Volvo to start U.S. production of its best-selling XC60 SUV in South Carolina by late 2026 to meet growing demand and offset tariff risks.
Volvo Cars has confirmed it will begin production of its popular XC60 SUV at its Charleston, South Carolina plant in late 2026, a move designed to boost local availability, manage rising demand, and reduce exposure to global trade tensions.
Volvo Expands U.S. Manufacturing Footprint
In a strategic shift toward regional production, Swedish automaker Volvo Cars, owned by China’s Geely Holding, has announced plans to produce its best-selling XC60 mid-size SUV in the United States. Production is scheduled to begin at Volvo’s Charleston, South Carolina facility by the end of 2026.
This move is a major milestone in Volvo’s North American strategy, aimed at minimizing reliance on European imports and strengthening its supply chain in the face of evolving trade and tariff landscapes.
XC60: Volvo’s Top-Selling Model in the U.S.
The XC60, a luxury mid-size SUV known for its sleek design and hybrid powertrains, has become Volvo’s most sought-after model in the United States. In the first six months of 2025 alone, XC60 sales in the U.S. rose nearly 23%, highlighting its increasing popularity in a highly competitive segment.
Volvo attributes the model’s strong performance to its blend of safety, Scandinavian aesthetics, and fuel-efficient engine options, which include both mild hybrid and plug-in hybrid variants.
Strategic Response to Tariff and Supply Chain Challenges
Volvo’s decision to localize XC60 production comes at a critical time. Earlier this week, the company announced a 11.4 billion Swedish crowns (around $1.17 billion) impairment charge for Q2 2025, linked to tariff-related complications and delays in launching its ES90 and EX90 electric models.
By shifting part of its production to the U.S., Volvo aims to reduce the financial impact of import duties and shorten delivery timelines. The Charleston plant, which currently produces the high-end electric EX90, will soon play a broader role in Volvo’s manufacturing strategy.
CEO’s Vision for U.S. Hybrid Production
Volvo Cars CEO Håkan Samuelsson had previously emphasized the importance of adding a popular hybrid model to the U.S. lineup to better serve local demand. With the XC60’s rising sales and its hybrid capability, the model fits squarely into the company’s growth plan.
“This is a smart and necessary move,” said an automotive industry analyst. “Not only does it shield Volvo from tariff volatility, but it also boosts its appeal to American consumers looking for advanced hybrid options built closer to home.”
Charleston Plant: Volvo’s U.S. Production Hub
The Charleston facility, opened in 2018, is Volvo’s only U.S. production site. Until now, it has primarily focused on manufacturing the fully electric EX90 SUV. With the addition of the XC60, the plant is expected to significantly ramp up output, create new jobs, and attract additional investment in local supplier networks.
This localization strategy aligns with a broader industry trend, where automakers shift production closer to their largest markets to manage costs, improve logistics, and reduce carbon footprints.
Impact on the U.S. Market and Consumers
For American buyers, the move signals better availability, potentially shorter wait times, and more competitive pricing on the XC60. It also reflects Volvo’s commitment to the U.S. market, which accounted for approximately 16% of its global vehicle sales in 2024.
The localized production is likely to appeal to environmentally conscious consumers as well, since reduced shipping distances and hybrid technology contribute to lower overall emissions.
Looking Ahead
With production scheduled to commence in late 2026, Volvo is preparing for increased market penetration and broader hybrid adoption in North America. The company is also expected to roll out additional hybrid and electric models tailored to regional preferences.
While challenges remain in the global automotive industry—from raw material costs to regulatory shifts—Volvo’s latest announcement shows a proactive stance aimed at long-term resilience and customer-centric growth.
