Volvo’s Best-Selling SUV Is Coming to Rescue Its U.S. Factory

Volvo’s best-selling model worldwide, the XC60 compact luxury SUV, will bring major powertrain and styling updates when a fresh round of updates debut later this year.

The second-generation XC60, which has been around since 2017, is expected to gain an upgraded plug-in hybrid battery enabling more range, refreshed styling inspired by Volvo’s latest EX60 and XC90 models, and enhanced cabin technology, all of which are aimed at keeping the compact luxury SUV relevant in its segment.

Volvo Expects To Build 20,000 XC60 SUVs In The First Year Of U.S. Production

But there’s also a big manufacturing announcement tied to the refreshed XC60, and that’s the fact that XC60 production for North American markets is moving to the United States. Starting in late 2026, the XC60 will enter production at the Ridgeville plant near Charleston, South Carolina, with full production to ramp up in 2027.

The facility, which currently assembles the all-electric Volvo EX90 and Polestar 3 twins, operates far below its annual capacity of 150,000 vehicles. Thankfully, the addition of the popular XC60 SUV is expected to boost the underutilized factory’s output by approximately two-thirds, according to Automotive News.

Early projections reportedly show that at least 20,000 XC60 units will be made in the first year of U.S. production. The factory will initially build the mild-hybrid version of the updated XC60, according to AN. The XC60 is by far Volvo’s best-seller in the United States, making up more than 33% of sales in 2025. It’s also Volvo’s best-selling model of all time with over 2.7 million sold worldwide, more than the iconic 240 wagon.

Production at the South Carolina facility is set to grow further by 2030, when Volvo plans to add a next-generation hybrid model. Volvo Cars CEO Håkan Samuelsson previously hinted that the future hybrid vehicle will be a full-size SUV, a “bigger size car primarily for America.”

U.S. Import Tariffs Brought XC60 Production Stateside

Volvo’s decision to build more models at its South Carolina factory—the only one it operates in North America—has a lot to do with the plant’s underutilization but likely more with the necessity to sidestep U.S. import tariffs.

Producing cars in the U.S. helps Volvo Cars avoid the 25% import tariff on vehicles built in Sweden, from where it currently ships XC60 SUVs to North America. Additionally, local production aligns with the company’s long-term strategy of “building where we sell,” helping strengthen its U.S. market presence and appeal to American consumers.

The automaker’s increased U.S. manufacturing focus may also help explain why Volvo Cars secured specific U.S. Department of Commerce authorization regarding its software and Chinese ownership links, whereas sister company Polestar did not.

Last but not least, the move supports local jobs and reinforces Volvo’s strategic focus on the U.S. market. The company expects to expand the factory’s workforce to at least 3,910 employees by the end of 2027, reinforcing South Carolina’s position as a key automotive hub in the country. The plant currently employs around 2,500 people.

Volvo Cars has invested around $1.2 billion in its South Carolina facility since breaking ground in 2015.