Context: Family of 3 (now in a center integrated booster), three cars in the household (21 XC90 and 19 XC40 are our primary drivers).
This is personal and relative to not only your other vehicles (if any) and how you intend to use them. In theory, the XC40 would WORK if we needed it to make due, but makes things like a Costco run with a baby stroller nearly impossible.
Babies don't take up much space, but their carseats and necessary baby STUFF takes up more room than a not-yet-parent can imagine.
When we had our daughter our "big" car was a loaded out Outback, with my garage queen 340i relegated to "as needed" dad-mobile. That setup lasted about 35 days. One trip to visit family for the holidays at day 29 sealed the fate of the BMW; it was traded within a week of returning from that trip and ended up in acquiring our first XC90. I did a 24 month lease because I had faith I could swap for maybe a V60 Polestar after proving to my wife that the XC90 was too big for our needs.....I ate my words and pulled through the lease early and upgraded to another XC90 (loaded this time) that will likely be in the stable for years now.
IMO the 7 passenger option is more suited for small children in carseats (rear facing, front facing, and booster varieties). Not only does it give you the flexibility of the integrated booster in a few years, but its just better suited for when kids inevitably drop things (pacifier, snuggle, snacks, water bottle, etc.). As a family of 3, we run the XC90 in 2 row mode with cargo cover over the third row and cargo area 99% of the time; it's nice to know the third row is there but not our focus. With the cargo cover and 7 seat setup nobody is wiser that the third row exists and I'd like to think it takes us out of the "you have the big car" obligation to drive a group at least a couple of times.
It's a solid parent-mobile, hands down.
We swapped the Outback for the XC40 because it wasn't big enough to be effective as a "big car" with kid gear, but wasn't really efficient or small enough to be an effective "city car" for commuting sans-child.
Best of luck, but honestly, I'd head straight to the XC90 again in a heartbeat (I did).
