According to foreign media reports, tariffs on electric vehicle batteries and materials imported from China increased by more than triple to 25% in 2024, forcing Volvo Cars to produce pure electric flagship SUV EX90 (the main model of Volvo) in the United States The pure electric version of XC90 is looking for domestic battery suppliers in the United States.
The EX90 is assembled at Volvo’s factory in Ridgeville, South Carolina, USA, using batteries supplied by CATL. But Volvo Cars CEO Jim Rowan said higher tariffs put pressure on EX90’s profits. “We are currently working to find domestic battery suppliers in the United States to help us reduce costs,” he said on a recent analyst call.
Volvo raised the EX90 price tag by $3,300 last summer due to tariff hikes, and now includes shipping, the EX90 starts at $81,290.
AutoForecast Solutions, an automotive market consulting firm, predicts that Volvo will produce 22,000 EX90s in the United States this year. The company also said that the cost of batteries accounts for about 30% of the total cost of an electric vehicle.
If Volvo plans to use domestic battery suppliers in the United States, there are actually many options. South Korean battery maker SK On operates a plant in Georgia with a $2.6 billion investment, about 250 miles northwest of Ridgeville, where Volvo assembly plant is located. The factory can supply batteries to approximately 300,000 electric vehicles each year. Currently, SK On has an agreement with Volkswagen, Ford Motor Company and Hyundai to supply batteries in the United States.
At the same time, Vision Power (AESC), a subsidiary of Vision Group, is building battery factories in Kentucky and Florence, South Carolina. Florence’s factory will supply batteries to BMW’s U.S. assembly plant in Greer, South Carolina, which will start producing the Neue Klasse series of electric vehicles by the end of 2026.
In addition, LG New Energy, a Korean battery manufacturer that currently supplies batteries to Volvo in Asia and Europe, is also expanding its business in the US market. LG New Energy and Honda have a 2 million square foot joint venture battery factory in Ohio, and have fully taken over the previous joint venture with General Motors in Lansing, Michigan.
Regarding the above report, SK On and AESC executives declined to comment on the negotiations with potential customer Volvo.