Volvo takes $1.2 billion charge over tariffs and EV model delays

Volvo Car AB is taking an impairment charge of $1.2 billion due to delays to some of its electric models and the escalating cost of tariffs.

Past development setbacks and duties in the U.S. have hit Volvo’s battery-powered models, the EX90 sport utility vehicle and ES90 sedan. The effect of the one-time non-cash charge on net income will be roughly $900 million in the second quarter, the carmaker said Monday.

Its shares declined 4.4% at the close in Stockholm, the steepest drop since April. The stock is down around a quarter this year.

“Due to import tariffs the company is currently unable to sell the Volvo ES90 profitably in the United States, while ES90 margins are also under pressure in Europe for the same reason,” the company said in a statement.

The Sweden-based automaker, controlled by China’s Zhejiang Geely Holding Group Co., is among the more tariff-exposed global car brands and has previously said it’s looking into adding more production at its US plant. Volvo is also struggling to attract EV buyers in the highly competitive Chinese market, despite its access to the Geely ecosystem.

Volvo said its upcoming EX60 SUV, set to start production next year, will deliver “significant cost reductions and performance improvements.” The EX90 has struggled with software-related delays that have raised the model’s development costs.

Chief Executive Officer Hakan Samuelsson, who was brought back in April, is pushing through a sweeping 18 billion-krona efficiency program after Volvo suffered a 60% plunge in first-quarter operating income. The automaker is scheduled to report second-quarter earnings on Thursday.