Volvo Car AB has announced plans to reduce its global workforce by approximately 3,000 positions as part of a broader cost-cutting initiative aimed at addressing declining electric vehicle (EV) demand and mounting trade challenges.
The Swedish automaker disclosed on Monday that the move represents about 7% of its total workforce and includes 1,000 consultants.
The restructuring comes amid deteriorating market conditions and a 60% year-on-year drop in Volvo’s first-quarter operating income.
The company will incur charges of up to 1.5 billion Swedish kronor ($140 million) in the second quarter related to the cuts.
Volvo currently employs around 43,800 people globally, with over half of the positions based in Sweden. According to the company, approximately 1,200 full-time employees and 1,000 consultants in Sweden will be impacted, with the remainder of the layoffs spread across international markets.
The downsizing is part of an 18 billion kronor efficiency program unveiled last month by Chief Executive Officer Håkan Samuelsson. The program is focused on material cost reductions, headcount rationalisation, and streamlined investment strategies as Volvo works to stabilize operations and protect profitability.
“This move is critical for us to create a structurally more efficient and resilient company,” said Chief Financial Officer Fredrik Hansson in an interview on Monday.
Volvo’s share price reacted positively to the news, gaining as much as 4.9% in Stockholm trading. However, the stock remains down by roughly 25% year-to-date, under pressure from weak EV sales, rising input costs and global supply chain disruptions.
The company’s cost-efficiency efforts come amid slowing momentum in the global electric vehicle segment. Rising interest rates, persistent inflation and waning subsidies in key markets have dampened consumer appetite, forcing legacy automakers like Volvo to recalibrate their product and investment strategies.
Samuelsson also rejected speculation that Volvo’s Chinese parent company, Zhejiang Geely Holding Group, is exerting tighter control over operations.
He stated that the restructuring is driven by market conditions and operational efficiency, not external influence.
“We are not shifting our development base to China. What we are doing is giving regional teams in the U.S. and China more autonomy to respond faster to local market demands,” he said.
As part of the broader realignment, Volvo has already made leadership changes, including appointing a new Chief Financial Officer and pursuing deeper integration with other Geely-owned brands.
The automaker aims to extract synergies across the group while reducing duplication of roles and improving response times to market changes.
The company last conducted job reductions in 2023, when it initially warned of up to 1,300 white-collar job losses in Sweden. Ultimately, 700 positions were eliminated in that cycle.
Volvo’s latest move underscores the mounting pressure on global automakers to protect margins in the face of shifting demand dynamics and macroeconomic headwinds.
Industry analysts suggest that further restructuring efforts may follow across the sector as companies adapt to slower-than-expected EV adoption rates and geopolitical trade risks.
