Tesla a shock

 (Reuters Breakingviews) – Volvo has just taken a bump from Tesla. The Swedish automaker announced on Wednesday it would stop producing new gasoline engines only from 2019 and move on to a variety of hybrids and fully electric.

This may not seem too important at first – the company, after all, accounted for only 0.6% of worldwide vehicle sales last year. But his plan summarizes the challenges facing the company to Elon Musk.

Certainly, Volvo stands out its engine proclaiming that “all electric”. It has not yet been planned to eliminate existing gasoline vehicles.

And that will keep the combustion engine in two of the three options that will be presented from two years – a hybrid plug-in that can use gasoline or electric power, and what he calls the soft hybrid like Toyota Prius, which converts The braking energy in electricity.

The industry sells more cars with engines such as powerful electric motors. This is especially true in China’s growing market, where nearly half of the electric and hybrid cars in the world are sold and the owner of Volvo Geely is based.

Tesla accounts for only 3 percent of electric and hybrid vehicle sales there, Barclays says. Local players who sell cheaper cars dominate; Meanwhile, people like Daimler and General Motors increased.

It is likely that this will further reduce the cost of batteries, which runs the risk of losing Tesla one of its main advantages.

It is emblematic of the growing competition Tesla faces everywhere. Virtually all car manufacturers offer electric and hybrid offerings, which are smaller vehicles such as the Nissan Leaf or i3 and BMW i8 speakers.

This does not mean that the musk company took a dead end. But it once again calls into question its aggressive goal of selling 500,000 vehicles by the end of next year – five times this year’s execution rate and just below what Volvo currently offers – and 1 million by 2020.

In addition, Tesla continues to suffer from growing pains. The latest change was the lack of batteries, which have kept production 40 percent below demand for much of the second quarter, the company announced just before July 4 on vacation.

This new and Volvo took more than 7% on the Tesla Stock Exchange Wednesday. While musician automobile operations in 25 times estimated earnings for 2020, compared to Toyota’s multiple more than 10 times earnings in 2017. More problems are ahead.

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