Volvo is aiming for price parity between electric and petrol cars by 2025

Volvo is aiming for price parity between electric and petrol cars by 2025

Volvo’s global boss claims petrol and electric cars could reach “price parity” in 2025 or 2026 – well ahead of other industry forecasts.


Chinese-owned Swedish automaker Volvo says it is aiming for “price parity” – equal prices – between petrol and electric cars by the middle of this decade due to falling battery costs and cheaper alternative battery chemistries.

Volvo Cars CEO Jim Rowan told investors last week the company “aims” to bring the price of its battery packs below US$100 (AU$155) per kilowatt-hour by 2025 or 2026, in order to achieve price parity with petrol cars to reach.

“We need to achieve price parity between BEV (Battery Electric Vehicle) and ICE (Combustion Engine) as soon as possible. We think we’ll get there by the middle of the decade, around 2025,” Rowan told investors in a report by Automotive News Europe.



If the timeline claimed by Mr Rowan is correct, it would coincide with Volvo Australia’s planned switch to an all-electric model range from 2026 – four years before Volvo plans to phase out petrol cars worldwide.

The only Volvo currently available with petrol and electric powertrains is the small XC40 SUV – and there’s a price difference of $9,000 between the most expensive petrol and the cheapest electric models, or $20,000 between the cheapest versions.

The price of the just-launched seven-seat Volvo EX90 is £96,200 (AU$174,000) in the UK – about 50 per cent more than the cheapest seven-seat XC90 and 15 per cent more than a top-of-the-range XC90 plug-in hybrid .



The Volvo Cars CEO’s comments contrast with those of Renault boss Luca de Meo, who said so Automotive News Europe Price parity between petrol and electric cars over the last month is “not…near”, due in part to rising material costs.

“I can come up with better battery chemistries and better power electronics, but those gains would be wiped out if the price of cobalt doubled in just six months,” Mr de Meo told the publication.

Experts quoted by Automotive News said higher profit margins by luxury car brands allow them to reach price parity more quickly by cutting the profit they make on electric vehicles to lower their showroom prices.



Speak with Automotive News Europe Separately, Mr Rowan said last week: “We think we’re getting [to price parity] … around 2025, where there is enough technology to reduce battery costs.

“Technology will increase reach. Fewer batteries, but more range, at a lower cost – we will do it.”

According to Mr. Rowan, these technologies “may include the addition of LFP [lithium iron phosphate batteries] on certain cars” – as used by the Chinese-built entry-level Tesla Model 3 and Model Y, and China’s BYD Atto 3 and MG ZS EV.



Volvo batteries for electric cars are currently made by China’s CATL — which also makes the LFP packs for the China-made Tesla Model 3, which analysts at UBS Bank (via Automotive News) is the cheapest of all electric cars at US$131 (AU$204) per kilowatt hour.

The Chinese-owned Swedish automaker will also lower the entry price of its electric vehicle (EV) lineup with a smaller SUV under the XC40, which is expected to be dubbed the EX30.

The EX30, due for release in Australia and Europe next year (and teased last week), is expected to use an electric car architecture developed by parent company Geely and have a smaller footprint than the 4.4m XC40.



Alex Misoyannis

Alex Misoyannis has been writing about cars since 2017 when he launched his own website Redline. He worked for Drive in 2018 before joining CarAdvice in 2019 and becoming a regular journalist on the news team in 2020. Cars have played a central role in Alex’s life, from leafing through car magazines at a young age to growing up surrounded by performance vehicles in a car-loving family.

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