facility will have initial annual production of around 100,000 cars and be located in Berkeley County, close to Charleston.
It will make latest generation Volvo models for sale in the United States and for export. Construction will begin in early autumn 2015, with the first vehicles expected to roll off the assembly line in 2018.
Once completed, Volvo will be able to manufacture cars on three continents, underscoring its position as a truly global car maker. It already operates two plants in Europe and two in China.
The new US plant forms part of an ambitious medium term expansion plan to double global sales, boost market share and lift profitability.
"This new global industrial footprint and a complete product renewal forms the foundation for our growth and profitability targets," said Hakan Samuelsson, President & Chief Executive.
"Building a plant in the US is a reflection of Volvo Cars' commitment to the US and the key role the US plays in our growth objectives," said Lex Kerssemakers, Senior VP Americas.
The decision to choose Berkeley County was taken as a result of its easy access to international ports and infrastructure, a well-trained labour force, attractive investment environment and experience in the high tech manufacturing sector.
Volvo Cars estimates that the plant will employ up to 4,000 people in the longer term. It has been estimated that the multiplier effect of a car plant means that it can create between 5 and 7 new jobs for every job at a plant. On top of that, factories have beneficial effects on many more aspects of the local economy, from taxation income to consumer spending.
Nikki Haley, Governor of South Carolina, added, "By bringing US$ 500-million in new investment and 4,000 jobs to this community, Volvo's presence and commitment to Berkeley County and the state will be felt for decades to come. We are proud to have this global leader in car manufacturing join and strengthen South Carolina's automotive industry."