Automobile manufacturer to implement job reductions as part of a £1.4 billion cost-cutting initiative; escalating tariffs and electric vehicle sales downturn significantly impacting profitability.
Unvarnished Dispatch:
Swedish automotive juggernaut, Volvo, unveiled its brutally honest plan to slash costs by a whopping £1.4 billion, an attempt to weather the storm of external challenges like plummeting electric vehicle sales and Trump's trade war nonsense.
This cost-cutting measures will include unpleasant consequences for the company's global workforce, as Volvo admitted that redundancies at their operations worldwide are imminent, starting from next year. However, they remained tight-lipped on the specific locations and numbers of affected jobs.
The Chinese-owned (Geely) carmaker aims to safeguard its profitability by streamlining direct and indirect costs, seeking efficiencies to navigate the perfect storm of economic issues—ranging from trade uncertainty, caused by Donald Trump, decreasing demand in China, and the slowdown in electric vehicle appetite.
Volvo's year-on-year electric car sales dived by a discouraging 25% in March, shortly after they welcomed back their old CEO, Håkan Samuelsson, to guide them through choppy waters. In the first quarter of 2025, Volvo's global car deliveries dropped 6% overall, resulting in a hefty 11.7% revenue drop from £7.3 billion to £6.4 billion.
During the first three months of 2025, Volvo managed to sell 70,737 cars worldwide—a disappointing 10% decrease compared to the same period last year. Sales of fully electric vehicles took the hardest fall, plummeting 26% to account for 19% (down from 21%) of deliveries in March 2025.
Despite being one of the companies at the forefront of the electric vehicle transition, offering an electrified variant of every model in its range, Volvo finds itself amidst a drastic turn of events. They initially committed to producing only electric cars by 2030, but due to delays in charging infrastructure expansion, government incentive withdrawal in some markets, and increased tariffs, they've decided to pull back their deadline and now aim for 90-100% of global sales to be either pure electric or plug-in hybrid by the end of the decade.
Volvo's earnings before interest and tax plunged from £370 million to a mere £120 million, and they've halted financial guidance for 2025 and 2026, citing recent developments and increased uncertainties that make future predictions unfeasible.
Some other manufacturers have reported similar financial struggles. Volkswagen Group, which owns VW, Audi, Bentley, and Porsche, among others, experienced a 40% decline in profits during the first quarter of this year. They blame this on the explosive growth of electric vehicles, which yield lower profit margins and are drowning their earnings.
In a nutshell, the auto industry is in a state of upheaval, with challenges of staggering proportions. The old guard is struggling to keep up with the relentless surge of change, with electric vehicles emerging as the new norm. Nevertheless, as Volvo navigate this transition, they remain committed to becoming a fully electric car company, using plug-in hybrids as a practical bridge for customers hesitant to take the full electric plunge.
[1] B Bloomberg: Volvo Car’s Earnings Fall as Uncertainty Snarls Electric Transition[2] B BBC: Volvo to cut 18bn kronor in costs amid electric vehicle slump[3] R Reuters: Volvo to cut thousands of jobs amid severe profit squeeze[4]_ T Financial Times: Volvo abandons commitment to be an all-electric car maker by 2030
- Volvo confirmed that they will be making significant cost cuts, citing the impact of the electric vehicle slump on their sales, with job reductions at their worldwide operations starting next year, as they seek efficiencies to navigate ongoing economic issues.
- Despite being a pioneer in electric vehicles, Volvo, like other manufacturers, has experienced financial challenges, with their earnings before interest and tax plummeting in 2025, leading to the halting of financial guidance for the year and the abandonment of their commitment to become a fully electric car company by 2030.
- As Volvo moves towards becoming a fully electric car company, they will be focusing on selling both pure electric and plug-in hybrid vehicles, aiming for 90-100% of global sales to be electrified by the end of the decade, despite the recent decline in sales of electric Volvo models.
