"Due to import tariffs the company is currently unable to sell the Volvo ES90 profitably in the United States, while ES90 margins are also under pressure in Europe for the same reason," the carmaker said in a statement to investors.
In the United States, Volvo has to grapple with a 25-percent import tariff decided by US President Donald Trump in April.
Volvo Cars -- owned by China's Geely automotive group -- had planned to sell its ES90 luxury sedan in the United States from next year for a price starting around $75,000.
It was to join the Volvo EX90 all-electric SUV that it started selling this year from $81,000.
But the company said EX90 launch delays and additional development costs, and the tariff barriers to selling the ES90, meant "we have reassessed volume assumptions for these two cars" and would have to take a non-cash impairment charge.
The one-off non-cash impairment charge of SEK 11.4 billion ($1.2 billion) will be booked in the second quarter of 2025.
The carmaker's chief financial officer, Fredrik Hansson, said the tariffs and the production delays have "resulted in a lower than planned lifecycle profitability".
Volvo makes cars in several plants around the world, including in South Carolina in the United States, as well as in Sweden and in China.
The company's CEO, Hakan Samuelsson, said in early April that Volvo would increase auto production in the US plant and would likely move ES90 manufacturing there.
In late May, the company announced it was cutting 3,000 jobs, around 15 percent of its office-based workforce, nearly half of them in Sweden.
ef-rmb/gv
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