Volvo Australia pulls back on plans to go electric-only from 2026

03/20/2025 04:00 PM

Volvo Australia has walked back an aggressive target to only sell electric cars from 2026, and says it will not turn off the taps on sales of new petrol and hybrid cars until its customers are ready.

The boss of Volvo Australia, Stephen Connor, told Drive the Swedish brand still plans to go fully electric, and but that “consumer sentiment and demand” towards electric cars has changed since the target was announced in 2022.

The original plans were set to see Volvo go electric-only in Australia four years before the rest of the world, and before any stated local plans from its luxury rivals – bar electric-only sibling Polestar.

But Volvo head office has since pulled back on its own 2030 target, now aiming for plug-in hybrid and fully-electric cars to account for “90 to 100 per cent” of its global sales come the end of the decade, with the remainder mild-hybrids.

MORE: Volvo Australia to go electric-only from 2026 (published November 2022)

Sales of electric vehicles have eased – or declined in some sectors of the market – as car brands move from selling to early-adopters, to mainstream consumers who are more concerned with price, driving range and charging infrastructure.

Just under half of Volvos sold locally last year were electric – up from 12 per cent a year earlier, but the brand’s overall sales slid 20 per cent last year, from 11,128 to 8898 vehicles.

“Our overarching strategy still remains true to the core, we are looking to be a fully-electric car company,” Connor told Drive.

“What’s happened since announcing that we’ll be fully electric in 2026 … the world has moved on even in two years. I’m amazed at how quickly the automotive industry is moving at the moment – and it’s moving at such a pace.”

MORE: Volvo drops global plan to only sell electric cars from 2030, amid EV slowdown

He said “when we announced the strategy, it was always subject to consumer demand. It was always subject to product availability.”

“And what’s actually happened in the last couple of years is I think consumer sentiment and demand has changed a little bit … PHEV is the fastest growing segment within all of the different variants at the moment, from petrol mild-hybrid through to battery electric,” Connor told Drive.

“One thing we are very fortunate to be able to do in Australia is that … at Volvo we’re agile enough to change the operational stance to meet the long-term objective.

“I think the other thing as well is that we’ve learned in a couple of years … is there’s no point pushing forward with a strategy if our consumers aren’t ready for it. They are getting there [on EVs] like most consumers at the moment.

MORE: Electric car sales growth in Australia hits the brakes amid Tesla slump in 2024

“And I think what we are seeing is that anybody who buys a brand new electric vehicle for the first time is very unlikely to migrate backwards to a petrol or diesel. However, there is still a bit of nervousness in the marketplace with consumers who people aren’t quite ready for that transition.”

Among the most important new cars needed to complete Volvo’s electric range is an XC60-sized SUV, the EX60, to indirectly take on the Tesla Model Y.

However, it will not be ready until 2026 overseas – and could take longer to reach Australia – while even the larger EX90 seven-seat electric SUV is only just arriving in the country, after being unveiled overseas two and a half years ago.

It will be followed later this year by a Cross Country version of last year’s EX30 city SUV (below), as well as the new ES90 sedan.

MORE: 2026 Volvo ES90 electric car revealed with 700km range, coming to Australia

Connor said his “aspiration” is for Volvo Australia to go electric “quicker than nearly all of our competitors”, but would not name a date.

“Will it be 2026? We don’t think so, but we are not ruling out when it will be at the moment because obviously the world is changing.

“But I can assure you, it will be driven off the back of consumer sentiment. It will be driven off the back of demand from the customers, and also more importantly doing the right thing for both our consumers and our [dealer] partners.

“… I’d like to believe that, aspirationally, we will get there before 2030. I’m pretty confident we will. We have to though take a step back and be agile enough to go, is it 2027, is it 2028? We don’t know as we sit today.”

MORE: 2025 Volvo EX90 price and specs – premium seven-seat electric SUV undercuts rivals

He acknowledged the “trend on Day One for battery-electric [vehicle sales] went through the roof” amid a rush of early adopters, but “all we’ve seen now actually is it’s settled down to a nice level.”

“It’s still growing, but it’s not growing at the rate that we expected for the first couple of years,” the executive said.

Connor said the move away from the 2026 target “wasn’t forced on us” by Volvo head office, and was influenced by changes in “some of our [new] product [launch] timings”.

“When we sit down with global, they talk to us about our cycle plan, we talk to them about our aspirations, we talk about volume and we take all of that imbalance and take a considered approach.

“… But we looked at the market forces, we looked at the consumers, we looked at our competitors and we looked at the fact that one thing we need to make sure is that we have an offering in the [popular] segments for the next couple of years while we’re waiting for product to come through and we’ve got some exciting product coming through.

“So it was a considered approach given all the facts that we know, but really the decision was [made] on a local level and supported by global.”

Since rolling back the 2026 target, Volvo has confirmed plans to introduce a second facelift for the XC90 – something Australia was previously set to miss out on.

MORE: 2025 Volvo XC90 update revealed – decade-old SUV scores new looks and tech

About 43 per cent of Volvo sales in 2024 were electric, Connor said, up from 12 per cent in 2023 – but the original 2026 plan would have required about 70 per cent of sales to be electric in 2025, a feat given EV sales have cooled.

“These [electric] cars that come through, we’re only going to tip the balance closer to battery electric and further away from mild-hybrid.

“The only question obviously is plug-in hybrid, and we at the moment aren’t looking to delve too deeply into that segment as we speak to that,” Connor said, acknowledging the recent surge in PHEV sales has been among “volume” brands such as BYD, not luxury marques.

Volvo has also stepped back from its previous target of 20,000 annual sales – last year it reported 8898 deliveries – as demand for new cars has cooled.

The post Volvo Australia pulls back on plans to go electric-only from 2026 appeared first on Drive.