Volvo Cars will record a $1.2 billion second-quarter impairment charge because of tariffs and launch delays on two essential electric vehicle models. The Swedish automaker Geely-owned Volvo reports this impairment charge because its ES90 and upcoming EX90 vehicles will not meet projected sales targets.
The ES90 model faces unprofitable sales in the American market because of U.S. tariffs while European market margins have also decreased. The total impairment charge consists of 4 billion crowns which affects cost of sales and the remaining amount affects R&D expenses.
The company attributed the impairment to rising import duties and past production delays that increased research and development expenses. The company plans to disclose its complete quarterly financial results on July 17.
European automakers encounter growing difficulties because of trade tensions and supply chain disruptions and rising EV development expenses. The asset value write-down by Volvo demonstrates how automakers suffer financially when they modify their product lines to comply with changing trade regulations.
Volvo maintains its dedication to electrification despite taking the impairment charge. The move indicates potential upcoming difficulties for car manufacturers who must handle tariff risks and complicated EV launches across China, Europe and the United States.
