Juan Oscar Aubert, 69, host of the Correntoso hotel, founded in 1917 in the region of Los Lagos, in the province of Neuquén, in Argentine Patagonia, says that in the 1940s, when the first families began to visit the place, there was no fuel the car.
Tourists arrived via the winding Route 40, the 5,194 km highway that crosses the tourist region of Los Lagos and ten other Argentine provinces.
It took some time for the first fuel pump in the region to be installed in the old Casa de Pedra, an attraction in Villa La Angostura, a city 80 kilometers from Bariloche and the closest to the hotel.
In 2022, guests at Correntoso (which start at R$2,200) can already afford to fill up their hybrid and electric cars on the hotel’s patio, which has a privileged view of Lake Nahuel Huapi and the snowy mountains of the Andes mountain range.
The charger was installed by Swedish automaker Volvo Cars, which has just launched a new engine for hybrid cars (which run on energy and gasoline) as part of its plan to move forward with electrification of the fleet. The goal is to reach the world by 2025 selling only hybrid and electric cars and, from 2030, only electric cars.
With the T8 engine, the brand’s hybrid models gained greater autonomy: they run 70 km only with electric charge, against the 40 km they did before.
“Brazilian consumers still don’t feel safe to go for an all-electric car, because they can’t use it to travel,” he told Sheet João Oliveira, general director of Volvo in Brazil. “We decided to improve the hybrid car’s engine, to increase the driver’s autonomy in the city and familiarize him with the electric model, which is the future of the automobile.”
Power consumption is similar to that of a hair dryer
According to Oliveira, anyone who invests in a hybrid model never thinks about going back to combustion, mainly because of the economy. He sets his own example.
“I have a fixed parking space in the condominium where I live. When I got my first hybrid car, the landlord had doubts whether the building’s electrical structure would withstand it. I explained that the power was similar to that of a hair dryer, with energy consumption of 3.5 kilowatts per hour”, says the 40-year-old executive with a degree in mechanical engineering.
Oliveira paid R$ 3,000 to pull the connection from the power board to his parking spot, where a toll booth was installed. “The building measures how much I consume every month and there is a separate charge on the condominium bill. I spend between R$ 80 and R$ 100 a month”, says he, who travels about 50 kilometers a day, on the way between his houses. and the work. “It’s less than a quarter of what I would spend on fuel.”
The economy is tempting for the vast majority of drivers in Brazil, who need to pay at least R$7 for a single liter of gasoline, considering the average price in the country. But the prices of hybrid and electric cars are still prohibitive for the middle class in the country: vehicles start at R$150,000. Volvo models start at R$300,000.
“As we manage to reduce costs and increase our economy of scale, we will have cheaper cars”, says Oliveira. “We started with a R$400,000 electric car and today we have a R$300,000 version, which offers 420 kilometers of autonomy”, he says. Electric cars have a much longer range than hybrids.
“Gasoline car will be more expensive than electric in three years”
According to the executive, within three years, producing an electric car will be cheaper than a combustion car.
“Globally, from 2025 onwards, the gasoline car will be more expensive than a similar electric one, due to the scale of costs of the lithium battery, which accounts for 40% of the cost of the car”, he says.
According to the executive, Volvo is working on a new model of electric car, which should be closer to R$200,000. “We are going to contribute to the massification of electrification in the country”, he says.
The big problem for Volvo and all automakers in Latin America –especially in Brazil, the largest market in the region, even geographically– is the lack of infrastructure to supply vehicles with energy.
Recharge points are still few and far between, without comparison with the more than 41,000 gas stations spread across the country.
On the roads, Volvo is investing BRL 13 million in a project to install 13 150-kilowatt chargers by September. “We opened the first one in Cajati (SP), on the São Paulo-Curitiba corridor, at a gas station”, he says. “It is the first phase of installing chargers in road infrastructure, it has a high cost of R$ 1 million per point. We will evaluate the results to define the second stage.”
To choose the installation location, the automaker selects stations with the highest flow and checks with the energy concessionaire if the location has the capacity to offer this electrical infrastructure, or if it is necessary to request an increase in demand.
Volvo comes in with the equipment and, by the way, with the cost of energy. “We have an agreement with the gas stations so that they do not cover customer shipments for at least two years,” says Oliveira. “For them, it is interesting to have a consumer for 40 minutes inside the store, waiting to charge the car battery.”
1,000 charging points versus 41,000 gas stations
The executive believes, however, that it is a matter of time before charging electric and hybrid vehicles becomes a business in Brazil. “Charger networks abroad have created a subscription program: the consumer pays US$ 100 per month to have a card that allows him to refuel anywhere in the country”, he says. “There are groups in Brazil already studying similar models.”
Volvo installed 1,000 charging points in Brazil in cities across all regions, in shopping malls and supermarkets. Between 2017 and 2018, when the sale of hybrid and electric vehicles began, the automaker even installed chargers at customers’ homes to encourage purchases.
“We did the technical inspection in the consumer’s garage and the electrical connection. The cost was already within the price of the car”, he says. “We realized that the consumer wanted to have the product, but saw barriers. Our job has been to map them and find ways to remove them.”
In the luxury car market, Volvo Cars competes with brands such as Audi, BMW and Mercedes. The company works with four SUV models in the country: XC40 (R$400,000), XC60 (R$390,000), XC90 (R$510,000) and C40 (R$400,000) – the first three hybrids and the last electric. .
In 2021, the brand’s sales in the country totaled 8,300 vehicles, an increase of 8% over the previous year. “This year, there will be 6,500 units because there is no car to deliver. The waiting list goes until November”, says Oliveira, referring to the shortage of semiconductors in the automotive sector.
The hybrid and electric vehicle market in Brazil totaled 65,644 units last year, according to analyst Marcelo Monteiro, from Lafis Consultoria. “It’s still a small number, close to the national fleet of 40 million vehicles, but it grew 21 times compared to 2015, when it totaled 3,119 units”, he says.
In Monteiro’s opinion, the country needs to electrify the fleet, so as not to run the risk of becoming a former USSR, with scrapped cars. “All the major automakers invest in hybrids and electrics to meet the CO² emission reduction targets defined in global protocols and charged by local governments. It is a path of no return”, he says.
High interest rate motivated direct sales from the automaker to the consumer
According to Oliveira, 60% of buyers of hybrid or electric cars in the country are from Volvo. “Only in electrics, we have a 30% share,” he says. The main competitor in electric cars is JAC Motors, which offers models starting at R$150,000.
Brazil, however, represents very little, 1.2% of the global sales of Volvo Cars, a Swedish multinational controlled since 2008 by the Chinese group Geely, after passing through the hands of Ford.
“But Brazil works as an innovation hub, where it is possible to test new business models”, he says. An example is the relationship with the concessionaires.
In 2021, the automaker completed the change in its sales model: the purchase is conducted online, while the dealership offers the customer a test drive and completes the sale, receiving a commission.
“In Brazil, 100% of our cars are already billed to the final customer”, says the executive. “The dealership does the intermediation of this sale, but does not have the stock.”
The very high Brazilian interest rate motivated the change. “The concessionaire bought the credit line with the bank, corrected by the Selic plus a bank spread”, says Oliveira. “If he had the car in the shop for three months, the interest paid to the bank would eat up his profit margin and he would have a loss,” he says.
With that, according to the Executive, the dealer’s biggest concern was to get rid of a car stopped in stock. Volvo Cars is served by around 30 dealerships, spread across all regions of the country.
“It is the Brazilian macroeconomic difficulty, which forced Volvo to think outside the box”, he says.
X-ray
- Volvo Cars
- Foundation: 1927
- Thirst: Gothenburg (Sweden)
- Employees: 21,900
- Revenue*: US$ 28.6 billion
- unit number sold*: 699 thousand
- Main markets: Sweden, China, United States and Germany
*2021
Reporter traveled at Volvo’s invitation
I have over 8 years of experience in the news industry. I have worked for various news websites and have also written for a few news agencies. I mostly cover healthcare news, but I am also interested in other topics such as politics, business, and entertainment. In my free time, I enjoy writing fiction and spending time with my family and friends.
