Volvo announces $1.2B tariff-related impairment charge

By Mucahithan Avcioglu

ISTANBUL (AA) - Swedish car maker Volvo Cars stated Monday that it would face a one-off, non-cash tariff-related impairment charge of 11.4 billion Swedish kronor ($1.19 billion) in the second quarter related to two models.

"The Volvo EX90 will have a reduced lifecycle profitability, despite a major upgrade of software quality and a planned volume ramp-up. This is due to significant launch delays in the past and subsequent additional development costs," Volvo said in a statement.

Meanwhile, it said that due to import tariffs, the company is currently unable to sell the Volvo ES90 profitably in the US, while ES90 margins are also under pressure in Europe for the same reason.

The charge will include adjustments in expected volumes and planned lifecycle profitability associated with the platform for the EX90 and ES90 cars, rightsizing assets to the known market realities.

The $415 million of the charge is estimated to impact cost of sales, and the majority of the remaining amount affects the research and development (R&D) line in the financial reporting.

"The effect on group net income will be SEK 9.0 billion ($935 million) and will be reported in Volvo Cars Q2 results, scheduled to be disclosed on 17 July 2025," the statement added.

"The development of the EX90 and ES90 has laid a critical technological foundation for our future, with the Volvo Cars Superset tech stack,” Volvo Cars CFO Fredrik Hansson said.

Following the news, Volvo shares were down 4.4% as of 1610GMT.

In April, US President Donald Trump imposed a 25% tariff on all automobile imports into the US.