Volvo plans to build only electric and hybrid vehicles, starting in 2019, making it the first major automaker to abandon cars and SUVs powered solely by the internal combustion engine.

Chief Executive, Hakan Samuelsson, said the move was dictated by customer demand. It means that in two years all new Volvo vehicles will have some form of electric propulsion. The announcement comes as the global auto industry slowly moves towards electric-powered vehicles after more than a century of using engines that burn only fossil fuels.

Even though sales are a fraction of conventional autos, companies must sell them to meet fuel economy and emissions regulations. In some markets, electric vehicles are seeing increased demand.
Yet the transition to fully electric vehicles will take years. Although Tesla Inc announced a $46,000 electric car for the masses and General Motors Co is selling the all-electric Chevy Bolt for a similar price, less-expensive hybrids are likely to sell more, at least in the short run.

Other automakers are likely to follow Volvo’s announcement in a few years, with luxury automakers leading the way, said Senior Analyst for Navigant Research, Sam Abuelsamid.

“I think we’ll probably see most of the premium brands do the same thing in roughly the same timeframe,” he said. “More high-volume mainstream brands will be a little slower.”
Manufacturers moving toward hybrids

In order to meet government fuel economy requirements worldwide, automakers are developing more hybrid systems. Many are 48-volt ‘mild hybrids’ that assist a gas engine move a car to make it more efficient, improving gas mileage by 10 or 15 percent, Mr Abuelsamid said.

Such systems generate enough electricity to allow automakers to move to electric power functions such as air conditioners and water and oil pumps, getting rid of mechanical belts that are a drag on the engine. Those systems can run only when needed and that can save another 2 or 3 percent on fuel consumption.

European luxury brands, such as Audi and Mercedes-Benz, are already rolling out mild hybrid cars in Europe. All manufacturers are moving towards more hybrids, but the transition to 100 percent electric vehicles is still years away, said Darren Jukes, Head of Industrial Products for accounting firm PricewaterhouseCoopers.

“I don’t think we’re seeing the end of combustion engines just yet,” he said.

Volvo, which is based in Sweden but owned by Chinese firm Geely, will launch five fully electric cars between 2019 and 2021.