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Trade war tactics: How Volvo will land a cheap Chinese EV on U.S. shores

A made-in-China electric vehicle will hit U.S. dealers this summer offering power and efficiency similar to the Tesla Model Y, the world's best-selling EV, but for about $8,000 less. The EX30 from Volvo Cars, the Swedish luxury brand owned by China's Geely, foreshadows the fierce competitive threat U.S. automakers could face from Chinese EV manufacturers that have surged far ahead of global rivals, especially on affordability. The $35,000 window sticker of Volvo's compact SUV hits a sweet spot in the U.S. market, where most buyers cannot afford most EVs. The competitive price reflects an unusual combination of Geely's China-specific cost advantages and Volvo's ability to skirt U.S. tariffs on Chinese cars because it also has U.S. manufacturing operations, according to interviews with four sources familiar with Volvo and Geely strategy and several U.S. trade policy experts. Chinese EV makers can undercut global competitors largely because of the nation's domination of battery minerals mining and refining, as well as its long-standing commitment to EV development, including heavy government subsidies. In addition, Geely has slashed manufacturing costs by merging supply chains and sharing platforms and parts with Volvo and other Geely brands, according to two senior Geely managers, who spoke on condition of anonymity because they are not authorized to speak publicly. Despite its aggressive price, Volvo is targeting hefty profit margins on the EX30 of between 15% and 20% globally, said a third Geely source. China's EV dominance will be on display this week at the nation's premier auto show in Beijing. In the China market, the world's largest, dozens of domestic EV brands are fighting it out in a price war while foreign automakers have steadily lost market share. The intense competition has driven China's biggest EV makers, led by BYD, to accelerate exporting of EVs that can capture higher prices and profits in less competitive overseas markets. The EX30 will be among only a handful of China-made cars sold in the United States, none of them from Chinese brands. Vehicles from China currently face a 27.5% tariff and increasingly strident calls for higher trade barriers from U.S. automakers and their political allies. But Volvo is eligible for tariff refunds under a law that awards them to firms with U.S. manufacturing operations — such as VolvoÂ’s South Carolina plant — that also export similar products, according to U.S.

Volvo Cars plans $20 billion stock IPO this month, sources say

STOCKHOLM — China's Geely Holding is in advanced discussions with banks to list its Volvo Cars unit in the coming weeks, three sources told Reuters, in what is expected to be one of Europe's biggest initial public offerings (IPOs) this year. Volvo Cars is aiming for a valuation of about $20 billion in the planned Stockholm listing, the sources said, with one saying the launch was penciled in for the end of September. Goldman Sachs and SEB are leading the transaction, while other banks including BNP Paribas, Carnegie and HSBC are also involved in the deal, the sources added. Volvo Cars declined to comment. Geely did not immediately respond to an emailed request for comment outside normal business hours in China. SEB and Goldman Sachs declined to comment. The other banks were not immediately available. Geely, which bought Volvo from Ford more than a decade ago in the biggest acquisition by a Chinese firm of a foreign car maker, sought to float shares in the Swedish firm in 2018 but then pulled the deal citing trade tensions and a downturn in automotive stocks. Traditional carmakers have fallen out of favor in recent years, as Tesla has risen to be one of the world's most valuable companies, putting the focus on electric vehicles. Many European firms have pivoted toward the electric sector, including Volvo, which aims to only make fully electric cars by 2030 and owns a 49.5% stake in electric car maker Polestar. Valuation Gothenburg-based Volvo Cars aims to secure a valuation of roughly $20 billion, one of the sources said, while another mentioned a possible range of $20 billion to $30 billion. A third source suggested a $16 billion valuation was more realistic, citing the firm's revenue outlook. A $20 billion valuation for Volvo would be equivalent to six to seven times its earnings, a level some analysts say is high although it would put it in line with rivals Daimler and BMW. Tesla's valuation is more than 70 times that. NordLB's automotive analyst Frank Schwope estimated a valuation range of $10 billion to $15 billion. "The strong margins seen in the first half of 2021 are unlikely sustainable as the market benefited from a strong post-pandemic rebound that is unlikely to continue," Schwope said. For Geely's founder Li Shufu, who bought Volvo for $1.8 billion, the listing is a milestone on the road to transport of the future, where cars are part of an electrified network of mobility services generating data and business opportunities.

Volvo recalls small batch of cars — 74, exactly — for potentially serious steering issue

Volvo announced earlier in January that it is recalling a small number of cars (just 74) to address a potentially serious issue with their steering boxes. An extra screw unintentionally inserted during assembly can work its way into the steering gear, potentially locking it up and causing a loss of steering control. The issue is present only on a small number of 2019-2022 Volvo V60CCs, XC60s and XC90s.  Per Volvo, the issue can be traced back to a single assembly line station that erroneously double-fed screws into the affected units, allowing the loose hardware to remain behind, where it can foul the gear. Volvo says it knows which steering boxes were assembled this way, allowing them to recall only the units in question. Customers whose cars exhibit the defect will not show any outward symptoms until the screw begins to interfere with steering box operation, which could be indicated by a grinding noise when turning the wheel.  Volvo has already notified dealers of the issue and will send notices to the 74 owners in March.  Related video: This content is hosted by a third party. To view it, please update your privacy preferences. Manage Settings. Recalls Volvo Ownership Safety Crossover SUV Wagon