Volvo Group made a big bet after the Paris agreement on climate change to lead the world when it comes to electric vehicles and sustainable development.
And during a keynote talk at CES 2025, Martin Lundstedt, president and CEO of Volvo Group reinforced the company’s commitment to be a leader to have net zero value chain greenhouse gas emissions by 2040. Technology and collaboration are Volvo Group’s most effective tools in achieving its ambitious target. That’s an interesting thing to hear from a company that is 96 years old.
Lars Stenqvist, joined Lundstedt on stage to bring us up to speed on how this bet is paying off. Amid climate skepticism and misinformation, some of the world’s leaders don’t believe in the cause. But Stenqvist believes there’s more risk in resisting change. That’s why the company is making not only changes in how it makes cars and the kind of cars it makes, it’s also changing its whole supply chain and working on infrastructure like EV charging and power generation.
With freight volumes expected to see a fivefold increase by 2050, the transition to ZEV solutions has become a clear necessity.
“If you’re not brave enough in embracing change, if you don’t invest in what is to come, then it’s a very big risk in a technology shift like this one. You’ll lag behind,” he said in an interview with GamesBeat at CES, the big tech trade show in Las Vegas last week.
We talked about this systemic shift that Stenqvist and Volvo want to see when it comes to sustainable transportation. And we talked about the importance of digital twins, a game-like technology for simulating factories in the digital world before building them in real life, to reaching those goals.
Here’s an edited transcript of our interview.
VentureBeat: I got to see the keynote online. The biggest part of the message focused on sustainability. How deliberate was that, compared to just talking about vehicles?
Lars Stenqvist: Today it’s not enough to just talk about products. Today we’re talking about the shift to sustainable transport. As we alluded to in the keynote, it’s not a switch from product A to product B. It’s a system shift. If we don’t work from the system perspective, then it doesn’t matter if we have the best electric trucks or fuel cell trucks, because if the system is not ready, if you don’t have infrastructure, it will not take off.
For us it’s not so strange to talk about sustainability. Our business idea, our strategy, is to transform our company into a company that is delivering truly sustainable solutions. For some companies, sustainability is something they’re doing Friday afternoon, besides the normal business. For us it’s the business.
VentureBeat: Can you add some context on how long you’ve been thinking about that? How did you come to decide that that’s the most important thing?
Stenqvist: We’ve been on a journey for many years when it comes to this. We had a very good strategic discussion around 2017, 2018, on how we should relate, for example, to the Paris agreement. We sat down and did a lot of thorough strategic investigation and discussion and analysis. We concluded that our interpretation must be that the Volvo rolling fleet by 2050 should be fossil-free. By simple mathematics–our vehicles, on the average, are on the road for 10 years. That means we cannot go on delivering fossil-driven solutions until 2049. We have to stay 10 years ahead, meaning 2040. We need to be 100% fossil-free.
That was an important statement to make internally. This must be our vision. This must be the direction of the company. Then we started to calculate backward. What does this mean, both from emissions perspectives, the auto tailpipe, but what does it mean upstream as well, in our supply chain, when it comes to decarbonization in the manufacturing footprint of the vehicles? That’s also included. I alluded to that in the keynote.
VentureBeat: Do you think you’re on schedule? There’s the leadership vision from years back, but there’s also the pace at which governments are changing, and consumer tastes as well.
Stenqvist: We think the transformation is going slower than we had expected. Martin was clear on stage today. A number of decisions, a number of actions, should have happened yesterday, and they didn’t. We need to make those decisions today or tomorrow. We need to accelerate. We want to be able to look our children in the eye, and in my case hopefully grandchildren, and say that in the 2020s we did what we needed to do. I don’t want to have to say, in 10 or 15 or 20 years, we knew what we needed to do, but we didn’t do it.
VentureBeat: The tough thing is, everyone also looks at the state of revenues and business. They tend to favor what has happened in the past. That slows the pace of change.
Stenqvist: If you’re not brave enough in embracing change, if you don’t invest in what is to come, then it’s a very big risk in a technology shift like this one. You’ll lag behind. You won’t be relevant in the future. In the short term, it’s a possibility that you will maximize profit. But you’re playing with fire. The question is, will you stay relevant? Yes or no?
VentureBeat: I thought it was interesting that Oshkosh is showing up for the first time in their history with technology products. A lot of them are electric postal vehicles. They have EV garbage trucks. It makes me wonder why someone didn’t do this a long time ago.
Stenqvist: Partly it’s the technology. We’ve had ground-breaking shifts. We’ve reached new levels in batteries, for example. That’s one reason why it’s taking off right now. Battery development is fascinating when it comes to energy density and price per kilowatt-hour. Today it’s possible to do much more than even five or 10 years ago.
VentureBeat: Was there a piece of technology you feel was most important in the speed of development and what it could change?
Stenqvist: We’re broad in our approach. We believe we need more technologies, several technologies in parallel. There are players in the industry that bet on one or another technology going forward. We’ve said clearly that for different regions in the world, we see different needs. We’ll continue to develop combustion engines, but running on fossil-free, renewable fuels. We’ll have battery electric vehicles, and we’ll have fuel cell electric vehicles, mainly powered by hydrogen. Hydrogen can also be used in combustion engines for direct combustion.
Besides that, we also have a full discussion around software-defined vehicles, digitalization, connected vehicles, data, and AI. It’s a digital and green revolution. We have a broader palette of technologies that we want to develop than ever before. If you look at the financial reporting on the Volvo Group, we’ve doubled our efforts on R&D in the last five years. The reason is very simple. We believe we need to develop all these technologies to be relevant in the future.
VentureBeat: What’s your opinion on digital twin technology? I’ve found that very fascinating. I cover games as well as tech. The line between games and simulation and real world–
Stenqvist: It’s getting closer and closer. I’m a super fan of digital twins, of simulations. I use it a lot in my communication internally with my teams. I’m pushing my engineering teams, on whatever level I’m talking to them, to embrace the definition of digital twins. I want them all to have digital twins – the component systems, the subsystems, all the vehicles. It goes from every single small component up to the complete vehicle. We’ll gain so much when we have this more in place. We have it partly in place, but we want to be much better than we are today in this area.
VentureBeat: Does it already seem like that pays off as expected? The digital twin perfects the design. You build the vehicle in real life. You have sensors on the real vehicle, and that feeds back data to make the digital twin better.
Stenqvist: You could say it’s a closed loop, but it’s not only one loop. You can take different turns in the loop as well. For example, we have 1.7 million connected vehicles. In the past, from a quality and performance perspective, we were sitting and waiting to see if any customer went into the shop to claim a faulty component, a component that didn’t work according to the customer’s expectation. Then it was handled in the warranty system. Finally, after weeks or months, it ended up at the desk of an engineer. “This customer had a complaint.” Statistically, maybe 100 customers around the world had this complaint.
Today, with connected vehicles, my push and my demand to my engineers is that we should be able to follow the performance of every component on board the vehicle in real time. Every morning when they check in at the office, they should see how our components have been performing since yesterday. You’ve designed the data that comes out of the sensors and the components in such a way that you can follow the health of the digital twin and then feed it back to the design department. I have good examples where they’re doing this now. Not across the organization, but we have good examples.
VentureBeat: About 80% of what I cover is games, and the interesting example for me this year is Microsoft Flight Simulator. It’s a cross between games and simulation. They say their game this year is 4,000 times more detailed on the ground than the one from four years ago. They have aircraft companies designing the aircraft they have in the game. There are cameras on those planes everywhere now, and the maps are generated from those cameras. They don’t have permission to get maps from Kazakhstan, but planes flying over Kazakhstan can give them data. They’re building a digital twin of the earth.
Stenqvist: Nvidia has been talking about that same kind of earth model.
VentureBeat: One interesting outcome of that is that there are more pilots being trained through the game for the real world. It feels like while games and simulations are separate, and should be, somehow they can help each other.
Stenqvist: I think you’re onto something. In principle you have similar starting points, similar algorithms that you can use. I don’t think you have too many trucking games compared to flight simulators. But you can compare gaming to what we’re doing with simulations. We’re doing a lot when it comes to crash simulations, a lot when it comes to aerodynamic flows, fluid dynamics simulations. There’s a lot of crossover between that and gaming. When it comes to using the same kind of compute capacity–gaming is very tough when it comes to computational power. That’s true for advanced simulation in our case.
VentureBeat: Some people still hope there will be a metaverse.
Stenqvist: We’re always attending the World Economic Forum in Davos in January. In two weeks we’ll be going to Davos. I have a list in my notebook regarding the most popular words, the trending topics going back a number of years. In 2018 it was autonomous driving, for example. That was dead for a few years, and now it’s coming back. Two years ago it was metaverse. Last year it was completely silent on metaverse. What’s your view?
VentureBeat: Everyone felt like it got overhyped and exaggerated, and so it was just a bunch of scams.
Stenqvist: Maybe they’re right.
VentureBeat: Same way with blockchain.
Stenqvist: But blockchain will come. It will be necessary. We’re super serious about decarbonization. If you think about the manufacturing footprint of a vehicle, what we’re doing today is rather rudimentary, rather elementary, our calculations. We’re using a lot of average figures on different materials and components and so on.
If I have two suppliers supplying the same part number to me, then of course the manufacturing footprint from a carbon perspective would differ between the two. They have different sub-suppliers, different processes and so on. I would like to know the exact carbon footprint of component A and compare it to the carbon footprint of the same part number coming from another supplier. This can only be done if you trace it all the way back to the mine. The only way I can see to trace it back to the mine is some kind of blockchain technology. Maybe that could be a true use case in order to get the true and real value.
I would love to see this in the grocery store. A package of coffee. What’s the carbon footprint of that coffee? It could be that the same brand might have a different half-kilo of coffee with a different value of CO2.
VentureBeat: Do you see the value in something metaverse-like? Nvidia is using the Omniverse.
Stenqvist: I see a lot of value in that. On my level it starts with bringing all the models of the components and subsystems together in order to get a very accurate model of a full truck. Then the full truck operating in real conditions. Maybe I’m not that aggressively talking about the metaverse as a universe or Nvidia talking about their world model, but I’m keen on getting better simulation models for complete vehicles in different environments. You saw this morning that we talked a lot about autonomous driving, which is an area where you need a lot of simulations. You need 200 million simulations before making the first unguided left turn.
When it comes to autonomous driving–as I said, there was a lot of hype five, six, seven years ago, mainly in the passenger car industry. Everyone promised on stage that it would be ready in a few years. They’re still not ready. The business case for autonomous driving is very much happening in commercial vehicles. The simple reason is that we have the business case. It’s in our industry where it will happen, where it is happening. That’s why it’s so important to get simulation in place.
VentureBeat: And the business case for simulation is here.
Stenqvist: Yes, clearly so.
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