Volvo Slashes 3,000 Jobs as Tariffs and EV Demand Slowdown Hit Hard

Volvo Cars announced on May 26, 2025, that it will cut 3,000 jobs globally, primarily targeting white-collar roles, as the automaker grapples with high costs, a slowdown in electric vehicle (EV) demand, and looming trade tariffs, reports Automotive News. The decision comes amid a challenging period for the automotive industry, with Volvo citing the need to improve cash flow and reduce operational expenses.

Job Cuts Target Sweden and Beyond

The layoffs will affect approximately 1,200 employees in Sweden and 1,800 consultants worldwide, representing about 15% of Volvo’s global office-based workforce. According to CEO Hakan Samuelsson, the reductions will span multiple departments.

“It’s white collar in almost all areas, including R&D, communication, human resources,” Samuelsson told Reuters. “So it’s everywhere, and it’s a considerable reduction.”

These cuts follow a 60% plunge in first-quarter operating income, prompting Volvo to unveil a cost-slashing program on April 29. The company estimates restructuring costs of 1.5 billion Swedish crowns, equivalent to $140 million USD, which will impact its second-quarter results.

Trade Tariffs Threaten Volvo’s U.S. Market

A significant driver behind Volvo’s restructuring is the uncertainty surrounding U.S. trade policies. On May 23, Samuelsson highlighted the potential impact of proposed tariffs, stating, “High tariffs will make it impossible to export the EX30 to the U.S.” The EX30, an affordable electric vehicle manufactured in Belgium, is a key model for Volvo’s U.S. market expansion.

U.S. President Donald Trump recently threatened a 50% tariff on imports from the European Union starting June 1, though he later extended the deadline to July 9 for negotiations. With most of Volvo’s production based in Europe and China—regions heavily exposed to these tariffs—the company faces significant challenges. Samuelsson noted on May 23 that customers would bear a substantial portion of tariff-related cost increases, potentially pricing the EX30 out of the U.S. market.

EV Demand Slowdown Adds Pressure

Volvo, majority-owned by China’s Geely Holding, is also contending with a global slowdown in EV demand. In the first quarter of 2025, the company reported 43,500 full-time employees and 3,000 staffing agency personnel, but weaker consumer confidence and unpredictable markets have strained its financial outlook.

Volvo’s new CFO, Fredrik Hansson, emphasized the strategic nature of the layoffs, stating, “It’s tailored to make us structurally more efficient and how that plays out might vary depending on the area. But no stone is left unturned.” The company aims to save money and create room for growth, with Samuelsson adding, “I think it will be very healthy, and will save us money and give space for people to [take on] bigger responsibilities.”

Industry Trends and Volvo’s Path Forward

The broader EV industry is facing similar headwinds, with high production costs and trade disputes complicating growth. Volvo’s EX30, a compact electric SUV, has been a cornerstone of its electrification strategy, but the potential loss of the U.S. market could hinder its global ambitions. The company’s focus on cost reduction aligns with industry trends, as automakers worldwide adapt to economic pressures and shifting consumer demand.

For EV owners and enthusiasts, Volvo’s restructuring signals a cautious approach to expansion, potentially delaying new model releases or technological advancements. However, by streamlining operations, Volvo aims to remain competitive in a rapidly evolving market, balancing efficiency with its commitment to sustainable mobility.

Photos courtesy of Volvo