By Abhirup Roy and Marie Mannes
LAS VEGAS (Reuters) – Sweden’s Volvo Group ( OTC: ) is moving ahead with a planned $700 million heavy truck plant in Monterrey, Mexico, Chief Executive Officer Martin Lundstedt told Reuters on Wednesday, even as President-elect Donald Trump threatens to impose U.S. tariffs on the import 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 the company’s revenue, as a strategic priority and expects the plant to begin operating in 2026. The plant is expected to supply vehicles to the United States, Mexico and Canada, as well as to Latin America.
Trump has said he will sign all necessary documents immediately after his inauguration on January 20 to begin levying 25% tariffs on imports from Mexico and Canada unless those countries crack down on illegal immigration and the fentanyl trade.
The project in Mexico is in an “early phase that continues,” Lundstedt told Reuters NEXT Newsmaker in an interview on the sidelines of CES 2025, the annual technology conference in Las Vegas. He said Volvo has options to use the plant for sales outside the United States.
“This is not a replacement for our American plants,” he said. Depending on what happens with U.S. tariffs, the Volvo 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 it sells in the United States. The company has invested in plants in Virginia, Maryland and Pennsylvania to expand that capacity, Lundstedt said.
Trump’s tariff proposals sent shockwaves through the auto sector as a number of carmakers, including BMW (ETR: ), Toyota (NYSE: ) and General Motors (NYSE: ), have invested in factories in Mexico to take advantage of lower labor costs and business-friendly policies.
Lundstedt also said Volvo expects large-scale production at its planned battery plant in Sweden to start several years later than the original target of 2029-2030.
Volvo said in September that it would delay construction of the plant by one or two years and said at the time that it was not certain whether this would affect the start of production.
Volvo wants to be at the forefront of green investments, including zero-emission trucks, but is refining its strategy to adapt to market factors, Lundstedt said. That’s because she doesn’t want to “fight all the windmills alone, like Don Quixote and Sancho Panza,” he said, referring to the fictional characters from the famous novel.
