CEO of Volvo says that US climate law will lead to an increase in EV technology in North America

Volvo Automobile AB's chief executive officer, Jim Rowan, stated in an interview this week that the Inflation Reduction Act is altering the company's plans to produce electric vehicles. “Our supply base, particularly for batteries and likely for minerals as well, is changing,” according to Rowan. “The amount of that technology entering North America is increasing.”

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That is not a bug in the IRA; it is a feature. Senator Joe Manchin, a Democrat from West Virginia, insisted on domestic assembly and sourcing standards for electric vehicle incentives, as well as price caps for qualified cars and income limits for eligible buyers, in order to secure passage of the historic climate legislation. For the purchase of a brand-new electric or plug-in hybrid car, the law includes a federal tax credit of up to $7,500. For a vehicle to be eligible for the entire amount, it must be built in North America and adhere to rules that will gradually be implemented between now and 2029 for procuring minerals and battery components from the US or its trading partners.

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The Treasury Department has set a deadline for this week's end to provide clarification on how it will interpret and apply these tax code obligations. Volvo's entirely electric cars are produced outside of the US, and even the plug-in hybrids produced in its South Carolina facility may not be eligible at first due to anticipated regulations regarding the origin of minerals and component parts.

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Nonetheless, Rowan anticipates that eventually, the tax credits will be fully accessible to the company's American clients. He added, "That timing is quite aggressive. How we can access will be implemented gradually to ensure that we hit all of those aims."

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Volvo committed to offering entirely completely electric vehicles by 2030 in 2021. The company is on course to fulfill the lofty goal set by Hakan Samuelsson, according to Rowan, who took over as CEO in March of last year following stints at heated-mug manufacturer Ember Technologies Inc., vacuum cleaner manufacturer Dyson Ltd., and mobile phone giant BlackBerry. Volvo presently produces a number of plug-in hybrid vehicles in addition to two crossover SUVs that are all electric. (Zhejiang Geely Holding Group Co. of China owns a majority stake in Volvo, which also owns nearly half of EV startup Polestar, which produces its vehicles at a plant that belongs to both Volvo and Geely.)

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The EX90, a three-row electric SUV, will go on sale later this year, Rowan revealed in November. The car will be constructed at a Volvo facility close to Charleston, South Carolina, marking the first time the business has begun manufacturing a new SUV outside of Europe. Belgian, Swedish, and Chinese factories are all home to Volvo.

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Later this year, the company will introduce "the tiniest SUV that we have ever done," according to Rowan, and then new EV vehicles will be released annually for the following four to five years. Plug-in hybrids and completely electric cars made up 23% and 20%, respectively, of global sales in December of last year.

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According to Rowan, while the company deals with the aftereffects of disruptions and chip shortages brought on by the pandemic and the crisis in Ukraine, demand for EVs is still outpacing supply. After Tesla Inc. and Ford Motor Co. slashed pricing on electric cars last month, Volvo Chief Financial Officer Johan Ekdahl stated that the business would not be drawn into a price war; Rowan reaffirmed that position."

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“Our order book is in the best shape it's ever been", said Rowan. "That might be because we're in the premium end of the market and individuals in that sector might have a little bit thicker wallets...But let's be honest, we're keeping a pretty beady eye on what's going on because there's so much turbulence."