Volvo Cars is struggling to recover in the United States as tariffs, the end of federal electric vehicle incentives and weak consumer sentiment weigh on its performance.
The company’s recovery is running behind schedule, with profitability remaining a challenge in the US market. Consumer sentiment has also fallen to its lowest level in around 50 years, adding pressure to the Swedish automaker.
Volvo’s US sales plunged 32% in the first quarter, reaching their lowest level since 2020. Sales recovered some momentum in the spring but continued to trail the previous year’s performance.
By the end of September, Volvo’s US sales remained 11% below its 2025 pace. The company recorded 121,607 sales in the US throughout 2025.
To exceed that total in 2026, Volvo would need to increase fourth-quarter sales by 33% compared with the same period last year. This would require a substantial improvement in demand over the final three months.
During its third-quarter results presentation on October 23, Volvo Cars highlighted the difficulties facing its US business. Chief Commercial Officer Erik Severinson said the market had proven difficult for the company to make profitable.
The end of federal EV incentives adds another challenge, particularly as the automotive industry continues to shift towards electrification. Tariffs are also putting pressure on the company as it attempts to rebuild sales and improve its financial performance.
Volvo’s recovery plan focuses on expanding local production in the US. The company also intends to adopt a region-by-region strategy rather than pursuing growth uniformly across the market.
Another priority is profitability over market share. This means Volvo will focus on improving financial returns instead of simply increasing sales volumes.
The company now faces the challenge of balancing local production, pricing and demand while navigating a difficult economic environment. Its fourth-quarter performance will be important in determining whether it can recover enough ground to surpass its 2025 US sales total.
