Volvo Cars has announced that it will start building more cars in the United States. This big decision came after the US government raised tariffs — a type of tax — on vehicles that are imported from other countries. The higher tax, set at 25%, makes it more expensive for car companies to bring cars and car parts into the US from other parts of the world.
To avoid these extra costs, Volvo says it will now make more vehicles inside the United States. The company already has a car factory near Charleston, South Carolina. There, Volvo makes two electric vehicles: the EX90 and the Polestar 3. But now, they say they will need to add at least one more car model to be built at this same factory.
Volvo first opened the South Carolina plant in 2018. At first, they planned to build sedans there and send them to China. However, when the US and China began putting tariffs on each other’s goods a few years ago, those shipping plans were quickly canceled.
With the new 25% tariff now in effect — and more taxes expected on some car parts by early May — Volvo has no choice but to act fast. Building more cars in the US will help avoid those extra costs and keep prices from going too high for buyers.
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A Return to Familiar Leadership
Volvo has also made a big leadership change. The company has brought back a former CEO to help turn things around. The person had already been the head of Volvo for ten years and is now returning to the job. The company had tried a different leader, who came from outside the car business. But under that leadership, Volvo had to lower its goals and even gave up on a major plan to sell only electric cars by the year 2030.
With the return of the former boss, Volvo is hoping to fix some of the problems it faced in the last few years. One of the first things being done is responding quickly to the new tariffs by moving more production to the US. The CEO told shareholders during a company meeting that they must “act swiftly” and learn from how some other countries, like China, manage to build things locally at lower costs.
Volvo says it needs to cut its manufacturing costs. Building cars in the US could help avoid taxes but also might be more expensive if not done the right way. That’s why choosing which new model to build in South Carolina is an important decision. The company said they are still deciding which car will be added next to the US production line.
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Pressure to Win Back Trust
There’s more pressure on Volvo than just tariffs. The company’s stock price has dropped a lot — more than 60% — over the past three years. That means many investors have lost confidence in how the company is doing. The returning CEO now has a tough job: get the company back on track and regain the trust of those who put money into it.
He said clearly that his job is to bring back investor confidence. He plans to share a new plan for turning things around in the coming weeks. But for now, the main focus is on dealing with the tariffs and making sure Volvo can keep selling cars at a good price.
At the same shareholder meeting, the chairman of the company also spoke. He said the world has changed a lot since Volvo became a publicly traded company in 2021. One of the biggest changes, he noted, is that it’s now much harder to do business across country borders because of new trade barriers — like the tariffs now being added in the US.
So far, Volvo has not announced exactly which new vehicle it will build at the South Carolina plant. But the message is clear: to stay strong in the US market, Volvo needs to make more cars where it sells them — and it needs to do it quickly.
