Volvo Layoffs 3,000 Employees Globally and Blames 25% U.S. Tariffs

Image Credit: Mikael Sjoberg on Bloomberg from Getty Images

Volvo Cars is eliminating 3,000 white-collar positions globally, including 1,200 in Sweden and 1,000 consultants, as part of a $1.9 billion cost-cutting initiative that will impact around 15% of the company's total office-based workforce. The company cites rising raw material costs, a slowdown in electric vehicle (EV) demand, and escalating U.S. tariffs as key factors driving this decision.

The U.S. has imposed a 25% tariff on imported vehicles and parts, significantly impacting Volvo, which imports many of its U.S.-sold cars from Europe and China. These tariffs have added approximately $2,000 to the cost of a $40,000 vehicle, squeezing profit margins.

In response, Volvo has delayed the U.S. launch of its EX30 EV until production could be shifted from China to Belgium, increasing the starting price from $35,000 to $46,195.

Volvo Cars president and CEO, Håkan Samuelsson, said:

"The actions announced today have been difficult decisions, but they are important steps as we build a stronger and even more resilient Volvo Cars."

CEO Håkan Samuelsson emphasized the necessity of these measures to strengthen the company's resilience and improve cash flow, and according to Reuters, he also wants Volvo customers to pay tariffs.

Despite the layoffs, Volvo remains committed to its goal of becoming fully electric by 2030, with 19% of global sales in Q1 2025 being fully electric vehicles—the highest among premium brands.

The company is also restructuring its operations to focus more on regionalization, aiming to reduce reliance on cross-border trade and mitigate the impact of tariffs. This includes plans to increase production at its South Carolina plant, which currently operates at a fraction of its 150,000-vehicle annual capacity.

Volvo's strategic pivot reflects broader industry challenges, as automakers navigate the complexities of electrification, supply chain disruptions, and protectionist trade policies. The company's success will depend on its ability to adapt to these changing dynamics while maintaining its commitment to sustainable mobility.