EXCLUSIVE Volvo is accused of 'money-making scheme' after car owner's electric hybrid model dies after just four years - leaving her with £7,500 bill

Daily Mail​

17-05-2025

A Volvo hybrid owner was saddled with a £7,500 repair bill and a car she didn't want after its electric motor packed in after less than five years - prompting accusations the Swedish firm is running a 'money-making scheme' on eco-conscious owners.
Terri-Anne Smith, 37, bought the high-tech XC60 T8 SUV for around £40,000 in 2021 - snapping it up less than a year from new after it had been used as the dealership manager's daily runabout.
But the mother of two, from Rugby, Warwickshire, was left with a gargantuan bill after a piece of hybrid machinery with a reputation for unreliability packed in at the end of February - four and a half years into its life.
Known as ERAD - short for 'electric rear axle drive' - the electric tech is meant to allow the car to be driven on battery power in town, with a petrol engine kicking in on high-speed motorway trips.
But the part is notorious among Volvo owners for its habit of failing. Nevertheless, the Swedish firm washed its hands of any responsibility when Ms Smith complained - instead blaming her for not servicing it at a Volvo garage directly.
She had leased the car on a four-year finance deal with a guaranteed 'balloon' value of £18,500 to pay at the end if she wanted to keep it.
She ultimately had to pay it as the motor sat in the garage while her dispute raged on despite wanting rid of it. She has sworn never to buy from the company again.
'It has left me extremely anxious, extremely stressed, extremely angry,' she told MailOnline.
'I usually cope with things quite well but I had to hand this over to my husband. I told him, "I cannot deal with Volvo, I cannot deal with the stress of this, I am struggling with it all."'
Ms Smith picked the plug-in hybrid because of its ability to run on electric charge alone - and what she thought was the firm's reputation for cast-iron dependability.
'I don't want to say I'm a bit of an eco-warrior but I wanted to contribute to reducing my emissions so I thought, let's do something good and get a hybrid,' she said.
'I wasn't running it through a business, I wasn't saving tax or anything. I just wanted to try and do a bit of good, really.'
For almost four years, the Nordic hatchback was fuss-free, ferrying about the family - including husband Lincoln and their sons Ted, seven, and Auro, four - in comfort and style.
But at the end of February, weeks before the lease was due to end, the ERAD unit began making a horrible grinding noise - that felt as embarrassing on the school run as it was unsafe, struggling to pull out of junctions amidst moving traffic.
'It was quite scary with two young children in the back of my car, and trying to set off from a junction it was almost stopping and dying,' she recalled.
'I remember a couple of days doing the school run and it was so embarrassing - the noise, people staring.
'It was as if someone pressed a button at Volvo headquarters. It was like, "oh, the four-year period's coming up", and the car just went into limp mode.
'I had said it was like somebody was having a laugh in Volvo.'
Ms Smith took the car into a Volvo garage in Hinckley, where mechanics diagnosed the ERAD issue.
But they told her upfront that it would not be covered as a fault as she had not been using their own dealerships to have the car serviced - instead using a local garage in Rugby that maintains the vans for her husband's firm, Custom Heat.
And with no warranty to fall back on, she was handed a £7,500 repair bill she refused to pay.
She continued: 'They said it hadn't had the software updates - that's specifically what they said.
'Now, this is my naivety, but I've never had a hybrid before and there was never any kind of warning that we had to have it serviced with Volvo, or that there would be repercussions.'
The firm did apply software updates to the car but the ERAD continued to fail. Stressed out, Ms Smith turned to the internet for answers and found she was far from alone in experiencing the issue.
She discovered that ERAD issues are so widespread that search results for Volvo ERAD are populated with complaints about their notorious tendency to fail.
Aggrieved owners have even clubbed together to draw attention to the problem.
Matthew Dean, who founded the Volvo ERAD Issues Reporting Group on Facebook, was given equally short shrift after he bought a used XC90 T8 that had always been serviced at Volvo garages.
After taking it to an independent garage once, Volvo did nothing to help when his ERAD gave up the ghost and handed him an £8,000 invoice.
He ultimately paid £1,400 under his extended warranty - but says the company should be doing more to help owners being handed massive bills.
'Volvo UK couldn't have been less interested,' he told MailOnline.
He shared a file of submissions from other hybrid owners showing cars being shoved onto transporters after breaking down.
Volvo owner Matthew Dean's eye-watering repair bill of almost £8,000 to replace the ERAD unit in his own car
MailOnline's own research reveals countless posts on Volvo owners' forums and social media groups reporting similar issues - and in many cases, the company refused to help.
Ms Smith's own attempts to appeal to Volvo's better nature ended in failure after its UK head office rejected her request for a goodwill contribution towards her repairs - after initially looking into a case involving another older car.
'On this occasion, Volvo Car UK has decided not to contribute any goodwill towards the repair costs,' it said.
'This is because your XC60 is nearly 5 years old and has no service history within the Volvo network.'
Sensing defeat, Ms Smith paid up. Following some deliberations, the firm agreed to buy the car from her for £22,000 minus the repair costs.
She expected to be £4,000 in the red, but Volvo later reduced the bill after the repair turned out to be cheaper than expected. Overall, she is just over £800 better off and 'very lucky' - albeit still frustrated.
'To me, the idea that my car is not even five years old yet and for a part to go that soon in its life? That is on the manufacturer, not the customer,' she said.
'If I had known when I was looking at this car that the ERAD could go within the first five years and it won't be Volvo's responsibility, I would not have bought it.
'We're quite lucky that we're in a situation where we can find that money but this has just not been very nice at all. They had no intention (of helping).'
She intends to report the manufacturer to the Motor Ombudsman for its failure to help with what appears to be an endemic problem with Volvo hybrids.
What she cannot understand, however, is why the company refused to do more.
Her leading theory is that if the company were to admit one fault with ERAD, it would open the floodgates to a cavalcade of claims.
Volvo's apology to Ms Smith - in which it admits reviewing the wrong car before telling her it will not contribute to the gargantuan repair bill
'I think Volvo are very aware of it,' she said.
'The garage in Hinckley did acknowledge it's not the first ERAD failure they have come across, so it seems like it's known.
'I could be very conspiratorial here and think that it's a money-making scheme, because obviously you're trying to generate sales through your servicing.
'When parts fail and people don't have options, then people are having to spend more money on repairs with you.
'So from a consumer perspective, either you're doing this intentionally to generate revenue or - or the best case scenario is that you're not taking any accountability for your actions either way.
'I don't see why I should be the victim of this.'
MailOnline asked Volvo whether it recognised the apparent persistent failure of its ERAD components. The company did not comment.
But on Ms Smith's case, a spokesperson said: 'We have investigated this situation and can confirm that the retailer has agreed to buy the car from Ms Smith, less the cost of the repairs.
'The retailer has made an offer to Ms Smith, which has been accepted.'
A latest version of the Volvo XC60 T8 was named the 10th most reliable hybrid car on the market today by WhatCar magazine in December.
The magazine did, however, note that around one in seven owners had experienced reliability problems - all of which were repaired under warranty.