Chinese-owned Volvo Hit with U.S. Delays Following Tariffs

Volvo Cars is delaying the launch of its low-cost EX30 BEV to the U.S. until 2025 as a result of higher U.S. tariffs on China-made BEVs, while the Swedish brand owned by Chinese automaker Geely moves production to Belgium.

The move to Belgium will also benefit the company’s European Union distribution, as the China-built BEV, which has had early sales success, also faces stiffer EU tariffs designed to inhibit the growth of China-made BEVs in EU countries.

Volvo Cars sold 14,500 EX30 models globally in the first quarter of 2024, nearly matching the EX40, which sold 17,400. In both the U.S. and EU, demand is rising for BEVs costing less than what has been offered up to now.

The announcement comes “due to changes in the global automotive landscape,” according to a Volvo Cars statement. Plans to launch the China-built EX30 in Canada later this year are intact.

The delay due to the higher prices that would result from the new U.S. (as well as EU) tariffs comes at a time when car buyers say their No.1 impediment, according to a recent Cox Automotive study, is the higher costs of BEVs relative to ICE vehicles.

After deciding that BEVs imported from China have an unfair pricing advantage due to Chinese government subsidies, the EU’s executive branch, the European Commission, said it would impose additional tariffs on Chinese BEVs of up to 38.1%. Last month, the U.S. announced a 100% tariff on Chinese electric vehicles.

According to global auto data firm Jato Dynamics, the average retail price of imported Chinese EVs was 29% lower than models produced in Europe. The pricing advantage comes from lower labor costs and lower battery costs due to the fact that China currently controls most of the BEV battery supply chain, as well as various incentives and subsidies the Chinese government bakes into BEV companies’ R&D.

In a statement, the EC says China’s trading practices are “causing a threat of economic injury to EU and BEV producers.”

Volvo’s EX30 starts at $34,950 in the U.S., making it one of the most affordable BEVs on sale in the country today, available in both single- and twin-motor options. The Single Motor EX30 features up to 275 miles (443 km) of range, while the AWD model gets up to 265 miles (427 km).

Volvo has been building its larger EX90 electric SUV in South Carolina. The all-electric Volvo luxury SUV is expected to be available in the second half of 2024.