Volvo Cars has announced plans to eliminate approximately 3,000 white-collar positions globally, representing about 7% of its workforce, as part of a strategic restructuring aimed at reducing costs and enhancing operational efficiency. The decision comes in response to declining electric vehicle (EV) demand, rising operational costs, and increasing geopolitical uncertainties, particularly concerning U.S. trade policies.
The layoffs will primarily affect office-based roles, with around 1,200 positions in Sweden and approximately 1,000 consultant roles, mostly based in Sweden, being eliminated. The remaining job reductions will occur across other international markets. Departments such as research and development, communications, and human resources are expected to be significantly impacted. The restructuring is projected to incur a one-time cost of 1.5 billion Swedish kronor (approximately $160 million).
CEO Håkan Samuelsson, who recently returned to lead the company, emphasized the necessity of these measures to navigate the challenging automotive landscape. “The actions announced today have been difficult decisions, but they are important steps as we build a stronger and even more resilient Volvo Cars,” Samuelsson stated. He highlighted the need to improve cash flow and structurally lower costs to address the industry’s current challenges.
Volvo’s decision is also influenced by potential U.S. tariffs on imported vehicles, which could significantly affect the company’s profitability, especially given its manufacturing bases in Europe and China. The company has expressed concerns that such tariffs might render the export of its more affordable models to the U.S. market unviable.
The restructuring plan, which includes an 18 billion Swedish kronor ($1.9 billion) cost-cutting initiative announced in April, aims to streamline operations and adapt to the evolving market conditions. Volvo plans to finalize the new organizational structure by the fall of 2025.
Despite a temporary 3.6% rebound in Volvo’s stock following the announcement, the company’s shares remain down 24% for the year, reflecting investor concerns over the broader challenges facing the automotive industry, according to Bloomberg data.
As Volvo navigates this period of transformation, the company remains committed to its long-term strategy, including its ambition to become a fully electric car manufacturer, while addressing immediate financial and operational hurdles.
