Volvo CEO Jim Rowan on the Toughest Challenge Facing Automakers 

Auto industry leaders didn’t used to be the sort of folks who talked about transformational change. Car companies tended to hire longtime industry veterans as chief executives, and their talking points would tread the same staid ground: better gas mileage, new design concepts, and other slight changes to the same gas-powered products they had been selling for generations.

Not so anymore. The effects of climate change are becoming impossible to ignore, and time for decarbonization is running out. Perhaps more importantly for automakers, the rise in the popularity of Tesla and other electric vehicle (EV) makers has threatened age-old market share and created a new paradigm: embrace the future, or die. Suddenly, the talk among auto executives is all about who is adapting fastest, and making the boldest moves. And sometimes embracing that mentality means bringing in new blood.

Jim Rowan, who took over as CEO of Swedish carmaker Volvo early last year, is exactly that kind of figure. His last high profile gig was as CEO of Dyson, known for its fancy vacuum cleaners. Before that, he was at Blackberry, the cell-phone giant-turned-software firm. Rowan’s predecessor at Volvo, Hakan Samuelsson, had already placed the company on an ambitious electrification path—Volvo announced in 2021 that it would sell only EVs by 2030, a faster timetable than many of its competitors—and Rowan has helped shepherd the company along. Earlier this month, he oversaw the launch of the company’s new, remarkably inexpensive EV, the EX30.

Rowan comes to the industry from an outsider’s perspective, and he says the transition away from gasoline power isn’t even the biggest challenge facing automakers. What’s harder will be integrating more and better technology into cars: the kind of computing power that will bring about more advanced assisted driving features, digital connectivity, and allow auto companies to take advantage of the vast amounts of data they can start collecting.

“Of course, battery chemistry and the e-motors and inverters are hugely important, but data, software, silicon and connectivity are really going to be the biggest changes,” Rowan says. “The auto companies that get this right, and come out as leaders, I think will become some of the biggest tech companies of the next decade or two decades, even.”

TIME spoke with Rowan about Volvo’s moves in the changing world of automobiles.

The following interview has been condensed and edited for clarity.

The big news is the EX30, which launched on June 7. Can you tell us a bit about why that car is important? Is it something that is changing the landscape of EVs, or is it a sign of changes that are already underway?

I think the world is changing, and there’s a few things that come out of that car. I think it’s perfectly tuned for city driving. Range is part of the design aspect. We’re going to offer two different battery sizes, and so that takes out some cost. It gives the choice to the owner and to the customer whether they want a larger range or a smaller range, whether they want one motor or two motors. A lot of this is around democratizing electrification, getting it to the point where it’s affordable to most people. We’re trying to talk to that younger first-time car buyer. I’m just hugely confident about the car—the size, the cost, the fact that it’s electric, the range, the fact that it will play to a different demographic, and that it’ll be a really nice city car, but with a decent range. I think it’s an important car for us.

I want to zoom out a little bit and talk about you coming on board at Volvo. I’m interested in why you took the job.

Three things really. One, Volvo is a brand I grew up with. We’re almost 100 years old as a company, so it’s got a heritage. I think it’s a massively undervalued brand, but it’s got this great heritage, and it’s got this authenticity and this kind of honesty to the brand. For me, that was really interesting.

We’re also in the middle of this double headed transition that’s going on in the industry. It’s probably the most interesting time to join the automotive industry in the last 30 years or so, because on one side you’ve got this massive transition from petrol to electrical propulsion, and then from people driving vehicles, to [driver assistance features] and ultimately autonomous vehicles, and of course core compute architecture, cameras and radars and LIDAR sensors and software and all that stuff. So there’s a massive technical transformation—as an engineer that’s really interesting. But then at the same time, you’ve got this other commercial transformation, direct to customer, coming from the consumer electronics industry. When I joined the auto industry, I found it quite strange that you could sell a $70,000 product to a customer that you never spoke to. Everything was done through the dealership. The dealership still plays a major part in the relationship with the customer, but we need to have direct contact with that customer as well. That’s part of the transition here—how do you bring the dealership and the customer and ourselves into one collective conversation that’s beneficial to everyone?

The third thing is that all of this is underpinned by sustainability and the move towards carbon neutrality. I’m late in my career at this point. This will probably be my last gig before I hang up my boots. So you get a chance to leave it all out there at a company that’s got great heritage and an industry that’s transforming massively, and which can be really beneficial from a carbon neutrality point of view, if we take it seriously.

Do you feel a lot of pressure in this being the last big act in your career? Do you feel like you have a big weight on your shoulders to make a difference?

I don’t feel it in terms of pressure. I feel it in terms of opportunity. The auto industry is so big globally, and we have a great opportunity to continue to be relevant in the industry, and become more relevant in the industry, and really invest in new technologies. If you look at the auto industry and the amount of technology that is invented in the auto industry, you’re moving toward cameras, and radars, and LIDARs, and basically vision technology. We’re at the very cutting edge of the most advanced core compute chips from Nvidia and Qualcomm. And [there’s] the amount of software that’s now in a car, and at the same time you’ve got cloud, and 5G, and the data analytics around that. I was asked by an auto journalist recently, “what [are] the most important things within the automotive industry in the next 10 years,” and without hesitation, I could say it’s software, it’s silicon, it’s connectivity and it’s data. Electrical propulsion will be the easier part of this transaction, and we’re much farther along through that. Of course, battery chemistry, and e-motors, and inverters, and stuff are hugely important. But data, software, silicon, and connectivity are really going to be the biggest changes. The auto companies that get this right, and come out as leaders, I think will become some of the biggest tech companies of the next decade or two decades, even.

One of the interesting components of that technological shift is in autonomous driving. Volvo is partnering with LIDAR-maker Luminar. I had the chance to speak to its CEO Austin Russell last year. He has kind of a unique perspective, calling himself an autonomous vehicle skeptic, and his view has been borne out to some extent in recent years, as it’s turned out that that problem of autonomous driving was much harder than people realized. Would you say you share the same view?

I agree insomuch as that the technology for autonomous driving will be available—technically, we will be able to drive autonomously—[but] the issues are going to be legislation and compliance around the world. So autonomous driving, in my opinion, will come much later than most people think. In the cities and the countries where autonomous driving is allowed, I think we will be capable as much as anyone else to do that. However, where that’s allowed, and the stretches of roads that allow that, I think it’s going to be limited for the foreseeable future. It’s going to be very difficult to do that in urban environments, where you constantly have roadwork that changes on a daily basis, you have schools, you have bikes, you have scooters, you have children running around. I don’t subscribe to the [idea of] five levels of autonomy. I subscribe to two levels: hands on the steering wheel, eyes on the road, and hands off the steering wheel, eyes on the screen. Anything else is confusing for the customer. You’re either in charge of the vehicle with some help and assistance from the car, or you’re not in charge of the vehicle at all. I think the first part, hands on the wheel, that’s going to be around for a long, long time before we go full hands off, full eyes off. I would think it would start somewhere on a highway between downtown San Francisco and the airport where you’ll probably have a full autonomous lane. Even that I think is a few years away.

Within the U.S., there have been some big regulatory moves on the EV transition. There’s the Inflation Reduction Act tax credit guidance. And then there’s the new stronger proposed emissions mandates that potentially are catching some automakers off guard, because they’re going much more stringent than they’ve been in the past. I’m wondering how you’re thinking about those new moves.

The Inflation Reduction Act in general is a good thing. It’s gonna drive investment, and more importantly high speed charging infrastructure. The subsidies, I think, are too confusing. Some of our cars will qualify for those subsidies. Some of them won’t. However, a lot of our customer base earn annual income above the threshold of them being able to qualify anyway.

Here’s how I look at that. I think it’s good when governments can lean in a little bit and help with a technology transition especially if it’s a technology transition that is meaningful to societies such as electrification. But if you’re running a business, you should never be thinking that this is going to be a long-term thing. Companies shouldn’t need to rely on subsidies in order for people to afford to buy their products. And, let’s be honest, governments have got other things to spend the money on. Where I think the government can really help is if they continue to invest in technology and infrastructure. Make sure there’s green energy available, make sure there’s good high speed infrastructure available to charge the cars, and help us make this transition to electrification, which is just a much better technology: no noise, no vibration, less moving parts, less servicing, zero tailpipe emissions, and much more efficiency.

Correction, June 19:

The original version of this story misquoted Rowan. He said connectivity would be one of the biggest changes for the industry, not conductivity.