Volvo Automobiles Reports Deficits in Electric Vehicle Sales and Due to Tariffs
Volvo Cars, the Swedish automaker owned by China's Geely, is currently grappling with a series of financial hurdles that have led to restructuring efforts and significant cost-cutting measures.
## Current Challenges
The production delays and higher development costs for new models such as the EX90 and ES90 platforms have impacted profitability, necessitating adjustments in financial assumptions. This has resulted in a 1.4-billion-kronor restructuring charge and the announcement of 3,000 job cuts in May.
Import tariffs on the ES90 and EX90 models in the US have further reduced profitability, adding to the costs associated with bringing vehicles to market. The tough competition in the automotive market and the challenging macroeconomic environment have also put pressure on Volvo Cars.
## Financial Impact
In Q2 2025, Volvo Cars reported a group operating loss (EBIT) of SEK -10.0 billion, with an EBIT margin of -10.6%. Excluding items affecting comparability, the EBIT was SEK 2.9 billion with a margin of 3.1%. Revenues decreased to SEK 93.5 billion from SEK 101.5 billion in the same period of 2024, and retail sales fell by 12% in Q2 compared to the previous year.
Despite these challenges, Volvo Cars remains committed to its SEK 18 billion turnaround plan, which is expected to yield full effects by 2026. The company has seen some positive impacts from its restructuring efforts, including improvements in free cash flow and a slightly higher EBIT margin excluding one-time items.
## Adapting to Challenges
To navigate the challenging car market affected by US tariffs and the costly switch to electric vehicles, Volvo Cars announced an 18-billion-kronor cost-cutting plan in April. The company will also begin building its XC60 SUV in the United States next year to avoid US tariffs.
The CEO of Volvo Cars has stated that demand is under pressure due to macroeconomic factors, tariff-related uncertainties, and increased competition. In response, the company has ceased providing financial guidance for 2025 and 2026 due to "external developments and increased uncertainties".
The announcement of building the XC60 SUV in the US was made on Wednesday, and shares in Volvo Cars increased more than seven percent on the Stockholm stock exchange. This quarter's revenue beat the analyst consensus of 88.2 billion kronor compiled by Bloomberg.
Despite the net loss of 8.1 billion kronor ($830 million) due to production delays, higher development costs, and US tariffs on the EX90 electric SUV and ES90 electric sedan, Volvo Cars remains optimistic about its future. The company's resilience and adaptability in the face of these challenges are evident in its ongoing efforts to streamline operations and expand its market presence.
Volvo Cars, in response to the challenging macroeconomic environment and the costly switch to electric vehicles, has announced an 18-billion-kronor cost-cutting plan and plans to build its XC60 SUV in the United States to avoid US tariffs as a step towards environmental sustainability, leveraging the advancements in technology. The company continues to grapple with the environmental impact of producing the EX90 and ES90 models, as import tariffs on these models in the US have further reduced profitability, adding to the costs associated with bringing electric vehicles to market.
