An Expensive Error and a Fated Flagship EV Led Volvo to Lose More Than a Billion Dollars | Carscoops

      The ES90 is already facing challenges due to high tariffs on both sides of the Atlantic.

      15 hours ago

      by Michael Gauthier

      Volvo has experienced a $1.2 billion setback related to the EX90 and ES90.

      The company stated that they are unable to sell the ES90 profitably in America because of tariffs.

      Software and production problems have also hindered the launch of the EX90 crossover.

      Volvo's troubles persist as it announces a one-time, non-cash impairment charge of $1.2 billion (11.4 SEK / €1 billion) for the second quarter. This setback arises from several difficulties, including the poor launch of the EX90 and tariffs on vehicles manufactured in China.

      Tariffs are affecting the brand new ES90, and Volvo indicated that the elevated fees hinder their ability to profitably sell the vehicle in the United States. A recent report noted that Chinese electric vehicles are now subjected to a 247.5% tariff upon importation into the U.S. This exorbitant rate seems to have put the S90 successor at risk.

      Tariff Pressure Extends Beyond the U.S.

      Unfortunately for Volvo, tariff pressures are not limited to the United States. Europe is also attempting to shield its automakers from inexpensive Chinese electric vehicles by imposing their own tariffs. As Volvo pointed out, "ES90 margins are similarly under pressure in Europe for the same reasons."

      In addition to tariff challenges, Volvo confirmed that the EX90 will experience “reduced lifecycle profitability.” The company cited “significant launch delays … and additional development costs” as the reasons. The electric crossover was introduced in November 2022 and was heralded as the "beginning of a new era for Volvo Cars."

      However, this era has turned out to be troublesome, with the 2023 launch postponed to 2024 due to software issues. Furthermore, sales have been modest, with only 1,972 EX90s purchased by Americans in the first half of the year. To provide context, Volvo sold 3,004 XC90s and 2,421 XC60s in June alone.

      Looking Ahead Despite Challenges

      In a statement, Volvo Cars CEO Fredrik Hansson mentioned, “In light of market developments such as import tariffs in the U.S., development and launch delays for the EX90, and strategic investment priorities, we have reevaluated volume projections for these two vehicles. This has led to lower than expected lifecycle profitability.”

      Despite the software challenges with the EX90, Hansson expressed optimism that the difficulties will ultimately be beneficial, as the crossover “established a crucial technological foundation for our future.” He added, “The insights and core systems we developed, including core computing and electric drivetrains, will inform next-generation platforms. These innovations are vital to achieving our long-term electrification and software-defined vehicle strategy, positioning Volvo Cars at the forefront of automotive technology.”