Geely's Volvo Cars will not develop any new diesel engines as the cost of reducing emissions of nitrogen oxide is becoming too expensive, according to chief executive Hakan Samuelsson.
"From today's point of view, we will not develop any new generation diesel engines," Samuelsson said in an interview with German newspaper Frankfurter Allgemeine Zeitung.
Volvo has been gradually weaning itself off engines and platforms shared with former owner Ford and, under current Chinese owner Geely, is developing its own Drive-E engine range, first rolled out in 2013. The engines, which are all built with a maximum capacity of two litres and four cylinders, offer lower weight, size and complexity, all resulting in lower emissions, lower fuel consumption and greater driveability.
Frankfurter Allgemeine Zeitung said Volvo wanted to further develop its current diesel, only a few years old, and adapt it to the future Euro 6c exhaust emission standards, but the cost would be too high. Samuelsson would not say exactly how long the existing engine generation could remain in use but indicated this could be expected until about 2023.
Automakers have until 2021 to achieve the EU fleet CO2 emissions average target of 95g/km (from 130g now) which cannot be reached without including diesels in the range. Samuel said with ever lower values likely to be mandated, the aftertreatment system [most commonly selective catalyst reduction (SCR) with urea injection – ed] for controlling nitrogen oxide emissions is so expensive that it is no longer worthwhile even in larger, more expensive and thus more profitable, vehicles.
According to the German paper, Volvo wants instead to rely on electrification of its entire model range (as already seen with its T8 hybrid powertrains), with such approaches as electric motors supplementing the petrol engine using 48 volt electricals, plug-in rechargeable hybrids and full electrics.
According to the report, citing Germany's Federal Motor Vehicle Office, at the beginning of 2017 34,000 pure electric vehicles and about 165,400 hybrid passenger cars were on German roads with another 31,000 battery or hybrid cars added by the end of April. Registrations of new EVs rose over 120% in the first three months of the year while registrations of diesel cars declined around 8%.
The challenge for Volvo is that petrol engines consume about 20% more fuel and emit more carbon dioxide than a comparable diesel. In Germany, Volvo sells around 40,000 cars a year, mainly diesels, the paper said.
According to Reuters, diesel cars account for over 50% of all new registrations in Europe, making the region by far the world's biggest diesel market. Volvo sells 90% of its XC90 offroaders in Europe with diesel engines.
"We have to recognize that Tesla has managed to offer such a car for which people are lining up. In this area, there should also be space for us, with high quality and attractive design," Samuelsson told the paper.
He has previously said tighter emissions rules will push up the price of diesel cars to the point where plug-in hybrids will become an attractive alternative. The company has previously said it would not use range extender technology.
According to Reuters, Goldman Sachs believes a regulatory crackdown – to ensure automakers are achieving real-world results in emissions testing – could add EUR300 (US$325) per engine to diesel costs that are already some EUR1,300 above their petrol powered equivalents, as carmakers race to bring real NOx emissions closer to their much lower test bench scores.