Karmactive Team
Volvo Cars announced Tuesday it will build a new hybrid model at its South Carolina plant before the end of this decade, responding to both US market demands and increasing tariff pressures under President Trump’s administration.
The Swedish automaker plans to add this next-generation hybrid vehicle alongside the previously announced XC60 mid-size SUV, which will begin US production in late 2026. These additions aim to boost activity at Volvo’s Ridgeville factory near Charleston, which currently produces only the fully electric EX90 SUV and Polestar 3 models.
“It will take time until America is electric everywhere,” explained Volvo Cars CEO Hakan Samuelsson. He described the upcoming larger hybrid as “more an electric car, but with a Plan B. When the battery is flat, you have a combustion engine kicking in, but normally you’d drive it electric.”
The Ridgeville plant, which represents about $1.3 billion in investment, currently uses only a small fraction of its 150,000-vehicle annual capacity. By adding more models, Volvo aims to increase efficiency while creating a production hub that can serve both US and export markets.
This production shift comes as automakers worldwide scramble to adjust manufacturing strategies in response to Trump’s tariffs on imported vehicles. While a July trade deal with the European Union would reduce US tariffs on European cars from 27.5% to 15%, that agreement hasn’t yet taken effect.
“The tariffs have accelerated this process, it would be fair to admit that,” Samuelsson acknowledged. “But it’s not only the tariffs.”
The move also reflects Volvo’s evolving approach to electrification. Despite previously positioning itself as an EV pioneer with plans to phase out all non-electric models by 2030, the company reversed course last year, keeping hybrids in its lineup as EV adoption progresses more slowly than expected.
“Electrification has not picked up as fast as we thought a few years ago,” Samuelsson said. “We think we need hybrid cars longer.”
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Luis Rezende, president of Volvo Cars Americas, emphasized the strategic importance of expanding US production: “The Charleston plant is foundational to our strategic growth plan for the US. By adding another model into production here, we’ll take a big step toward realizing the full potential of our local manufacturing investments and workforce.”
The announcement coincides with Volvo’s 70th anniversary in the United States and supports the company’s ambitious growth targets. Volvo aims to increase US sales by 60% over the next five years, from approximately 125,000 vehicles sold last year.
Beyond avoiding tariffs, the production shift could create export opportunities. Samuelsson noted that a 10% reduction in duties on US auto imports into Europe “gives us the possibility to grow” Volvo’s operations in Europe by selling US-made vehicles abroad.
Volvo’s expansion runs counter to recent trends from other automakers who have scaled back EV production plans in the US. Mercedes-Benz halted production of its electric EQE and EQS cars in Alabama in July, while Honda and Ford have cancelled plans for electric models at their American plants.
For Volvo, increasing US production is part of a broader strategy to build cars closer to where they’re sold. “If you want to stay in the US, the level of localization of our products needs to increase tremendously,” Rezende said. “The industry is going in this direction and we will be doing the same because it’s just not working properly if we source from different continents.”
