Why Volvo & Polestar are Moving EV Production to the US

Volvo Cars and Polestar plan to consolidate the production of Polestar 3 cars at Volvo’s US car plant in Ridgeville, outside Charleston in South Carolina, shifting production away from China. 

The announcement also sees Volvo, who will now own a 19.9% stake in Polestar, convert approximately US$274m of outstanding shareholder loan into Polestar’s equity in an update to Polestar’s capital structure. 

This move comes during a challenging time for the US EV market with 100% tariffs in place on Chinese made EVs and regulatory uncertainty.

Polestar 3 manufacturing in US

Volvo Cars has invested US$1.3bn in its South Carolina facility in the last decade

Volvo’s US manufacturing facility is currently a global production hub for Volvo’s EX90 SUV EV. The EX90 is built on Volvo Cars’ SPA2 architecture, which also underpins the Polestar 3. 

Håkan Samuelsson, Chief Executive of Volvo Cars, says: "The move to consolidate global Polestar 3 production in Charleston help generate efficiencies for both companies, whilst also underscoring our confidence in the plant and the role it plays in our manufacturing footprint.

“The US is a very important market for Volvo Cars, both to support our growth ambitions as well as a strategic production site to meet regional and export demands.”

The Polestar 3 is currently also produced in Chengdu in China, but the move will see the Polestar 3 manufactured exclusively in the US.

Financial consolidation

Polestar released a statement outline that Volvo would carry out a debt-to-equity conversion of roughly US$274m and extension of shareholder loan from Volvo, with a further conversion of approximately US$65m expected later in the second quarter.

The maturity of Volvo’s remaining approximately US$661m shareholder loan to Polestar has been extended to December 2031.

Michael Lohscheller, Polestar CEO, says: “We are grateful for the continued support from Volvo Cars in helping us to strengthen our balance sheet and reinforce our liquidity profile. 

“Our strong operational collaboration with Volvo Cars continues through manufacturing, our commercial operations and offering our customers access to one of the most extensive service networks in the industry.”

This follows Polestar's announcement of a December 2025 US$300m debt-to-equity conversion agreement by Geely Sweden Holdings AB, which owns a controlling stake in Volvo Cars.

Polestar also announced a US$300m investment by purchasers including Crédit Agricole CIB, Vida Finance S.A., Innovator Limited and Proximastar Holdings Company Limited in March 2026 as it seeks to strengthen its balance sheet and raise equity.

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Challenging time for EVs in the US

Amid tariffs of 100% on Chinese made EVs for the US market, multiple companies scrapping EV plans and regulatory uncertainty, Michael agrees the US EV market is challenging. 

Michael said, when announcing Polestar's operational results for the third quarter and first nine months of 2025: “As market conditions remain challenging, we continue to take steps to make our organisation and operations more efficient.”