Volvo CEO Jim Rowan Discusses the Most Formidable Challenge Confronting Automakers

Volvo CEO Jim Rowan

In the past, automotive industry leaders were not accustomed to discussing transformative change. Chief executives of car companies typically hired industry veterans, and their narratives revolved around familiar topics such as improved fuel efficiency, fresh design concepts, and minor modifications to traditional gasoline-powered vehicles that had been sold for decades.

Times have changed. The undeniable impacts of climate change have reached a tipping point, leaving no room to ignore the urgency of decarbonization. Additionally, the emergence of Tesla and other electric vehicle (EV) manufacturers has disrupted the traditional market and presented a new reality: either embrace the future or face obsolescence. Now, automotive industry executives find themselves engaged in discussions about which companies are adapting most rapidly and making the most daring strides. This shift in mindset often entails welcoming fresh perspectives and new talent into the fold.

Jim Rowan, who assumed the role of CEO at Swedish automaker Volvo in early 2022, embodies the kind of visionary leader required in this changing landscape. Prior to joining Volvo, he held prominent positions such as CEO of Dyson, renowned for its innovative vacuum cleaners, and worked at Blackberry, the once-dominant mobile phone manufacturer that transitioned into a software company. Rowan’s predecessor, Hakan Samuelsson, had already set Volvo on an ambitious path toward electrification. In 2021, Volvo made a groundbreaking announcement that it would exclusively produce electric vehicles by 2030, surpassing the timelines of many competitors. Rowan has played a pivotal role in guiding the company towards this goal. Just recently, under his leadership, Volvo successfully launched its affordable electric vehicle, the EX30.

Coming from a fresh perspective outside the industry, Rowan highlights that the shift away from gasoline power is not the most formidable obstacle automakers face. According to him, the real challenge lies in seamlessly integrating advanced technology into vehicles. This entails incorporating powerful computing capabilities that enable enhanced driver assistance features, digital connectivity, and the utilization of vast amounts of data that can be collected. Rowan emphasizes the importance of leveraging technology to propel the automotive industry forward and unlock its full potential.

Rowan emphasizes the significance of data, software, silicon, and connectivity as the major drivers of transformation in the automotive industry. While battery chemistry and electric powertrain components are crucial, Rowan believes that mastering the realm of data and technology will be the true game-changer. He envisions that the automakers who successfully navigate this shift and emerge as leaders will not only revolutionize the industry but also have the potential to evolve into major tech companies in the coming decades.

Can you provide some insights into the significance of the recently launched EX30 on June 7? Does this car represent a game-changing development in the EV landscape, or is it a reflection of ongoing changes already taking place in the industry?

I believe the EX30 reflects the changing landscape of the automotive industry. It is designed specifically for city driving, prioritizing range as a key aspect. The availability of two battery sizes offers customers the choice between a larger or smaller range, as well as the option of one or two motors. This approach aims to democratize electrification by making it more affordable and appealing to a wider range of people, particularly targeting younger, first-time car buyers. The EX30’s size, cost, electric powertrain, decent range, and ability to cater to a different demographic make it a significant and important car for Volvo.

Can you share your motivation behind accepting the position at Volvo and what factors influenced your decision to join the company?

There were three key factors that drew me to Volvo. Firstly, the brand’s rich heritage, which spans nearly a century, resonated with me on a personal level. Secondly, I believe that Volvo is an underappreciated brand, possessing authenticity and a genuine commitment to its values. Lastly, the brand’s honesty and integrity greatly appealed to me, making it an intriguing opportunity to be a part of.

We are currently in the midst of a fascinating dual transition within the automotive industry. This period represents one of the most captivating times to be a part of the automotive sector in the past few decades. On one hand, there is a monumental shift from traditional gasoline-powered vehicles to electric propulsion, as well as the evolution from human-driven vehicles to those equipped with driver assistance features and eventually autonomous capabilities. This entails a significant technical transformation, involving advanced computing architecture, sensors like cameras, radars, and LIDAR, and the development of cutting-edge software. As an engineer, I find this aspect incredibly captivating. Simultaneously, we are experiencing a commercial transformation that involves a direct-to-customer approach, influenced by the consumer electronics industry. This dual transformation, both technically and commercially, presents a thrilling and dynamic landscape to be a part of.

Upon entering the automotive industry, I observed an interesting dynamic wherein a $70,000 product could be sold to a customer without any direct interaction. The entire process was conducted exclusively through dealerships. While dealerships remain crucial in the customer relationship, it became apparent to me that establishing direct communication with customers is equally important. As part of this transition, we are exploring ways to foster a collaborative dialogue that involves the dealership, the customer, and ourselves. The goal is to create a collective conversation that benefits all parties involved and enables a more direct and meaningful engagement with customers.

The third aspect that drew me to this opportunity is the profound commitment to sustainability and the pursuit of carbon neutrality. As I near the later stages of my career, I see this as a chance to give my all to a company with a rich heritage and to an industry undergoing monumental transformation. By wholeheartedly embracing the challenge of carbon neutrality, we have the potential to make a significant positive impact. This role provides me with the opportunity to leave a lasting legacy, contributing to a cause that holds immense importance for our planet and future generations.

As you approach the culmination of your career, do you sense a significant amount of pressure in this role being your final major endeavor? Is there a weighty responsibility on your shoulders to effect meaningful change?

I don’t perceive it as pressure, but rather as an extraordinary opportunity. The automotive industry holds immense global significance, and we have the chance to not only maintain relevance but also increase our relevance by investing in new technologies. When you consider the innovations happening in the automotive industry, such as cameras, radars, LIDARs, and vision technology, we are at the forefront of cutting-edge advancements in core compute chips from Nvidia and Qualcomm. Additionally, the amount of software integrated into vehicles, coupled with cloud computing, 5G connectivity, and data analytics, is remarkable.

When asked about the most crucial aspects of the automotive industry in the next decade, I promptly responded: software, silicon, connectivity, and data. While transitioning to electric propulsion is significant, it is the easier part of this transformation, and we have made considerable progress in that regard. Battery chemistry, e-motors, and inverters remain crucial, but the real game-changers will be data, software, silicon, and connectivity. I firmly believe that the automotive companies that excel in these areas and emerge as leaders will become some of the prominent tech companies of the next decade or even the next two decades.

Given the partnership between Volvo and Luminar in the context of autonomous driving, I would like to ask if you hold a similar perspective to Luminar’s CEO, Austin Russell, who has referred to himself as an autonomous vehicle skeptic. Over the years, it has become apparent that the challenge of achieving fully autonomous driving is more complex than initially anticipated. Do you align with this viewpoint?

I share the perspective that the technology for autonomous driving will eventually be available, enabling vehicles to drive autonomously from a technical standpoint. However, the major challenges lie in the legislative and regulatory aspects, as well as achieving compliance worldwide. Therefore, I believe that the widespread implementation of autonomous driving will take longer than anticipated. While we may see progress in cities and countries where autonomous driving is permitted, the scope will likely be limited for the foreseeable future. Urban environments pose significant difficulties due to factors such as ever-changing road conditions, the presence of schools, bicycles, scooters, and pedestrians. Personally, I don’t adhere to the notion of five levels of autonomy but rather two levels: hands-on-the-wheel, eyes-on-the-road, and hands-off-the-wheel, eyes-on-the-screen. Anything beyond this can be confusing for customers. It will take a long time before we transition to full hands-off, eyes-off autonomy. I anticipate that the initial implementation of autonomous driving may start with dedicated lanes on highways, such as between downtown San Francisco and the airport, although even that is still a few years away.

In light of the significant regulatory developments in the United States regarding the transition to electric vehicles, such as the Inflation Reduction Act tax credit guidance and the proposed stricter emissions mandates, some automakers may find themselves caught off guard due to the increased stringency compared to previous regulations. I’m curious to know how you are approaching and considering these new regulatory moves in your strategic thinking.

In general, I believe that the Inflation Reduction Act is beneficial as it will stimulate investment and promote the development of high-speed charging infrastructure, which is crucial for the widespread adoption of electric vehicles. However, I find the subsidies associated with the act to be somewhat confusing. While some of our vehicles may be eligible for these subsidies, others may not. Additionally, many of our customers have annual incomes that exceed the qualifying threshold for these subsidies, making them irrelevant in their purchasing decisions.

In my perspective, government support can be beneficial during a technology transition like electrification, as it has a meaningful impact on society. However, as a business, we should not rely on subsidies as a long-term solution. Companies should strive to make their products affordable without the need for ongoing government assistance. Moreover, governments have other priorities to allocate their funds to. Instead, government involvement can be valuable through investments in technology and infrastructure. This includes ensuring the availability of green energy and establishing a robust high-speed charging infrastructure. By supporting the transition to electrification, which offers numerous advantages such as reduced noise, vibrations, and emissions, as well as increased efficiency and lower maintenance, governments can contribute to a sustainable and efficient future.