Volvo’s $1.2B Loss Is Deeper Than You Think: The Two Faces of a Company in Crisis

Last week, Volvo shocked the market by announcing a staggering $1.2 billion write-down, largely blamed on the troubled launch of its flagship EVs, the EX90 and ES90. The culprits cited were familiar: tariffs and software delays.

But this is only half the story. A deeper dive into Volvo’s sales data reveals a more complex and fundamental crisis. The company appears to be living a double life, with a stable present masking a perilous future.

The Bleeding Edge: A Failing Flagship EV Strategy

The $1.2 billion loss is a direct result of a failed premium EV strategy. The China-made ES90 is unprofitable in the US and Europe due to tariffs, and the EX90’s launch was a disaster, plagued by software issues and resulting in dismal initial sales (under 2,000 units in the US for H1 2025). This is a clear failure at the top end of their lineup.

The Silent Collapse: The Crisis at the Entry-Level

However, a more alarming problem is brewing at the other end of the portfolio. The XC40/EX40, Volvo’s entry-level gateway for new customers, is in a freefall. Global sales dropped 13% in 2024, and a staggering 31% in January 2025. While the $1.2B loss grabbed headlines, this silent collapse at the foundation of their customer base could be a far more significant long-term threat.

But, we need to look at the other side of the coin: The Single Pillar Holding It All Up

So, is Volvo collapsing? Surprisingly, no. The company is being propped up almost single-handedly by one incredibly successful model: the XC60.

While their new EVs falter, the ICE/Hybrid XC60 continues to be a global bestseller, with sales remaining robust. This model is not just a car; it’s Volvo’s cash cow and lifeline. It’s the stable, profitable “past” that is funding the expensive and failing “future.”

Conclusion: The Real Problem is a Strategic Polarization

This brings Volvo’s true crisis into focus. The issue isn’t just one bad model or tariffs. It’s a dangerous polarization of their entire strategy:

1. A Failing EV Lineup: From top to bottom, their new electric vehicles are struggling to compete effectively.
2. Systemic Software Weakness: The EX90 issues suggest a company-wide lag in software development capabilities.
3. An Unstable Profit Model: The company’s financial health is precariously dependent on a single, aging ICE/Hybrid model.

The $1.2B loss was the symptom. The disease appears to be a struggling EV strategy that is fundamentally uncompetitive. Can Volvo use the time and money bought by the XC60 to completely re-engineer its electric future? This is no longer just about launching new cars; it’s about the very survival of the brand in the electric era.