The Swedish manufacturer Volvo Car AB is planning an enormous cost-cutting exercise of 18 billion Swedish kronor (1.87 billion U.S. dollars), aimed at protecting its bottom line from a receding EV market and rising trade tensions related to, in particular, U.S. tariffs. The plan, unveiled on Tuesday, will involve deep job cuts and a wide-ranging restructuring under the leadership of reinstated CEO Hakan Samuelsson.
Volvo now stands, once again, before a tide of difficulty under CEO Hakan Samuelsson. Previously leading the automaker until 2022, Samuelsson was invited to return by Geely Chairman Li Shufu in 2023. Amazingly, in the interim, the panorama of demand for electric vehicles worldwide has been diminishing, sales have suffered thanks to model delays, and Trump-era tariffs have been interfering with Volvo's operations across the globe. Within these last months, Samuelsson articulated to Bloomberg Television that the tariffs were "disturbing a global company massively."
Along with canceling its 2025 and 2026 financial guidance due to the deep uncertainty of the economic climate globally and supply chain disruptions, Volvo expects to stabilize its operations by increasing local manufacturing activities in both the United States and China- the two major important markets for the brand.
The company wants to maximize output at the South Carolina plant and plans to bring a conventional or hybrid model to the lineup; an extended-range plug-in hybrid is also in development for the Asian market.
A Cost-Cutting Strategy is really as follows:
3 billion kronor from materials spend.
5 billion kronor from reductions in white-collar headcount.
10 billion kronor from reductions in investments and stock levels.
Most of the impact will take place financially from these cuts in 2026.
Missed earnings and falling share price
This follows disappointing first-quarter revenues and operating income at Volvo, both missing analyst estimates. The market value of the company has now almost halved from its IPO in 2021, and the announcement has seen its share price drop by nearly a further 11% in Stockholm. Currently, it is down about 31% year-to-date and has drawn increased interest from short sellers.
The restructuring at Volvo intends to reset the economic course of the brand, while there is still an uneven road ahead.
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