Facing Tariffs and Market Shifts, Volvo Aims to Become Fully Electric by 2026

Volvo Cars has announced an ambitious restructuring plan worth nearly $2 billion (SEK 18 billion) aimed at revitalizing growth and mitigating the financial impacts of U.S. tariffs under the Trump administration.

This move comes in response to a staggering 60% drop in operating income, which fell to SEK 1.9 billion in the first quarter of 2024.

To tackle these financial challenges, Volvo’s comprehensive plan includes SEK 3 billion in variable cost actions and SEK 5 billion aimed at enhancing efficiency in indirect spending.

Volvo Cars Unveils $2 Billion Restructuring Plan Amidst Financial Challenges

Additionally, SEK 10 billion will be utilized in cash actions to help reduce working capital and capital expenditures, with most of these measures projected to take effect by 2026. CEO Håkan Samuelsson emphasized the significant challenges the automotive industry is currently facing, noting that the company must enhance cash flow generation while lowering costs.

Volvo’s strategy focuses on three core areas: profitability, electrification, and regionalization. Notably, electrified vehicles accounted for 43% of Volvo’s sales in the first quarter, and the company is keen on building upon this momentum with the upcoming launches of the EX30 and the newly unveiled ES90, its second electric vehicle based on the Superset Tech Stack.

The company is also adapting to market changes in China by introducing its first extended-range plug-in hybrid electric vehicle (PHEV) later this year. As it continues to navigate the turbulent market landscape, Volvo is bracing for the potential impact of tariffs on its newest models, including the EX90 and EX30.

In a bid to streamline its operations, Volvo has established a new Americas region, encompassing the U.S., Canada, and Latin America, while also ramping up production at its Charleston, South Carolina plant. Despite the current headwinds, Volvo remains committed to its goal of becoming a fully electric car company.