Volvo Cars concerned about EU tariffs on China-made EX30 electric cars

Volvo Cars has voiced concern over the European Union’s (EU) provisional import tariffs on electric cars manufactured in China.

Jim Rowan addressed the EU’s additional import duties and their potential effect on the manufacturer during the question-and-answer session accompanying the company’s second-quarter results.

The issue is particularly significant because the new EX30 - Volvo’s chief growth driver this year and already the third best-selling electric model in the European market - is the brand’s only vehicle built in China and sold in Europe.

It is therefore important to understand how the additional import tariffs, which add 19.9% in Volvo’s case, could affect both the EX30 and Volvo’s overall results.

Volvo Cars’ chief executive Jim Rowan said that, given the “turbulent environment”, the brand’s performance had been very satisfactory, “which is already a good starting point”.

Nevertheless, he stressed that although everything is currently going well, a possible increase in tariffs on China-made electric cars could create a short-term problem.

The Swedish manufacturer has already confirmed that EX30 production will move to Europe, specifically Ghent in Belgium, at the end of the first half of 2025.

“Until we can begin producing the EX30 in Belgium, we will try to understand what the impact of the tariffs will be in the second half of this year.”

Jim Rowan, CEO of Volvo Cars

EU import tariffs and the Volvo EX30

Johan Ekdahl, Volvo Cars’ chief financial officer, echoed these uncertainties. While he said it was “not possible to quantify the precise impact of these tariffs”, he acknowledged that they would clearly have some effect.

“We do not know the exact outcome of these tariffs, as this is still a dialogue under way with the European Commission.”

Johan Ekdahl, CFO of Volvo Cars

Despite strong demand and the EX30 delivering very positive gross margins (20%), the CEO said that “we are looking at all the available options”, without ruling out a price adjustment for the electric SUV. In Portugal, prices for the Volvo EX30 start from €39,554.

Uncertainty over the United Kingdom

Speaking further about the import tariffs, Rowan also expressed concern that the United Kingdom - Europe’s second-largest market - has yet to decide whether it will introduce the same duties provisionally imposed by the EU.

Other concerns for Volvo Cars

Beyond tariffs, Volvo Cars’ CEO answered questions about the Chinese market and the ongoing price war there. Rowan said the market “is very turbulent and has far more competition than it had in the past.”

However, he said the brand’s strategy, particularly for electric models, is not to compete in the mass market, but rather in the premium segment.

“We remain in the premium segment, which allows us to survive the turbulence, and this is expected to last between 18 months and two years.”

Jim Rowan, CEO of Volvo Cars

Volvo Cars’ top executive also raised other geopolitical concerns, including the US presidential election, as well as the increase in US import tariffs on batteries from 7% to 25%.

A resilient supply chain

Even so, Rowan emphasised that, regardless of these concerns, “the important thing is to make sure that you have a resilient supply chain.”

“It is impossible to predict turbulence in the automotive industry, or where it will arise, so rather than trying to guess, we must ensure that we have a more resilient supply chain than we had before.”

Jim Rowan, CEO of Volvo Cars