Volvo to import C4O Recharge CKD kits from China for sale in India

Volvo C40 Recharge, Fjord Blue

Volvo Car Corporation, the Swedish luxury carmaker, plans to import kits of its electric cars from its facility in China for assembly and sale in India before making them locally.

The company, which will launch the electric version of its C40 SUV in the fourth quarter of 2023, plans to introduce one electric vehicle every year in India.

Completely knocked down (CKD) kits of the XC40 Recharge will be imported from China and assembled at Volvo’s Bengaluru facility, where other models such as XC60 petrol hybrid, XC40 petrol hybrid, S90 and XC90 are also assembled. Reliance on China will continue because Volvo has set up a mega facility in that country, a company official said.

Chinese carmaker BYD, which is expanding aggressively in the electric passenger vehicle segment, ships in CKD kits from its homeland. Volvo Cars, owned by Geely, a Chinese multinational automotive company, is following a similar strategy for its Battery Electric vehicle (BEV) line-up.

“We take the kits from where we get them. Because of the supply issues (from other countries), we don’t hesitate to source it from there. Also, we produce more XC40 BEVs in China than in Europe. So, it is a matter of practicality on where this comes from,” Nick Connor, head of commercial operations for Volvo Cars in the rest of the Asia Pacific region, told reporters. “So for the C40 Recharge too we will follow that route. The next [step] would be to move from CKD [assembly] to full-scale manufacturing.”

Volvo Cars’ global CEO Jim Rowan was reported as saying earlier that locations in India and Southeast Asian countries are among the contenders for the company’s new EV manufacturing unit.

At the global level, the Swedish carmaker had unveiled a strategy to develop China as a global manufacturing and export hub servicing growing demand for its new range of cars in the US, Europe and Asia Pacific, including India.

The carmaker said earlier it plans to make the 60- and 40-series cars in China and shift production of the new S90 sedan from Europe to China in the future.

Additionally, Volvo said it is undeterred by the tax structure in India and expects sales to reach pre-Covid levels. The company sold about 2,600 units in 2018 and 1,800 vehicles in 2022.

The government increased the customs duty on the import of some completely built up vehicles and semi-knocked down vehicles, while leaving the rate for CKD units unchanged in Budget 2023.

“This (new tax regime) works to our advantage with full BEV production and a knocked-down production. That actually gives us a better competitive position in the market than we had previously. Therefore, I am not concerned (and) I never lose sleep on taxation because it’s like death and taxes are always with us. So we just have to tackle them and make the best out of them,” Connor said.

Volvo reaffirmed that it will go fully electric in India by 2025, ahead of its global target of becoming an electric car company by 2030.

“We can't do it this year – maybe in 2025. We said we will be 50 percent electric (globally) by then. We could say, well in India, we're going to be 100 percent electric. We've already said in Australia, for example, that by 2026, we're going to be 100 percent electric,” Connor said.