Volvo builds the EX90 and Polestar 3 at its factory in South Carolina, but the bulk of its catalog is produced overseas. The automaker operates factories in Sweden, Belgium, China, and elsewhere, which puts it at significant risk under the Trump Administration’s tariffs. Reuters reported that, to help mitigate some of the impacts, Volvo announced it would start building a new hybrid vehicle in the U.S. by the end of the decade.
The way Volvo’s CEO describes it, the new vehicle sounds like a plug-in hybrid, saying it was “more an electric car, but with a Plan B. When the battery is flat, you have a combustion engine kicking in, but normally you’d drive it electric.” That aligns with Volvo’s Recharge plug-in hybrid models, which are all built internationally at the moment.
While it remains a Swedish company, Volvo’s parent company, Geely, is Chinese, and some of its vehicles are built there. Other models built in Europe will still see tariffs when they enter the U.S., with a hefty tariff on vehicles when the trade plan is complete.
Volvo will boost output at the South Carolina factory with other vehicles. Earlier this year, it announced that it would shift some XC60 production to the facility, helping absorb some of its excess capacity, as the plant is currently nowhere near its 150,000-vehicle annual capability. Additionally, U.S.-built vehicles won’t see the tariffs that European imports do, which could make models like the EX90 more appealing to overseas buyers.
Like many other automakers, Volvo is reevaluating its approach to electrification, stepping back from some of the more aggressive plans in favor of a slower, more measured approach. The brand backtracked on its goal of becoming an all-electric automaker by 2030, stating last year that it would continue to offer hybrids in its lineup. That said, its CEO still believes EVs are an inevitability. It’s also not the only one moving vehicle production to the United States, as Hyundai and others have announced plans to build more of their vehicles in the country.
