Volvo Has Temporarily Halted Its Forecast as Tariffs and Electric Vehicle Challenges Disrupted Q1 | Carscoops

      Volvo will rely on its U.S. plant to navigate tariffs on imports

      17 hours ago

      by Michael Gauthier

      Volvo has announced a notable drop in revenue and earnings for the first quarter.

      The company attributed these declines to several factors and is initiating a cost-cutting initiative.

      Its facility in South Carolina is poised to play a crucial role in Volvo's U.S. strategy.

      Volvo Cars has revealed disappointing results for the first quarter, with revenues decreasing by 11.7% year-over-year to 82.9 SEK ($8.62 / €7.57 / £6.43) billion. The operating income fell sharply from 4.7 SEK billion ($489 / €429 / £365 million) to 1.9 SEK billion ($198 / €173 / £147 million).

      The automaker cited the "current turbulence in the world and a challenging external environment for the automotive industry." Additionally, they pointed to Trump's tariffs and heightened pricing pressures that have led to larger discounts.

      More: Volvo Plans to Launch 5 Models in 2025, EX60 Arriving in 2026

      In an effort to stabilize the situation, Volvo has introduced an "accelerated cost and cash action plan" worth 18 SEK ($1.87 / €1.64 / £1.40) billion. While details were sparse, the company mentioned plans to reduce investments and cut costs. Regarding the latter, Volvo will collaborate with Geely to reduce product costs.

      Beyond cuts, Volvo believes a more regional approach is necessary to effectively meet the product and technology preferences of different markets. Their primary focus will be China and the United States, which are key markets for the company.

      In China, they are set to launch their first range-extended model later this year, which they describe as a "good example of their ability to customize products to varying demands in different markets."

      As part of their focus on the United States, Volvo is establishing a new Americas group that will also encompass Canada and Latin America. The company stated that this restructuring "further simplifies the company’s global operations into three streamlined regions: Americas, Greater China, and Europe & Rest of the World."

      Given Volvo’s heavy reliance on China, Trump's tariffs pose a significant challenge. To address this, the company aims to "better utilize its existing manufacturing footprint" in the U.S. in the upcoming years, resulting in "producing more cars where they are sold."

      Volvo also committed to refining its U.S. product offerings. While specific details were not revealed, the company has already announced the upcoming EX60 in 2026.

      Regarding production, the EX30 has recently begun manufacturing in Ghent, Belgium, effectively resolving the crossover's "China problem." Production is expected to increase in the latter half of this year.

      In terms of electric vehicles, Volvo highlighted that nearly 20% of sales in the first quarter were from electric models, with 43% of total sales coming from electrified vehicles.

      Although there are some positive signs ahead, Volvo noted that "2025 will be a challenging and transition year due to uncertainties surrounding macroeconomic, geopolitical, and market developments." The company expects "tougher market conditions and lower volumes combined with increased price pressure and tariff effects" to affect profitability.

      In light of these developments and "increased uncertainties," Volvo has suspended its financial forecast for 2025 and 2026.