Volvo's Premium Eco-friendly Electric Sedan Facing Issues
Volvo's New Flagship Battery-Electric Sedan Faces Tariff Challenges
Volvo Cars' latest offering, the ES90, a high-end battery-electric luxury sedan, is set to hit the markets this summer. However, the vehicle's profitability may be impacted by tariffs on Chinese-built electric vehicles (EVs) in key markets like the United States and Europe.
The U.S. has imposed a 100% tariff on Chinese EVs, making it economically unfeasible for Volvo to sell the ES90 profitably in the country. Similarly, the European Union applies countervailing duties on Chinese EVs based on the level of subsidies their manufacturers receive, which could also affect the ES90's profitability.
Despite these challenges, the ES90 boasts an impressive environmental profile. According to Europe's International Council for Clean Transportation (ICCT), the ES90 has one of the smallest lifecycle carbon footprints of any model produced by Volvo. When charged using a European energy mix, the ES90's carbon footprint is 31 tons, which is lower than its BEV stablemate, the EX40 compact SUV. Furthermore, the ES90's carbon footprint is about half that of the Volvo S90 mild hybrid model and is 30% lower than that for the Volvo plug-in hybrid S90.
The ES90 is built with sustainability in mind, featuring about 29% recycled aluminum, 18% recycled steel, and 16% recycled polymers and bio-based materials such as real, FSC-certified wood in the cabin. The vehicle also comes with Volvo's world-first battery passport, based on blockchain technology that allows the company to track the origin of raw materials and the overall health of the battery.
However, the ES90's launch is not without its challenges. Volvo has announced a SEK 11.4 billion ($1.23 billion) non-cash impairment charge in the first quarter of 2025 due to previous launch delays for the EX90, new import tariffs in the U.S. and Canada, and tariffs imposed on Chinese BEVs by the European Union. These factors, along with market developments and strategic investment prioritizations, have resulted in a lower than planned lifecycle profitability for the ES90 and another unnamed car.
Despite these challenges, Volvo's head of global sustainability, Vanessa Butani, states that the company goes above and beyond existing legislation in terms of sustainability. The ES90 is set to enter most European markets later this year, priced from €71,000 ($82,900).
While the ES90's carbon footprint is impressive, its profitability in key markets remains uncertain due to tariffs. However, Volvo's commitment to sustainability and innovation shines through in the ES90, making it an exciting addition to the luxury EV market.
References:
- Volvo Cars announces SEK 11.4 billion non-cash impairment charge in Q1 2025
- Volvo Cars' turnaround plan is on track, but details on ES90’s tariff impact are not provided
- Chinese EVs face high tariffs in North America
- Canada imposes 100% tariff on Chinese EVs
- UK tariff rates for EVs are not specifically detailed
The tariffs on Chinese-built electric vehicles in key markets like the United States and Europe pose financial challenges for Volvo, undermining the profitability of their flagship battery-electric sedan, the ES90. In the technology sector, the ES90 incorporates innovative features such as a battery passport using blockchain technology, but its impact in the automotive industry could be significant if these tariffs persist. Furthermore, the finance industry's interest in the ES90 might be affected by the uncertainties surrounding these tariffs, potentially impacting investment in the transportation sector.
