As Volvo sees it, plug-in hybrids are the path toward achieving one of its high-aiming carbon-reduction goals—making fully electric cars half of its sales by 2025. To do so, the automaker plans to nudge its portion of PHEVs in the U.S. over the next 16 months, to 20 percent, up from about 4 percent today.
But it also knows that plug-in hybrids only serve their purpose—as what Volvo Car USA president and CEO Anders Gustafsson calls "segue ways to all-electric"—when drivers of PHEVs actually plug in. That’s the onus behind an unusual new program announced by Volvo Wednesday.
The gist of it: Volvo will cut owners a check at the end of one year based on how much they’ve been plugging in.
Using the vehicles’ On Call capabilities—no additional subscription required—Volvo will see how many kilowatt-hours of electricity the vehicle has used. The company will simply take that number and multiply it by the national-average price per kilowatt-hour, to arrive at the amount paid back to the owner.
Volvo is aware that buyers with cheap electricity are going to make money from the program, while those with particularly expensive residential electricity aren’t going to recoup all of their charging costs. According to the U.S. Energy Information Administration, the national-average price of residential electricity is 13.27 cents per kilowatt-hour. If 8.0 kwh is now usable (the usable capacity in Volvo’s latest XC90 T8 plug-in hybrid), and owners are able to plug in twice a day, that’s potentially about $773 for the year.
The company currently isn’t actually able yet to read cumulative vehicle power used via On Call, but it will be sometime next spring. Starting at that time, and including all the vehicles going back to October 1, new plug-in hybrid models will be included in the program on a rolling basis.
So far the figure Volvo does have is one based on drive time. It’s found that globally customers are using plug-in electricity 41.4 percent of the time.
2018 Volvo XC60 T8 R-Design with Polestar optimization
In studying some of the first buyers of Ford’s Energi plug-in hybrid products, in 2013, Ford found that drivers were covering more than 60 percent of their overall mileage on plug-in electricity. Those were early adopters and particularly eager to plug-in whenever possible, but other studies have suggested that buyers of luxury-brand PHEVs aren’t plugging in as often.
With Volvo incentivizing plugging in, instead of the vehicle itself, it might be able to boost the demand for the vehicles in a way that can help dealerships sell the idea, without going down a slippery slope with high incentives, bruised residuals, and an artificial market.
As Volvo looks toward electric—starting with the 2021 XC40 Recharge—it’s one way it can potentially sell drivers on it, too, and reward them for making a habit of plugging in.