Volvo Cars is adapting to the increasingly fragmented global trade landscape by developing different technologies for its Chinese and Western customers, according to CEO Håkan Samuelsson. Speaking at the EVS38 symposium in Gothenburg, Sweden, Samuelsson revealed that the company is working on creating two versions of its software and silicon components – the computer systems in its vehicles.
Trade Tensions and Market Adaptation
“We need to have a Western version and a Chinese version. That’s something we just need to live with and adapt to,” Samuelsson told Euronews. This decision comes as the company faces challenges from new US tariffs of 25% on foreign cars and car parts, which are dampening consumer demand and increasing import costs.
The Swedish automaker, majority-owned by China’s Geely Holding Group since 2010, reported a drop in profits in its first-quarter earnings report. Volvo Cars partly blamed the “current turbulence in the broader world economy” for this decline. In response, the company announced an action plan to improve profitability, with a focus on the US and China markets as priorities.
Regionalizing Products
Samuelsson emphasized the need to tailor products to different markets, particularly in China. “We need to listen more to the local people in the region and adapt to local habits and tastes — and perhaps also have some special cars for the Chinese market,” he said. The company has already announced the new XC70, an extended-range plug-in hybrid for Chinese customers, aimed at competing with rivals like BYD.
In the first quarter, Volvo Cars’ retail sales in China decreased by 12% year-on-year, while sales in the US jumped by 8%. The US market saw electric vehicles and plug-in hybrids making up 28% of total sales, compared to 10% in China.
European Market Considerations
Despite focusing on the US and China, Volvo Cars remains heavily reliant on the European market, which accounted for nearly half of its total sales in 2024 and Q1 2025. The company faces exposure to EU duties introduced in response to alleged unfair subsidies from Beijing. Samuelsson criticized the tariffs, stating, “Tariffs are not going to help the European industry to be more competitive long-term.”
The CEO expressed a preference for free trade and competition but acknowledged that “we’re going into a more regional world.” Volvo Cars is taking steps to mitigate the impact of these trade changes while adapting its products to local markets.
