Volvo hunts for US battery supply to avoid 25% tariff on key model
Tariffs on electric-vehicle battery cells and materials imported from China more than tripled to 25 percent last year, pressuring Volvo Cars to find a domestic source for its U.S.-made EX90 crossover.
Volvo Cars CEO Jim Rowan said the higher tariff “takes a bite” out of the profit on the EX90, which is assembled in Ridgeville, S.C., with batteries from China’s Contemporary Amperex Technology Co.
Rowan said on a Feb. 6 analyst call,
We’re looking to try and find if we can get a local battery manufacturer in the U.S. to help us minimize those costs,
“That’s an ongoing project for us right now.”
AutoForecast Solutions projects Volvo will produce up to 22,000 EX90s in the U.S. this year. It said the battery accounts for about 30 percent of an EV’s cost.
The tariff increase forced Volvo to hike the sticker price by $3,300 last summer — before the vehicle reached dealerships. The EX90 starts at $81,290 with shipping.
The crossover is the battery-powered counterpart of Volvo’s workhorse XC90.
Alleged ties to Chinese military
Last month, the U.S. Defense Department added CATL to its list of firms with alleged links to the Chinese military. The list doesn’t carry any specific sanctions but can deter U.S. companies from business dealings with those on it.
CATL has called the designation a mistake and said it
Is not engaged in any military-related activities.
Liu Pengyu, a spokesperson for the Chinese embassy in Washington, told the BBC.
The U.S.’s practices violate the market competition principles and international economic and trade rules that it has always advocated, and undermine the confidence of foreign companies in investing and operating in the United States,
CATL accounted for more than a third of global battery shipments in the third quarter of 2024, according to Seoul-based SNE Research, more than double that of runner-up BYD Co.
CATL supplies several major automakers, including Tesla, Stellantis and Volkswagen Group.
Potential partners
Volvo has options for battery suppliers with production capacity in the region and beyond.
South Korea’s SK On operates a $2.6 billion factory in Commerce, Ga., about 250 miles northwest of Ridgeville. The operation can supply about 300,000 EVs annually.
SK On has U.S. battery supply agreements with Volkswagen, Ford Motor Co. and Hyundai Motors.
LG Energy Solution, which supplies batteries to Volvo in Asia and Europe, is expanding its footprint in the U.S. It will supply EV maker Rivian from a factory in Arizona.
In Ohio, LG has a 2-million-square-foot joint venture cell factory with Honda Motor Co. And the supplier took over a battery factory under construction in Lansing, Mich., after partner General Motors sold its stake in the operation.
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Volvo hunts for US battery supply to avoid 25% tariff on key model, source
