Volvo CEO says plan for Mexico truck factory ongoing

LAS VEGAS: Sweden's Volvo Group is proceeding with its planned $700-million heavy-truck factory in Monterrey, Mexico, CEO Martin Lundstedt told Reuters on Wednesday, even as President-elect Donald Trump threatens to impose U.S. tariffs on imports of vehicles and other goods.

The maker of Volvo and Mack semi trucks has targeted growth in North America, which accounts for about 30% of company revenue, as a strategic priority and expects the plant to start operations in 2026.

It initially expected the factory to deliver vehicles to the United States, Mexico and Canada, as well as to Latin America.

Trump has said that immediately after his Jan. 20 inauguration, he will sign all necessary documents to begin charging a 25% tariff on imports from Mexico and Canada unless those countries clamp down on illegal immigration and fentanyl trafficking.

The Mexico project is in an "early stage that is continuing. There are different opportunities to utilize a facility like that" for sales outside the United States, Lundstedt said in a Reuters NEXT Newsmaker interview on the sidelines of CES 2025, an annual tech conference in Las Vegas.

"This is not a replacement of our American facilities," he said of the Mexico manufacturing plant.

Volvo's U.S. factories make 100% of the trucks it sells in the United States.

The company has been investing in plants in Virginia, Maryland and Pennsylvania to expand capacity, Lundstedt said.

Trump's tariff proposals have sent a shockwave through the automotive sector because a swath of passenger carmakers, including BMW, Toyota and General Motors , have invested in Mexico factories to take advantage of lower labor costs and business-friendly policies.

Lundstedt also said Volvo expects high-volume production at a planned battery plant in Sweden to begin a couple of years later than the original target of 2029-2030.

Volvo had said in September it would delay construction of the plant by one or two years and said at the time it was uncertain if this would affect the start of manufacturing.