November 6, 2023
Attracted by the generous subsidy rules in the United States, Volvo Cars is tinkering with plans for the expansion of its American factory.
This is what Volvo Cars CEO Jim Rowan said in an interview with Financial Times. New investments in production capacity in the US are top of mind. Rowan is attracted by the United States’ generous subsidies for green auto investments under the $369 billion Inflation Reduction Act plans.
‘The money in those funds is running out. If you want to take advantage of it, you need to start thinking about what investments you might want to make,” says Rowan.
Volvo Cars has had a factory in South Carolina since 2017. The fully electric large SUVs Volvo EX90 and Polestar 3 will be built there from next year. The current factory can make 150,000 cars per year, considerably less than Volvo Cars’ Ghent factory.
Volvo is significantly expanding its production capacity. Work is currently underway on the construction of a completely new factory in Slovakia. It should be operational in 2026 and will only build A-cars.
All that extra production capacity is needed to realize Volvo’s ambitious plans. While Volvo sold 615,000 cars last year, this should be at least 1.2 million per year by 2026. The subsidiary of the Chinese Geely needs additional factories for this.
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One of the most important models to achieve this doubling is the small electric SUV, EX30. Volvo will not only build this in China, but also in Ghent.
Volvo is far from the only car manufacturer that is responding to American subsidy manna. Last week, Toyota announced it is investing an additional $8 billion in its North Carolina factories.