CARY, N.C. -

While Volvo’s recent move to place electrification at the forefront of its business is exciting, it could pose a challenge for U.S. remarketers in the near future, says Edmunds Ivan Drury.

The Swedish automaker turned many heads on Wednesday when it announced its plans to fit all of its post-2019 vehicles with electric motors.

Drury said within the used-car market, the upcoming EV’s future residual values will largely depend on what type of EV the new models will be.

“Years from now, it really depends on the implementation. Like are we talking about a hybrid that gets significantly better fuel economy? Is it just kind of like a mild hybrid system or are they going full on so that they can get double what the gas equivalent would be?” Drury explained during a phone interview with Auto Remarketing.

He said if you look at something like a low-range, pure EV Nissan Leaf, residual values can struggle.

“They are some of the worst in the industrym and that’s because you have a vehicle that’s so heavily tied up in that range factor that it doesn’t make it practical for a lot of consumers,” Drury added.

While the Volvo XC90 T8 Hybrid is listed above $16,000 and more than the T6 fitted with a comparable internal combustion engine, its anticipated residual value after 36 months is only $2,500, according to Eric Ibara, director of residual value consulting for Kelley Blue Book.

“As the auto industry struggles to decide what to do with diesel engines it is not surprising to see a progressive company like Volvo take a stand like they did (Wednesday). However, the current reality in the U.S. market hints that it could be an uphill battle,” Ibara told Auto Remarketing in an email.

“In the era of moderately priced gasoline, used-car buyers seem uninterested in the fuel savings a hybrid can bring, even in luxury sport utility vehicles.”

Between 2019 and 2021, Volvo said it will launch five fully electric cars.

Three of the fully electric cars will be Volvo models and two of will be high performance electrified cars from Polestar, the automaker’s performance car arm.

Volvo said it will introduce a selection of electrified cars across its model range, such as fully electric cars, plug-in hybrid cars and mild hybrid cars.

Petro and diesel engine cars will gradually be phased out. Volvo plans to enhance its internal combustion engine cars with electrified options to replace them.

“This is about the customer,” Volvo president and chief executive officer Håkan Samuelsson said in a news release. “People increasingly demand electrified cars and we want to respond to our customers’ current and future needs. You can now pick and choose whichever electrified Volvo you wish.”

Drury points out that traditional hybrids’ residual values are slightly better due to their higher-mile range capabilities.

“Traditional hybrids always outperform the pure EVs unless we look at something like a Tesla. And that’s where I think a lot of people definitely want to get to.”

Drury said that, years ago, “Nobody really knew how bad range anxiety was going to essentially kill the used-car market values. Now that we’re starting to have these vehicles that have less of that and they’re overcoming range anxiety, we will start see residual values start to increase for these vehicles.”