Electric Cars

Volvo, a brand historically celebrated for its commitment to safety and distinctive vehicle designs, is currently navigating a period of significant commercial adversity. The automaker recently reported a substantial 14% year-over-year decline in global sales for July, the lowest monthly volume recorded this year. This latest dip marks the fifth consecutive month of decreasing sales, compounding a challenging second quarter that saw the company incur an operating loss exceeding $1 billion. This concerning trend raises questions about the strategies and market dynamics influencing the Swedish car manufacturer's performance.

A critical factor contributing to Volvo's current predicament appears to be its past strategic misjudgments, particularly concerning production allocation. For nearly a decade, Volvo's sole manufacturing plant in the United States, which represents its third-largest market, was primarily dedicated to producing the S60 sedan. This decision was made despite a clear market shift towards SUVs, which consistently outsold sedans. The S60 and S90 sedans, along with the V90 wagon, have consistently been among Volvo's least popular models. The subsequent introduction of the flagship EX90 electric SUV to the Ridgeville factory was intended to alleviate capacity issues, but its high price point and reported software problems have limited its ability to reverse the negative trajectory.

Furthermore, increased import tariffs have significantly impacted Volvo's electric vehicle (EV) sales, particularly for the EX30 electric crossover. Despite a robust start in Europe, where it became a top-selling EV in 2024 due to competitive pricing, its momentum in the US and other regions was severely hampered by higher tariffs on Chinese-made vehicles. These tariffs dramatically inflated the EX30's starting price, making it less attractive to overseas consumers. In response, Volvo has begun manufacturing the EX30 in Belgium, hoping to mitigate the tariff effects and reduce wait times, thus making the vehicle more accessible and competitively priced in key markets.

Volvo's new CEO, Hakan Samuelsson, a seasoned industry veteran, has swiftly initiated a comprehensive turnaround strategy. Recognizing the crucial demand for SUVs, the company plans to shift production of its best-selling XC60 crossover to the South Carolina facility. This move aims to align production more closely with market preferences. While an ambitious goal of an all-electric lineup by 2030 was previously scaled back, Volvo now targets plug-in hybrids and EVs to constitute 90%-100% of sales, reflecting a more pragmatic approach to market realities. Samuelsson acknowledged the persistent macroeconomic pressures, tariff uncertainties, and heightened competition but expressed confidence that ongoing corrective measures, including workforce adjustments and a focused product strategy, will yield positive results, with the full impact expected to materialize in the coming year.

The company's struggles underscore the complex interplay of strategic planning, market demand, and geopolitical factors in the automotive industry. Volvo's proactive adjustments, particularly in manufacturing location and product focus, indicate a determined effort to regain market share and financial stability. The success of these initiatives will be pivotal in shaping Volvo's future trajectory within an evolving global automotive landscape.

Foxconn, globally recognized for its role in producing Apple's iPhones, is divesting its Lordstown, Ohio, automotive manufacturing plant. This facility, originally a General Motors site, was earmarked for electric vehicle (EV) production, including the ill-fated Lordstown Endurance electric pickup. The sale is occurring despite previous aspirations to establish the plant as a significant EV manufacturing hub. This transaction signals a strategic pivot for the Taiwanese giant in its American automotive endeavors.

The former General Motors assembly complex in Lordstown, Ohio, was originally constructed in the 1960s. It boasts the capability to produce hundreds of thousands of vehicles annually when fully operational. In 2019, Workhorse Group, the company behind the ill-fated Lordstown Endurance electric pickup, acquired the facility. Subsequently, in 2022, Foxconn, officially known as Hon Hai Precision Industry Co., purchased the site for $230 million with the explicit goal of transforming it into a vital center for electric vehicle contract manufacturing.

The buyer of the Lordstown facility is an enigmatic entity named \"Crescent Dune LLC.\" According to filings with Taiwan's stock exchange and reports from Automotive News, this new company will pay a total of $375 million for the plant's buildings, land, equipment, and machinery. Curiously, Foxconn has stated that Crescent Dune LLC is an \"existing business partner,\" yet TechCrunch reports that the company was established in Delaware less than two weeks before the sale announcement, raising questions about its nature and long-term plans for the site.

The total sale amount of $375 million is divided into several transactions. The factory and land component of the sale accounts for approximately $88 million. In addition, one portion of machinery and equipment will be transferred through a separate $257 million deal by Foxconn's EV Asset Management subsidiary. A further $30 million worth of equipment will be sold by EV System LLC, another subsidiary of the Taiwanese conglomerate.

Despite this significant sale, a Foxconn representative affirmed that the company intends to maintain its involvement in the manufacturing of products for various customers at the Lordstown facility. The company reiterated its dedication to clients and suppliers within the automotive sector, asserting its capacity to quickly scale up vehicle production as customer demand dictates. This statement suggests that while ownership of the plant is changing hands, Foxconn's operational presence may endure, albeit under new arrangements. Reports from The Wall Street Journal indicate that Foxconn may pivot towards manufacturing artificial intelligence (AI) servers at the site, diversifying its strategic use of the property.

The Lordstown facility's journey has been tumultuous. After Foxconn's acquisition in 2022, the plant did manage to assemble a limited number of electric pickups before Lordstown Motors declared bankruptcy in June 2023. Prior to this, several emerging automotive companies, including Fisker, had engaged in discussions with Foxconn regarding the production of their electric vehicles at the Ohio plant, but these collaborations ultimately did not materialize. Currently, the Lordstown factory is engaged in assembling electric tractors for Monarch, a California-based startup. Beyond these contract manufacturing arrangements, Foxconn has also been actively developing its own electric vehicles in Asia through a joint venture with Yulon. Their strategy involves offering a complete, ready-to-brand electric vehicle platform to other automakers. The Model C, an electric crossover, debuted last year in Taiwan as the Luxgen n7 and was projected to enter the U.S. market this year. Furthermore, Foxconn is slated to produce Mitsubishi-branded electric vehicles next year, intended for the Australian and New Zealand markets, showcasing its broad ambitions in the electric mobility space despite the recent divestment.

The disposition of the Lordstown factory signifies a notable adjustment in Foxconn's aspirations within the electric vehicle manufacturing landscape. Although the precise long-term intentions for the site under its new ownership remain to be fully unveiled, the move underscores the evolving dynamics and challenges within the burgeoning EV industry and Foxconn's adaptable approach to its diverse portfolio.