Volvo has confirmed plans for a new vehicle assembly plant in the U.S. The Swedish automaker, owned by Chinese automaker Geely as well as the Chinese government, is committed to spending $500 million in the plant, which is expected to come online around 2018. A location is yet to be confirmed, with the automaker only stating it has drawn up a short list of potential locations. It was previously reported that Volvo has been in talks with several state governments including those of Kentucky, North Carolina and South Carolina about potential incentives.

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The latest decision underscores Volvo’s long term commitment to the U.S., which was once the automaker’s most significant market. Last year it accounted for just 12 percent of sales, or about 56,366 units. Volvo’s medium term target is 100,000 sales in the U.S. annually, which is roughly the number of sales the automaker enjoyed back in 2007.

Volvo already has two plants in Europe and two in China. However, building cars in even more regions will aid Volvo in hedging against currency fluctuations as well as benefiting from logistics  and lower production costs. It’s a strategy rival firms such as BMW, Lexus and Mercedes-Benz have successfully undertaken.

There’s been no mention of what models will be built in the U.S. but it’s likely we’ll see more SUV models built here, such as the XC90 or the next-generation XC60, since these are the most popular segments here. And with Volvo’s future models set to feature common platforms, it’s possible we’ll see more than one model produced at the plant. Importantly, the plant will serve both the U.S. and export markets.

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“Volvo Cars cannot claim to be a true global carmaker without an industrial presence in the U.S.—today, we became that,” Volvo CEO Håkan Samuelsson said in a statement. “The U.S. is an absolutely crucial part of our global transformation and today’s announcement makes it perfectly clear that Volvo is in the U.S. to stay.”


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