Volvo cuts sales forecasts citing EU tariffs on Chinese electric cars

Swedish automaker facing a 'minimum of six months' of tariffs until it moves EX30 production to Belgium, which is expected to start early next year

Volvo is majority-owned by China's Geely and faces a 19.9% tariff on its Chinese-made fully-electric EX30. The tariffs come following claims by the EU that Chinese electric cars benefit from unfair subsidies. 

Swedish carmaker Volvo has cut its full-year sales forecast, blaming EU tariffs on electric cars made in China, which it said would hit one of its key electric models until it shifts production to Belgium.

While Volvo posted better-than-expected car sales for the period April to June, it lowered its forecast for sales growth this year to 12%-15% from 15%. Shares in the company increased 6% in the morning trade.

Volvo chief executive Jim Rowan said the revised forecast was “driven by tariffs” saying it was a “short-term issue for us, but it is an issue and we're just going to have to deal with that”.

He said while Volvo still hoped for 15% growth, it was now providing a range given the 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 announced provisional tariffs of up to 37.6% on imports of electric cars made in China, saying they benefited from unfair subsidies — an allegation Beijing rejects.

Volvo is majority-owned by China's Geely and faces a 19.9% tariff on its Chinese-made fully-electric EX30.

Mr Rowan said the Swedish automaker faced a "minimum of six months" of tariffs until it moves EX30 production to Belgium, which is expected to start early next year.

Volvo said the main ramp-up of EX30 production at its factory in Ghent was expected during the second half of 2025.

Major automakers have seen slowing demand for electric cars, driven in part by a lack of affordable models and the slow rollout of charging points.

Volvo said it saw a "modest decline" in orders for fully electric models in the second quarter, but noted "demand for hybrid cars remains very strong".

"We will continue to invest in this line-up and these cars form a solid bridge for our customers not yet ready to move to full electrification," Rowan told analysts in a conference call.

Volvo produced 211,900 cars in the second quarter, more than it sold amid the decline in European demand for electric cars.

Its operating income, which includes its stake in loss-making Polestar, rose to 8bn Swedish crowns (€693m) from 5bn crowns a year earlier. That topped the 6.7bn crowns expected by analysts.

This comes as French carmaker Renault posted strong sales for the first half of the year, up 1.9%, on the back of the strengthening demand for hybrid cars.

The company sold more than 1.15 million vehicles globally between January and June. It said sales in Europe grew 6.7%, outpacing market growth of 5.5%, with electrified vehicles, including fully electric and hybrids, accounting for 29.6% of the group's sales in the region, up 4.3% from 2023.

Sales of hybrids accounted for 34.6% of the brand's volumes, up from 25% a year ago, said Renault brand chief executive Fabrice Cambolive.

“The idea was really to have a growth in Europe that was based on hybrids in the first half," he said.

Reuters