Volvo Cars CEO: Up to Two Years Before Increased Production in the U.S.

Volvo Cars is currently facing significant challenges due to escalating tariffs on imported vehicles in the United States, a critical market for the company. In a recent discussion, the CEO expressed the company's need to adjust its production strategy in response to these changes.

Despite having a manufacturing facility in South Carolina for the past seven years, Volvo Cars primarily imports a majority of its vehicles from Gothenburg, Sweden. This includes popular models such as the XC60 and the larger XC90. The only model currently produced at the U.S. facility is the delayed electric SUV, the EX90, which has seen limited production numbers.

The CEO indicated that since April 2, the company has been subjected to a total tariff of 27.5% on automobiles imported into the U.S., a combination of an existing 2.5% tariff and a new 25% tariff. This results in a considerable cost increase for consumers, adding approximately 165,000 SEK to the price of a vehicle priced at 600,000 SEK.

When asked about the viability of continued sales under such high tariff conditions, the CEO remarked that sustaining vehicle sales at these tariff levels is impractical without local manufacturing. However, establishing new production capabilities in the U.S. is not an immediate solution and could take up to two years.

While some companies, like Jaguar Land Rover, have halted exports to the U.S. from their respective countries, Volvo does not currently plan to take similar measures. The CEO acknowledged the difficult position they are in but noted that many premium vehicles face similar tariff challenges when imported to the U.S.

Volvo has also been exporting vehicles from China to the U.S., but the CEO firmly stated that the current tariff environment makes this route impossible for future exports.

The company is now looking forward to potential negotiations between the European Union and the United States that might lead to reduced tariffs. The CEO is hopeful that both sides can agree to lower tariffs back to the original 2.5% levels, which would provide significant relief for manufacturers and consumers alike.

As Volvo Cars navigates these complexities, the company remains focused on selling existing inventory while exploring options for future models that could be manufactured locally in the U.S. The CEO hinted that the next model to be produced could either be a variant of the existing SUV lineup or a new hybrid model that resonates well with American consumers.