The trend of layoffs is leaving no business unscathed. Auto tariffs have hit the country hard and economic uncertainties are coming for automakers both in and outside of the country. Layoffs at Volvo Cars have been confirmed, with 5% of workers expected to be cut from its Charleston Plant in Ridgeville. This is only the start of the job cuts as the company has a large-scale cost-cutting goal that will likely require further workforce reduction attempts at Volvo Cars.
Additionally, Volvo’s battery firm is also exploring workforce cuts—Novo Energy is reducing its workforce by a bigger margin. Reports suggest that the Novo Energy layoffs will affect 50% of the workforce as a part of its strategy to cut costs while remaining operational. Northvolt and Volvo Cars set up Novo Energy together in 2021 in Sweden, however, the former firm has declared bankruptcy, which has forced its hand on the cost-cutting measures.
The Volvo Cars layoffs paired with news of the cuts at Novo Energy spell troubling times for the auto industry. (Image: Pexels)
Volvo Cars Layoffs and Novo Energy Workforce Cuts—Changes Across the Board
There are two parts to the Volvo Cars layoffs: cuts at the company’s own business as well as its battery firm. We know more about the Novo Energy layoffs as it cuts half of its staff down. The joint venture between Volvo and Northvolt began exploring cost-cutting measures earlier in January when the company dismissed 30% of its staff to try and secure the business.
With the latest round of layoffs, Novo Energy will cut another 150 jobs to better manage the business and its expenses. The firm will continue with operations at a limited capacity and explore scenarios that might allow it to resume activities at a larger scale and complete the first phase of its Gothenburg facility.
“Despite our best efforts to secure a suitable new partner and address the ongoing economic challenges, it has become impossible to maintain operations at our current scale. Our focus is now on adjusting to the market realities and finding ways to move forward sustainably.”
—Adrian Clarke, Novo Energy CEO
Northvolt’s bankruptcy filing at the center of the economic chaos mentions over $8 billion in debt and this is mainly due to financial troubles arising from high operational costs and struggles with production scaling. In February, Volvo decided to take full ownership of this joint venture, offering to purchase Northvolt’s 50% stake in the business for a token price, but the deal is still pending approval. Despite the switch, the financial impact of the co-owner’s bankruptcy is still being felt by the battery maker.
What Do We Know About the Volvo Layoffs?
The Northvolt bankruptcy and Novo Energy layoffs are part of the problem, but the Volvo Cars job cuts come as the company faces economic uncertainties of its own. Due to changing market conditions, new trade policies, and a desire to safeguard long-term prospects, sources suggest Volvo has also decided to cut 5% of its workers.
These cuts are expected to be focused on employees at its Charleston Plant in Ridgeville, which employs around 2,500 workers. As a result, around 125 workers will be laid off from the Volvo Cars plant. Despite the cuts, the business reiterated its commitment to creating 4,000 jobs in the South Carolina region in the future.
Volvo told Reuters that these cuts were not included in the redundancies flagged in its earnings report last week, where the company plans to cut costs by 18 billion Swedish crowns which would convert to approximately $1.88 billion USD.
Volvo Cars dropped its 2025–2026 margin forecasts and initiated inventory reductions, signaling a need to streamline operations which includes workforce reductions. The company isn’t looking into making any major investments in the coming months, which is just as well considering the heavy losses being experienced at Volvo.
HR Teams Need To Stay Prepared for Changing Times
Much like other businesses undergoing layoffs, Volvo Cars has also stated that it will support its employees during this time of change and balance the company’s “investments with the need to reduce costs and improve efficiency.” As automakers readjust to the new operating realities of 2025 and beyond, we expect that there will be more cuts and reorganization efforts to come.
HR must anticipate further restructuring as Volvo Cars implements its $1.8 billion cost-cutting plan, potentially requiring role redefinition or reskilling for EV-focused operations. The auto industry is set to see a prolonged period of cost-cutting measures take precedence over performance, leaving employees in the lurch about what to expect next.
During times like this, developing robust severance and outplacement programs will be essential to maintain the employer’s reputation and support affected employees in any way possible.
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