Volvo shifting manufacturing to different regions worldwide to dodge import taxes

Volvo Cars, the Swedish automaker, has announced a comprehensive restructuring plan aimed at boosting profitability and returning the company to profitability by 2026. The plan, led by CEO and President Håkan Samuelsson, includes cost-cutting measures of 18 billion Swedish kronor ($1.9 billion).

As part of the restructuring, Volvo will implement a new governance guideline in China, giving executives more freedom to adapt to local conditions and grow faster. This decision follows the success of the XC70 example, where Volvo was able to lower its costs by having a cooperation on a more parts and components level in China.

One of the significant changes is the relocation of production for Volvo's fully electric EX30 mid-sized SUV from China to Europe. This move, which began in April 2023, was taken to avoid tariffs. The new plant in Slovakia will also be used to build the Polestar 7 for sale in Europe. Volvo will work with Polestar, also owned by Geely, to achieve this.

The restructuring plan also includes the elimination of 3,000 jobs or 15% of its global workforce. About 1,100 people have already departed from the automaker.

In the U.S., Volvo's operations will benefit from a new leadership structure and experience more empowerment to grow in the Americas. Steffen Freichel, the Head of Commercial Operations at Volvo, will lead the U.S. operations as of May 2025. The move allows Volvo more production synergies with its parent company, Geely, where Volvo can introduce its line of cars based on Geely platforms.

Volvo Cars is also planning to build its XC60 mid-sized SUV at its Ridgeland, South Carolina factory starting in late 2026. This decision will give the factory better utilization in the second half of 2026.

The restructuring decision was made as part of Samuelsson's strategy since his return to the automaker. The restructuring costs will represent a one-off charge impacting earnings before interest and taxes by 1.4 billion SEK ($147.1 million). The company took a $1.2 billion impairment charge, but the restructuring is expected to offset these costs and ensure Volvo's long-term sustainability.

In summary, Volvo Cars is undergoing a significant restructuring process to boost profitability, circumvent tariffs in the U.S., China, and Europe, and return to profitability by 2026. The plan includes cost-cutting measures, leadership changes, and production relocations, demonstrating Volvo's commitment to adapting to the changing automotive landscape.

Volvo shifting manufacturing to different regions worldwide to dodge import taxes