Volvo Cars shares drop 5% on $1.2 billion tariff-related impairment charge

Shares of Volvo Cars plunged 5.5% in late trade after the Swedish automaker said it would face a one-off, non-cash impairment charge of 11.4 billion Swedish kronor ($1.19 billion) in the second quarter related to two models.

The firm said Monday that its upcoming Volvo EX90 electric SUV will have a “reduced lifecycle profitability” due to previous launch delays and additional development costs. Meanwhile, it is not currently able to sell its new all-electric Volvo ES90 saloon profitably in the U.S. due to import tariffs. Margins on the ES90 are also under pressure in Europe due to the impact of tariffs, it said.

Fredrik Hansson, Volvo Cars CFO, said the models had nonetheless “laid a critical technological foundation” for the company’s future.

A 9 billion Swedish kronor effect on net income will be reflected in results due July 17, Volvo Cars said.

In April, the U.S. placed 25% import duties on vehicles imported to the U.S.

The European Commission is set to share a proposal for a second tranche of countermeasures against U.S. tariffs with European Union members on Monday, the bloc’s trade commissioner Maros Sefcovic said.

“Our rebalancing measures on steel and aluminum are suspended until early August, and today, the commission is sharing with the member states the proposal for the second list of goods accounting of some 72 billion euros [$84.1 billion] worth of U.S. imports,” he said during a Monday press conference, adding that member states would now be able to discuss the proposal.

The EU’s measures in response to U.S. President Trump’s steel and aluminum duties are set to target U.S. goods worth around 21 billion euros.

“This does not exhaust our toolbox, and every instrument remains on the table,” Sefcovic warned.

He reiterated that the EU was still aiming for a negotiated solution, but was also preparing for all potential outcomes.

“Later today, I will continue my engagement with my U.S. counterparts. The EU as you know very well, never walks away without genuine effort, especially considering the hard work invested, how close we find ourselves to making a deal, and the clear benefits of the negotiated solution,” Sefcovic said.