The ES90 is already in trouble due to steep tariffs on both sides of the Atlantic
- Volvo has taken a $1.2 billion hit from issues related to the EX90 and ES90.
- The company said they can’t sell the ES90 in America profitably because of tariffs.
- Software and production issues also hampered the launch of the EX90 crossover.
Volvo’s bad news continues as the company is taking a one-off, non-cash impairment charge of $1.2 billion (11.4 SEK / €1.0 billion) in the second quarter. The hit stems from several challenges, including the disastrous launch of the EX90 and tariffs targeting Chinese-made vehicles.
More: Volvo ES90 Takes On BMW i5 With More Style And Range
Tariffs are impacting the brand-new ES90 and Volvo said the high fees prevent them from profitably selling the car in the United States. According to one recent report, Chinese EVs now face a 247.5% tariff when imported into the United States. That’s an astronomical number and one that appears to have doomed the S90 successor.
Tariff Pressure Expands Beyond the U.S.
Unfortunately for Volvo, tariff pressures aren’t limited to the United States. Europe has also been trying to protect its automakers from cheap Chinese EVs by establishing tariffs of their own. As Volvo noted, “ES90 margins are also under pressure in Europe for the same reason.”
Besides tariff troubles, Volvo confirmed the EX90 will have “reduced lifecycle profitability.” The company blamed this on “significant launch delays … and subsequent additional development costs.” The electric crossover debuted in November of 2022 and was billed as the “start of a new era for Volvo Cars.”
That era turned out to be a nightmare as the 2023 launch was pushed back to 2024 due to software issues. On top of that, sales have been modest as only 1,972 Americans have bought an EX90 in the first six months of the year. To put that number into perspective, Volvo sold 3,004 XC90s and 2,421 XC60s in June alone.
Looking Ahead, Despite Setbacks
In a statement, Volvo Cars CEO Fredrik Hansson said “Given market developments such as import tariffs in the US, development and launch delays for the EX90, and strategic investment prioritizations, we have reassessed volume assumptions for these two cars. This has resulted in a lower than planned lifecycle profitability.”
Despite all the software issues with the EX90, Hansson suggested the headaches will eventually be worth it as the crossover “laid a critical technological foundation for our future.” He added, “The learnings and core systems we developed, including core computing and electric drivelines, will be used in next-generation platforms. These innovations are key to realizing our long-term electrification and software-defined vehicle strategy, putting Volvo Cars at the technological forefront of the auto industry.”
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