Volvo CEO says he's standing by Uber and tackling trade concerns

Swedish executive hints full self-driving technology will be an expensive option.

Resurgent Swedish automaker Volvo isn't just bullish on its ability to make autonomous technology profitable, it's confident in its new US production plans and is sticking by its embattled partner, Uber.

San Francisco-based ride-sharing service Uber has been embroiled in scandal on numerous fronts over the past few weeks, including allegations of sexual harassment by former employees, using special "Greyball" tracking software to thwart regulators, recent video surfacing of CEO Travis Kalanick losing his cool arguing with an Uber driver, and an industrial espionage suit levied by Waymo.

The company's aggressive culture has come under the microscope in the media, but Volvo Cars President and CEO Håkan Samuelsson says his company's agreement with Uber is going well. When I asked the executive to characterize Volvo's relationship with the ride-hailing service at Wednesday's Geneva Motor Show, Samuelsson said, "The rumors about how they behave and what type of culture they have in the company, I really can't comment on that. I just know what I've read in the newspapers. We see that relationship as very positive so far. I see no reason to question that in any way."

Samuelsson says, "We need partners, we cannot do everything ourselves. That's why we teamed up with Uber to develop the base car required for autonomous drive. And we then share the cost and do it better together... I think that's a very good example of how we can do this, not just do everything by ourselves and investing billions in in-house development. We don't have the money and I don't think we would be fast enough, either. You also have to be humble enough to understand maybe you need some impulses from outside."

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The second-generation XC60 is Volvo's big Geneva Motor Show premiere.

Roadshow

Over the long term, Volvo expects autonomous car sales to be good for the company's bottom line, and Samuelsson sees two main paths to get there. "One is to supply this type of base car to taxi companies or ride-hailing services like Uber... I think it will be a very profitable road for Volvo being one out of three [or] four carmakers who are able to supply such cars. I think it will be much more profitable than being one of 200 supplying a normal car."

Håkan Samuelsson - President & CEO, Volvo Car Group

Håkan Samuelsson, Volvo CEO

Volvo

Samuelsson also sees great potential selling vehicles with full self-driving hardware to individual consumers directly: "... if we were to have autopilot functionality -- which would be real autopilot where you can sit back, relax and do something totally different like teleconferencing or watching a movie... being able to do that safely will have a very high value. The price for that option could be very high, because it's a very attractive feature."

In the near term, Volvo is pushing to rebound to 150,000 cars a year in North America while gunning for 800,000 sold worldwide. Last year, Samuelsson says Volvo cleared 535,000 units globally, but it was capacity constrained -- it couldn't build enough cars to meet demand. Help is on the way, though. Volvo is shifting production of its hot-selling S90 flagship sedan to Daqing, China, and it will provide more production, including cars for North America.

Volvo's first US plant is poised to come online in Columbia, South Carolina, in the middle of next year. It will produce S60 models for the entire world. Despite recent trade-policy posturing by the Trump Administration, Samuelsson remains confident in company plans to import vehicles like the S90 from China. He says the new US plant will result in 4,000 jobs, 50 percent of which he attributes to global production.

"Half of the [S60] production in Charleston will be exported, and is more or less the same volume as we are going to import. So I think we have a very strong concept there," says Samuelsson. "It's not trade only going one way, it's definitely a sort of fair import-export. The net import will be more or less zero... we think that is a strong case if also discussing a border adjustment tax. [We] assume that has to be calculated on the net."

Volvo's Geneva Motor Show premiere, the second-generation XC60, is the company's biggest news in the short term. Impressively, it's the brand's strongest-selling model globally, despite the current generation having been in production since 2008. A new XC60 launching in America's fastest-growing segment is sure to boost dealer morale while fortifying company balance sheets.

After a prolonged slide, Volvo's future suddenly looks very bright. But as a small player in the luxury market, it needs to get each step right in its comeback bid exactly right, and that includes its partner dealings and government matters. For the moment, at least, the Swedes are ahead of schedule and looking good.

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