Volvo Cars, the Swedish automaker owned by China’s Geely Holding, has announced plans to slash 3,000 white-collar jobs—about 15% of its office staff—as part of a sweeping $1.9 billion (SEK 18 billion) cost-cutting effort. The move reflects the deepening crisis facing the global automotive industry amid high raw material costs, slowing EV demand, and escalating trade tensions.

The bulk of the layoffs will hit Sweden, where Volvo maintains its headquarters and R&D hub in Gothenburg. About 1,200 staff roles and nearly 1,000 consultant positions will be eliminated domestically, with the remainder spread across the company’s operations in the U.S., Belgium, and China.

“The automotive industry is in the middle of a challenging period,” said CEO Håkan Samuelsson, recently reinstated to the role. “To address this, we must improve our cash flow generation and structurally lower our costs.”

Samuelsson confirmed that cuts would span across departments including R&D, HR, and communications. “It’s everywhere, and it’s a considerable reduction,” he told Reuters. Volvo’s CFO Fredrik Hansson added that no division would be spared, though most layoffs will concentrate in Gothenburg.

Impact of U.S. Tariffs

Volvo’s restructuring coincides with growing strain from U.S. President Donald Trump’s 25% tariff on imported automobiles and steel—measures that disproportionately impact Volvo, which produces mainly in Europe and China. The company warned it may no longer be viable to export its entry-level models to the U.S.

Further uncertainty looms as Trump threatened a 50% tariff on EU car imports from June 1. That deadline has now been delayed to July 9 to allow negotiations between Washington and Brussels.

Market Pressures and EV Challenges

Volvo's April global sales dropped by 11% year-on-year, highlighting demand-side weaknesses. In 2021, the company pledged to go all-electric by 2030, but has since scaled back the ambition, citing trade disruptions and falling consumer confidence in EV markets.

The workforce reduction will cost Volvo an estimated SEK 1.5 billion in restructuring charges. Still, analysts see the decision as pragmatic. Hampus Engellau of Handelsbanken said the scale of cuts aligned with expectations and praised the company’s efforts to streamline.

Industry-Wide Restructuring

Volvo isn’t alone. Nissan recently announced 11,000 job cuts and seven plant closures. Meanwhile, aggressive price cuts by Chinese EV manufacturers like BYD—whose Seagull EV now sells for just $7,745—are triggering a price war and pressuring global competitors.

Outlook

Volvo Cars' stock rebounded 3.6% following the news, though it remains down 24% for the year. The company aims to finalize its new organizational structure by autumn 2025.

As automakers across the globe brace for more volatility—from tariffs to technological transition—the real test for Volvo will be how it balances cost discipline with innovation in an increasingly hostile and fragmented market.