Why the Electric Car Revolution Won't Change Everything

The tipping point is here. By 2030 you won't be able to buy a new Bentley with an internal combustion engine. You won't be able to buy a Volvo with one, either. Nor, in Europe, a Ford. By 2030 Jaguar will have been an all-electric marque for five years, and Land Rover will be just six years away from its entire lineup being powered by either batteries or hydrogen fuel cells.

The end of the decade sounds a long way off. No more Rolling Stones gigs. The Cubs could win another World Series. The Tesla Model S will almost officially be a classic car. But in terms of designing, engineering, and building new electric cars, trucks, and SUVs, it'll be here tomorrow. We're no longer at the dawn of the electric automotive age. The sun's up, and people are hard at work on the most profound change to the automobile since Henry Ford put the world on wheels.

And it is profound. Volvo, for example, has just put all its internal combustion engine engineers into a separate business unit intended to provide parent company Geely with expertise in traditional powertrain technologies. That's right. A company whose engineers have been designing and building internal combustion engines in-house since 1927 no longer has anyone on the payroll with that skill set.

With huge capital demands and wafer-thin margins, the auto industry is not for the faint-hearted. Never mind the cost of entry; the cost of survival has kept out new players for decades now. But the hysteria around Tesla—which finished 2020 valued at more than VW, Toyota, Mercedes-Benz, and GM combined—suggests the automobile's electrification throws that old calculation under the bus. And a bunch of Tesla wannabes—Lucid and Rivian, to name but a few—are swarming to further disrupt the industry.

Volvo chief technology officer Henrik Green agrees the technology arms race unleashed by the new electric vehicle manufacturers and the emergence of tech companies into the sector challenges the auto industry's traditional ways of working. "We see speed in development has taken over as the key differentiator," he says. But that doesn't mean the EV newcomers, unburdened by the legacy costs associated with building internal combustion engine vehicles, have an inherent advantage, Green insists.

The popular notion that electric vehicle powertrains mean simpler vehicle architectures that can underpin more types of vehicles and can be kept in production for longer is wrong, Green says. "It's easy to fall into the trap that BEV platforms will be simpler and have longer model cycles," he says. "Traditionally, whomever could do the most vehicles on the same platform would win. But in this new world, if you make a platform and believe you can keep it the same for 10 years, you'll probably be dead in 10 years."

Although relatively straightforward to engineer, with much of its hardware—the central underfloor battery pack, the inverter, the motors—readily sourced from suppliers, the skateboard platform favored by many EV startups is an inefficient solution in terms of both weight and packaging, Green says. Far better, he argues, to integrate battery cells directly into the vehicle's body structure and use motors and inverters that are tailored to a vehicle's performance and packaging parameters.

Volvo's transformation to a pure EV maker (so far it has released the XC40 Recharge and C40 Recharge, pictured being built on production line, for the U.S. market) will therefore rely on in-house expertise. The company already has its own battery lab, and it's about to start designing its own motors with integrated inverters. "We gain electrical efficiency," Green says. "We gain in space efficiency. We gain in weight efficiency. There are so many areas where we can still optimize what from the beginning looks like a fairly simple solution."

The bottom line, according to Green, is now that traditional automakers like Volvo and Porsche and Mercedes-Benz and GM are focusing on EVs, the startups are going to need very deep pockets to stay in the game. "Our conclusion is that doing a brand-new EV is not going to be cheaper than doing a brand-new internal combustion engine vehicle."