Volvo Car India expects 33% of its sales to be EVs in 2024

Having been on fringes in the mainstream luxury car space, Swedish carmaker Volvo Cars India is looking to capitalise on the strong acceptance for electric vehicles at the top end of the market.

In a nascent yet fast growing EV market, with just two electric vehicles – XC40 and C40, Volvo Car India was the second largest EV brand in 2023, behind BMW Group India and just a shade ahead of Mercedes Benz India.

About 28% of its total sales for Volvo Cars in 2023 came from electric vehicles, according to Jyoti Malhotra, Managing Director of Volvo Car India. The same is set to grow to 33% of total sales in 2024.

“Our ambition is to be amongst the leaders in the EV space, we believe that the luxury car segment is going to grow much stronger,” he told Autocar Professional.

While Volvo’s market share in the traditional luxury car segment powered by internal combustion engine was less than 5% in 2023 with its modest product portfolio, the Swedish brand managed to grab a share of over 24% in the segment’s electric vehicle space. The company sold 690 electric vehicles in 2023 – from its total sales of 2423 cars, which grew by 31%.

Unlike the mass car market, electric vehicle adoption in the luxury car space is growing at a better rate. Factors such as a higher number of models, affluent consumers and better access to charging infrastructure are driving the adoption.

“The penetration of electric vehicles in luxury car space has hit 7%, much higher than the mainstream market. My hunch is that by the end of the decade, about 50% of luxury car sales will be EVs,” Malhotra said. He noted the penetration is likely to improve to 10% within the next 2 years.

The company may introduce new variants of the existing EV models with smaller battery packs at an attractive price to sustain the excitement in the market, plus the first full year sales of C40 EV will help bring incremental sales.

The adoption curve is expected to accelerate further, with two new models in 2025 - one at the entry with the EX30 and the top-of-the-line EX90, which will help the brand breach 50% EV contribution in the coming two years.

“This year it should be one-third penetration, with more car lines coming in 2025, the penetration will further increase,” Malhotra said.

He is of the opinion that much like the mainstream market, the growth rate for luxury car market is likely to correct to 8-10% in 2024, after three consecutive years of a strong double-digit growth.

Given the nascency of electric vehicle segment, Volvo Cars decided to sell directly to consumers, with the dealership playing an important role of delivering a superior ownership experience to the prospective EV buyers, whose anxieties and questions are being answered at dealership. 

With strong acceptance of direct EV selling to consumers, the company might look at a direct sales model for traditional internal combustion engine vehicles as well in the coming few years.

Going forward, Malhotra anticipates the growth momentum of electric vehicle contribution to continue with 100% sales coming from electric vehicles by the end of the decade, in line with the brand’s global commitment.

India was the fastest growing market for the Swedish car maker in the Asia Pacific region and as the automaker explores newer manufacturing bases beyond China, US and Sweden, India is part of a future manufacturing and exports base for the company.

Malhotra clarifies that volumes are still very low, however, “India is seen as a potential production base of the future, which could be used for exports. It is just a thought right now, no decision has been taken,” he noted.