Volvo XC60 U.S. Production Launches; South Carolina Plant Capacity to Increase by Over Two-Thirds

Volvo Automobile is accelerating local production of the XC60 at its Ridgeville, South Carolina plant to address dual challenges: weakening U.S. demand for its electrified models and chronically low capacity utilization at the facility. Mass production of the XC60 is scheduled to begin in January 2027.

According to Volvo Automobile North America's Louis·Rezende, speaking to Automotive News, initial XC60 production will add at least 20,000 units annually to the plant — located near Charleston — lifting its current annual output of roughly 30,000 units by over two-thirds. "This will add at least one full shift and lay a solid foundation for much larger-scale production — the Charleston plant will become very, very busy."

Opened in 2018 with a total investment of $1.3 billion, the plant was designed for an annual capacity of approximately 150,000 vehicles. However, since discontinuing the S60 sedan in 2024, it has only handled low-volume production of the EX90 and Polestar 3 electric SUVs. GlobalData estimates its recent capacity utilization at just ~15%.

Local XC60 production will improve the return on investment for the U.S. plant while enabling more agile responses to market demand. "The primary reason for localizing XC60 production is to ensure we build what consumers truly want — we're confident this vehicle will be a strong seller," said Rezende.

The XC60 remains Volvo's core volume driver in the U.S., accounting for 37% of the brand's total sales in the first half of 2026. The 2027 model year XC60 will receive a mid-cycle refresh: subtle exterior updates, upgraded powertrains, and — for the T8 plug-in hybrid — a significantly larger battery, more than doubling its all-electric range from the current 35 miles (~56 km).

Price competitiveness is also critical. "'Affordability' is the keyword," noted Rezende. "We see competitors increasingly focusing on the SUV segment — especially within our own market niche." While domestic assembly helps partially avoid import tariffs, tariff pressure remains unavoidable, as key components continue to be imported from Europe.

Rezende declined to disclose the Charleston plant's annual XC60 production target, citing phased ramp-up influenced by European component supply timing and U.S.-based quality control processes. "The tooling has arrived, and production lines are under commissioning," he added. XC60 localization is also viewed as preparation for a forthcoming high-volume model: a three-row extended-range hybrid flagship SUV positioned above the XC90, slated for launch at the end of 2028 and directly targeting Mercedes-Benz's GLS and BMW X7.

Notably, Volvo faces sales headwinds in the U.S. in 2026: federal tax credits for plug-in vehicles are phasing out, and persistent tariff pressures contributed to a 12% year-on-year sales decline in the first half — outpacing the luxury segment's overall 7.4% drop. The brand has dynamically adjusted dealer allocations, reducing the share of plug-in hybrid XC60 and XC90 models from 40% last year to approximately 30% to better align with actual demand. "We're striving to become a profitable, electrified premium brand," emphasized Rezende.