Volvo's 1,600-acre challenge might turn into its hidden advantage against tariffs.
Volvo, Adobe
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Every automotive manufacturer is still trying to navigate the swiftly changing import tariff landscape in the U.S. However, Volvo may have a chance to turn an unfavorable situation to its advantage. The Swedish automaker has a large factory in South Carolina, initially intended to focus entirely on electric vehicles, but is currently operating at minimal capacity. This seems like an ideal opportunity to start producing the Volvos that are actually in demand here.
According to a report from Automotive News, citing "two individuals familiar with the [undisclosed] plan," Volvo plans to commence production of the XC60 (which was the brand's top-selling model at the end of last year) at the Ridgeville, SC facility in 2027, followed by the XC90 (its second-best seller) in 2028.
On July 16, Volvo confirmed that production of the XC60 will indeed be moving to the Ridgeville facility.
As of this moment, both SUVs are still being manufactured in Sweden.
Volvo inaugurated its 2.3 million square-foot factory in South Carolina in 2018. In 2021, it was promoted as "the cornerstone of the Swedish automaker’s ambitious plan to transition to an EV-only brand by 2030," according to Automotive News. It’s safe to say that this goal is no longer feasible, and the plant, which produced “approximately 20,000 vehicles last year,” is currently operating at just 13 percent of its capacity. The only known project at the facility is the EX90 electric SUV.
Volvo’s factory in South Carolina spans 1,600 acres.
I reached out to Volvo’s representatives for comment on this situation, and here’s the official statement I received from a spokesperson (prior to the XC60 confirmation press release):
“Volvo Cars is committed to its long-standing strategy of manufacturing where we sell — a principle that is now more crucial than ever. As part of this strategy, Volvo Cars has previously indicated that it’s considering adding production of another model at our U.S. plant, which has a capacity of 150,000 vehicles annually.
We are not providing comments on future product or production plans at this moment, but we look forward to sharing more information soon.”
If the figures mentioned above are correct, there are many idle facilities and significant capacity available for producing more vehicles. Moving the production of popular SUVs to a local site to avoid tariffs seems logical. Retooling a factory is no small undertaking, which is why the facility hasn't been repurposed yet, but for Volvo, adjusting an existing factory to manufacture more vehicles in the U.S. should be considerably easier than for other automakers to build new facilities from scratch.
Thus, in an indirect manner, Volvo could benefit from its underused factory and altered EV ambitions, making its 1,600-acre challenge a potential asset against tariffs.
The Ridgeville factory employed approximately 860 hourly workers in 2021 when it was producing the S60 midsize sedan. The impact of shifting the XC60 and XC90 production on local employment is still uncertain. Currently, Volvo has only one job listing available at Ridgeville, for a software engineer position.
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Volvo's 1,600-acre challenge might turn into its hidden advantage against tariffs.
Volvo has a factory in South Carolina that is not being fully used following a shift away from electric vehicles. However, it could now help the company avoid tariffs on the XC60 and XC90.