Volvo Cars' modern plant in Charleston, South Carolina, is now set to significantly increase its production and hire an additional 4,000 employees. Starting in 2026, tens of thousands of units of the long-standing XC60 – Volvo's most popular in the U.S. – to be manufactured in Charleston. Under current customs regulations, the cars can then be exported to Europe completely duty-free.
This move, which is a direct result of U.S. trade tariffs, is an example of how many companies are now relocating their manufacturing to the U.S. to secure their profit margins in the large, lucrative U.S. market. As early as the beginning of the year, when the U.S. administration announced its trade tariffs, Volvo Cars CEO Håkan Samuelsson noted that further regionalization of the global economy is to be expected.
“The automotive industry will see a clear shift toward regionalization following the U.S. 25 percent vehicle tariffs,” he noted during the company’s annual shareholders’ meeting in April.
By “regionalization,” he means, in practice, that the global market will essentially be divided into three parts: the United States, Europe, and Asia, each of which will function as its own regional market for purchasing, production, and sales.
”Darwin’s Law”
By manufacturing closer to their local markets, delivery times and shipping costs are reduced, while regionalization allows companies to adapt to local requirements and other conditions. And even if production in the U.S. were to become more expensive, this would be offset by lower costs for shipping, warehousing, and customs duties. At the annual shareholders” meeting, Samuelsson noted that Darwin’s law applies—that is, ”survival of the fittest”:
– And in a situation like that, all you can do is follow Darwin’s law and adapt faster than your competitors.
The XC60 is Volvo Cars’ best-selling model in the U.S.; sales of this model rose by nearly 23 percent in the first half of this year alone. Going forward, the XC60 will be produced as a gasoline-electric hybrid and as a plug-in hybrid.
Sources: The Wall Street Journal, TT, and SvD.
