Abhirup Roy and Marie Mannes
LAS VEGAS (Reuters) – Sweden’s Volvo Group is moving ahead with construction of a planned $700 million heavy-duty truck plant in Monterrey, Mexico, Chief Executive Martin Lundstedt told Reuters on Wednesday, even as President-elect Donald Trump threatens to impose US tariffs on imports of vehicles and other goods.
The maker of Volvo and Mack semi-trailers has targeted growth in North America, which accounts for about 30% of the company’s revenue, as a strategic priority and expects the plant to begin operations in 2026. He expects the plant to supply vehicles to the United States. , Mexico and Canada, as well as Latin America.
Trump said that immediately after his inauguration on January 20, he will sign all the necessary documents to begin levying a 25% tariff on imports from Mexico and Canada unless those countries stop illegal immigration and trade in fentanyl.
The Mexican project is in “an early stage that is ongoing,” Lundstedt told Reuters NEXT Newsmaker on the sidelines of CES 2025, an annual technology conference in Las Vegas. He said Volvo has the option to use the plant for sales outside the United States.
“This is not a replacement for our American capabilities,” he said. Depending on what happens with U.S. tariffs, Volvo’s plant in Mexico may or may not ship trucks to the U.S., he said.
Volvo’s US plants currently produce 100% of the trucks sold in the US. The company is investing in plants in Virginia, Maryland and Pennsylvania to expand its capacity, Lundstedt said.
Trump’s tariff proposals have sent shockwaves through the auto sector, with a number of passenger car makers including BMW (ETR:) Toyota (NYSE:) and General Motors (NYSE:) have invested in plants in Mexico to take advantage of lower labor costs and business-friendly policies.
Lundstedt also said Volvo expects high-volume production at its planned battery plant in Sweden to begin a couple of years later than the original target of 2029-2030.
In September, Volvo said it would delay construction of the plant by one or two years and did not know at the time whether that would affect the start of production.
Volvo wants to be at the forefront of environmental investments, including zero-emission trucks, but is refining its strategy to adapt to market forces, Lundstedt said. That’s because it doesn’t want to “tilt at windmills alone like Don Quixote and Sancho Panza,” he said, referring to the fictional characters from the famous novel.