Volvo Cars blames EU tariffs, cuts 2024 sales forecast

Volvo Cars has revised its full-year retail sales forecast, now expecting growth between 12% and 15%, down from the previous 15%. The Swedish automaker attributes this adjustment to European tariffs on electric vehicles (EVs) manufactured in China, impacting one of its key models until production shifts to Belgium.

Despite reporting better-than-expected second-quarter results, which boosted its shares by 6% in morning trade, Volvo announced a reduction in its sales growth forecast for the year. CEO Jim Rowan explained that the newly imposed tariffs drive the revised forecast. “It’s driven by tariffs,” Rowan told Reuters. “It’s a short-term issue for us, but it is an issue and we’re just going to have to deal with that.”

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Rowan emphasized that while Volvo still aims for 15% growth, the company provided a range due to the prevailing uncertainty. “We wanted to put a floor on that for the markets to say we’re still going to grow but there are some headwinds,” he said.

Earlier this month, the EU introduced provisional tariffs of up to 37.6% on imports of EVs from China, accusing them of benefiting from unfair subsidies—a claim that Beijing disputes. Volvo, majority-owned by China’s Geely, faces a 19.9% tariff on its Chinese-made fully-electric EX30.

Rowan stated that Volvo will endure these tariffs for at least six months until EX30 production is relocated to Belgium, which is anticipated to commence early next year. The main production ramp-up at Volvo’s Ghent factory is expected during the second half of 2025.

Bernstein analysts described the new sales guidance as “sensible given today’s macroeconomic situation.” Major automakers have experienced a slowdown in EV demand, partly due to the lack of affordable models and the slow expansion of charging infrastructure. In contrast, U.S. and European automakers have reported strong hybrid sales and are launching more hybrid models to meet growing demand.

Volvo reported a “modest decline” in orders for fully electric models in the second quarter but noted that “demand for hybrid cars remains very strong.”