Volvo just announced a major pivot in its electric vehicle strategy, revealing plans to manufacture extended-range electric vehicles (EREVs) at its South Carolina factory. The move comes as the Swedish automaker - facing declining sales and tariff pressures - pushes back its all-electric timeline from 2030 to 2040. This represents a fundamental shift from pure EVs to hybrid bridge technology as the industry grapples with changing market dynamics.
Volvo just threw the automotive industry another curveball. The Swedish automaker announced it's doubling down on American manufacturing with plans to build extended-range electric vehicles at its South Carolina plant, marking a dramatic shift from its original all-electric aspirations.
The announcement came during a factory tour in Ridgeville, where CEO Håkan Samuelsson outlined what he calls Volvo's 'second-generation hybrid' strategy. Unlike traditional hybrids that rely primarily on combustion engines, these EREVs function as electric cars with small gas engines serving as backup power generators. 'It's more an electric car with a backup engine than the first-generation [hybrid], which is a combustion car with some batteries,' Samuelsson told reporters.
The timing isn't coincidental. Volvo has been hemorrhaging sales throughout 2024, with monthly declines driven by rising prices and softening EV demand. The company even had to pause sales of certain models in the US as Trump-era tariffs made imports prohibitively expensive. This new EREV production represents Volvo's attempt to manufacture its way out of trade war casualties.
Nvidia is also getting a piece of the action, supplying computing power for Volvo's updated EX90 SUV that's rolling out alongside the gas-powered XC60. But the real story is Volvo's strategic retreat from pure electrification - the company has now pushed its all-electric deadline from 2030 to 2040, a full decade delay that signals broader industry uncertainty.
Volvo isn't alone in this EREV gold rush. Ford has been betting heavily on extended-range technology, while Ram, Hyundai, Nissan, and Scout Motors have all announced similar programs. The convergence stems from looming federal tax credit changes that could crater pure EV sales, making hybrid bridge technologies suddenly attractive again.
The Swedish company's Chinese ownership through Geely creates both opportunities and complications. While Volvo can tap into Geely's extensive hybrid expertise - the Chinese parent produces numerous hybrid models - manufacturing in the US helps navigate increasingly complex trade relationships. 'We're fairly global,' Samuelsson noted, 'I have engineers in pretty much all continents ... the majority of which are in Sweden. So that's always going to be the center of gravity.'
