Chinese-owned carmaker sees electric vehicle sales drop with thousands of redundancies on the table

The carmaker, which is majority-owned by China's Geely, said electric vehicles accounted for just 21 per cent of total sales volumes in May.

Overall, electrified cars, including plug-in hybrids, dropped 20 per cent to represent 44 per cent of total sales, marking a sharp change from the previous year.

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The disappointing figures come as Volvo grapples with mounting pressures, including high costs, slowing electric vehicle demand and trade uncertainty.

These latest results add to concerns about Volvo's performance after the company announced plans to cut thousands of jobs as it faces headwinds from US President Donald Trump's new tariffs.

The redundancy programme forms part of an accelerated cost and cash action plan totalling 18 billion Swedish Krona (£1.9billion) that Volvo launched in late April.

The company confirmed that approximately 3,000 positions would be eliminated, with 1,200 jobs cut across its Swedish operations and a further 1,000 consultant positions terminated, primarily in Sweden.

"These are difficult decisions to make, but are vital to making us stronger and even more resilient," said Håkan Samuelsson, who returned as president and chief executive in April after the former head, Jim Rowan, stepped down.

The plan includes three billion Swedish Krona (£230million) in variable cost reductions and five billion Swedish Krona (£380million) in indirect cash spending efficiencies, with half impacting earnings before interest and tax in 2026.

Volvo said it expects to complete all structural changes resulting from its strategic review by the third quarter of 2025. Volvo's first-quarter 2025 results revealed the depth of its challenges, with retail sales down six per cent to 172,200 units and revenue falling 12 per cent to 82.9 billion Swedish Krona (£6.38billion).

The company withdrew its financial guidance for 2025 and 2026, citing "external developments and increased uncertainties".

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Samuelsson, who previously led Volvo from 2012 to 2022, acknowledged in the Q1 update that "2025 will be a challenging and transition year given the uncertainties around macroeconomic, geopolitical and market developments".

Despite the sharp decline in electric vehicle sales, Volvo maintained its commitment to full electrification with Samuelsson stating in the first-quarter report that the brand remained "firm on becoming a fully electric car company" due to it being "the fastest growing segment".

However, the company acknowledged pragmatic adjustments to its strategy. "Demand for our plug-ins will remain stronger for longer than we thought three years ago, and we are ready for that," Samuelsson said.

Volvo revealed plans for its first extended-range plug-in hybrid specifically for China, recognising the need for "a transitional plug-in product for people and locations not yet ready for electric cars".

Volvo's Chinese ownership under Geely has become increasingly significant as the company navigates trade tensions and tariff pressures.

The carmaker revealed it is currently restructuring its global operations into three streamlined regions across the Americas, Greater China, Europe and the rest of the world.

"We need to adapt to a more regionalised world," Samuelsson explained, outlining plans for "a more tailored approach for each region in terms of product, technology, manufacturing and commercial".

The company started production of its EX30 electric SUV at its Ghent plant in Belgium in April.