Volvo Cars could increase U.S. production and seek out more domestic suppliers to offset higher import duties, especially on batteries for electric vehicles, President and CEO Jim Rowan said on a call with analysts on Feb. 6.
Rowan told analysts that Volvo has the capacity to expand domestic production at its plant in Ridgeland, South Carolina, which can manufacture up to 150,000 vehicles annually. At the time of the call, vehicles manufactured in Europe and exported to the U.S. were subject to a 2.5% tariff, he said. However, if that changed, the automaker would deal with the issue at the appropriate time.
On Wednesday, President Donald Trump said during a media briefing that he would soon announce a 25% tariff on vehicle imports and other products from Europe.
Trump said the European Union is a different situation than Canada because “they don’t accept our cars,” adding that the alliance of nations has taken advantage of the U.S.
“They don’t accept, essentially, our farm products,” Trump said. “They use all sorts of reasons why not. And we accept everything, and we have about a $300 billion deficit with the European Union.”
With Volvo now producing its all-electric luxury EX90 SUV in South Carolina, the automaker is seeking a U.S.-based battery source to mitigate tariff hikes on imports from China, Rowan said. Batteries used in the U.S.-manufactured EX90 is supplied by China-based CATL and subject to a 25% duty that could increase an additional 10% as soon as March 4.
The import tax on batteries was previously 7.5%, Rowan said, adding that the spike “takes a bite out of some of the profits that we make for the EX90.”
The EX90’s 2023 introductory base price was $76,695. But Volvo dealers and EX90 pre-order customers were informed on June 26, 2024 that the base model price was increasing to $79,995 due to increased material costs, a company spokesperson said in an email to Automotive Dive. The price increase also was updated on the automaker’s website that same day.
Growing EV sales is a priority for Volvo, which has targeted electrified vehicles — a mix of battery electric vehicles and plug-in hybrid models — to represent between 90% and 100% of its sales by 2030. A total of 34.4% of the 8,136 vehicles sold by Volvo in the U.S. in January were electrified models, representing a 49.3% year-over-year increase.
Volvo’s U.S. manufacturing operations may feel some impact of higher duties on parts sourced from Mexico, Rowan said, though any increase would be “nothing that would cause us great concern.”
Trump said in a Truth Social post Thursday that tariffs on imports from Canada and Mexico would take effect on March 4.
Volvo as well as other automakers including General Motors, Ford Motor Co. and Nissan Motor Corp. are all weighing options to mitigate a wave of tariffs announced by Trump, including new duties on steel and aluminum.
