Volvo ditching diesel because the writing's on the wall

Once again, a bit of credit must be sent Volkswagen's way.

Volvo

If you're a really big fan of Volvo's diesel cars, you might want to avert your eyes.

Volvo announced that it would no longer develop new diesel engines, Reuters reports, citing an interview between Volvo CEO Hakan Samuelsson and Germany's Frankfurter Allgemeine Zeitung newspaper.

Some 90 percent of XC90s sold in Europe are diesels, but that sounds like it's going to change in the future.

Volvo

The reason is simple -- money. Thanks to an unnamed automaker's massive diesel scandal, regulators around the world are cracking down on diesel emissions. More difficult tests and any potential new mechanisms for controlling emissions will only ramp up a diesel vehicle's price, to the point where they will no longer be competitive.

There's also the matter of electric cars. Battery costs and chemistry are improving to where sub-$40,000 cars can pack nearly 300 miles of range on a single charge. Automakers the world over have announced plans to bring long-range EVs to market in the next several years, and some are already on sale.

Volvo sees which way the tides are turning, and it's not about to get left behind. The money that would have gone toward diesel development will instead be invested in hybrid and pure electric vehicles. Its first EV is planned for a 2018 debut, and it will likely be based on the same new platform that will underpin the forthcoming XC40 compact crossover.

While that might not seem like much of a big deal in the US, it's definitely a big deal in Europe. As Reuters notes, 90 percent of the XC90 SUVs sold in Europe come with diesel engines. If that engine slowly loses competitiveness, Volvo will have to hope that its buyers will seek other Volvo vehicles, rather than a different automaker with a newer diesel engine.

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