The decision to make its first electric car in China highlights the central role China will play in Volvo’s electrified future and underlines China’s growing sophistication as a manufacturing center for the automotive industry, the company said.

China is the world’s largest sales market for electrified cars and has ambitious targets to expand sales of fully electric and hybrid cars in order to address congestion and air quality issues in its cities.

Volvo has a commitment to sell a total of 1 million electrified cars—including fully electric cars and hybrids—by 2025. It is also developing a fully electric car on its Scalable Product Architecture (SPA). The company also plans to offer plug-in hybrid versions of every model.

Volvo has three manufacturing facilities in China in Daqing, which makes its 90 series cars; Chengdu, which makes its 60 series cars; and Luqiao, which will make its 40 series cars.

Volvo Cars has been under the ownership of the Zhejiang Geely Holding (Geely Holding) of China since 2010. It formed part of the Swedish Volvo Group until 1999, when the company was bought by Ford Motor Company of the US. In 2010, Volvo Cars was acquired by Geely Holding.