Volvo backs company culture to overcome transition and geographical challenges

A company that has been making ICE vehicles for almost a century is going to face different cultural challenges — as well as undoubtedly having certain advantages in brand and distribution — compared to an EV pure play start-up.

Large swathes of the workforce are gong to be justifiably proud of work they have done and the legacy they have built on cars that burn gasoline or diesel.

And that will mean a pivot towards full electrification — in the process of which Gothenburg-headquartered Volvo Cars is undergoing ahead of an end-of-decade all-electric goal — will be sensitive.

And Volvo has another cultural challenge. While still very much a Swedish company, the firm has both a large Volvo team in China and, since 2010, a majority Chinese owner in Geely. So it is navigating the efficient integration of eastern and western outlooks, as well as grappling with any roadblocks that increasing Sino-scepticism in Europe and the US might threaten to throw up.

How is Volvo meeting these challenges? EV inFocus sat down with Erik Severinson, head of strategy and programme management at the firm, to find out more.

Has there been internal resistance from those who have spent careers at Volvo working on ICE to your enthusiastic embrace of the e-mobility revolution?

Severinson: I think what is a little bit unique with Volvo is that almost all Volvo employees have an extremely strong attachment to the brand. You start working at Volvo because you feel for the brand.

And that brand stands for so much more than what propulsion you have in it. It stands for safety, for people, for sustainability.

The electric motor will be the motor that propels the automotive industry in the next century. If we care about our brand and our company, we need to make sure that we tap into growing segments. That is a quite easy way of explaining why we should focus on electrification.

And we have done one thing — which is a little bit unique — in that we divested our combustion engine business. We did that not only because it was a good idea for the combustion engine department, but also because it helps the rest of the company to focus on electrification.

All our future tech platforms are fully electric — there is no other way to go. And I think that creates a lot of focus in the organisation on where we are heading.

We have had diesel engineers with 25 years of experience retraining themselves and becoming stunning e-machine engineers. It is not combustion versus electrification, it is engineering. That has been quite an amazing journey.

Sticking with culture, how does Volvo find interaction with Geely, its Chinese owner? Any challenges comminating between Sweden and China?

Severinson: Primarily, how we collaborate between Europe and China is through our own organisation. We have a thousand engineers in Shanghai, and it is amazing when you go to that office and really feel that it is like coming to Volvo. Whether you are in Shanghai or in Gothenburg, it is the same spirit in the office.

I think we have a very strong cultural fit in general between Europe and China. And in the collaboration programs we have with our Geely colleagues, a lot of that goes through our Chinese organisation in Shanghai. We do not see any issues from a cultural perspective.

What advantages to you get from a strong Chinese footprint, both Volvo’s own and Geely’s?

Severinson: When you look at the world right now from an automotive perspective and in the transition to electrification, China is moving at an extremely rapid speed. And it is not only electrification, it is also smartification and the tech trend, which is very evident in China.

Of course, that means great benefit for us having a strong partner locally in China, and having been able to build our own operation in China.

We have a very strong R&D centre in China, we have three plants producing cars. So we have a very strong local presence and that actually enables us to tap into this swift transformation.

Do you see any risks geopolitically in having a substantial ownership stake held by a Chinese company?

Severinson: Of course, we have a strong Chinese owner and that gives us opportunities in China, but we are a Swedish-listed, standalone company. I think the whole geopolitical discussion and risk is a little bit more around footprint and supply chain. Where do you produce stuff? Where do you create jobs?

Our strategy when it comes to footprint is quite easy and simple — we are ‘build where you sell and source where you build’. With a local footprint, I think you can mitigate a lot of the tensions that we see in the world right now.

Has that influenced your plans to bring the China-produced EX30 to the plant in Ghent in Belgium?

Severinson: First of all, we have seen very strong demand; I think we were almost surprised about the fantastic reception of the EX30, in Europe particularly. And thus we now have an opportunity to produce it in Ghent, which makes a lot of sense because that is where our customer base is.

It is more driven by that, quite frankly. It is not always good to ship cars across the globe; it is better to produce them where the customers are and buy inputs where the plant is. It makes industrial sense, and it also makes geopolitical sense.

How does Geely’s SEA platform for BEVs give you opportunities?

I think the EX30 product is an example of a very good collaboration. It was developed together with Geely, but with Volvo engineers making sure it is a true Volvo, designed by Volvo — and allowed us to tap into a whole new segment.

There have always been, in the history of the automotive industry, opportunities to collaborate on platforms and technology. And if you do it right and protect your brand identity — creating a product true to you on that technology base — that is a great opportunity.