Volvo Cars aims for fully electric cars to make up 50% of its sales by 2025, the company announced in Beijing. The announcement builds on Volvo Cars’ 2017 announcement that all new models released from 2019 will be available as either a mild-hybrid, plug-in hybrid or battery-electric vehicle.

New Volvo XC40 T5 plug-in hybrid

The company’s strategy to generate half of its sales from electric cars by 2025 positions it as a powerful player in China, the world’s leading market for electrified cars.

The Chinese government plans to have new-energy vehicles account for more than 20% of the country’s annual car sales by 2025—equating to more than seven million vehicles, based on Chinese government forecasts.

Last year we made a commitment to electrification in preparation for an era beyond the internal combustion engine. Today we reinforce and expand that commitment in the world’s leading market for electrified cars. China’s electric future is Volvo Cars’ electric future.

—Håkan Samuelsson, president and CEO of Volvo Cars

Volvo Cars currently produces the S90 and S90L T8 Twin Engine plug-in hybrids in China. This week also marks the start of production for the XC60 T8 Twin Engine in China, meaning that soon all three Volvo Cars China plants—Luqiao, Chengdu and Daqing—will produce either plug-in hybrid or battery electric cars.

At the Beijing Auto Show, Volvo Cars will visually reinforce the company’s position as an industry leader in electrification with all cars on display plugged-in. The event marks the first time the company displays only plug-in hybrid vehicles at an auto show.

In another first, side-by-side on stage, the company is displaying its three globally-available Volvo SUVs: the XC90, XC60 and the new XC40. Beijing also marks the first public appearance for the T5 plug-in hybrid version of the new XC40.

From start of production in Ghent in November 2017, the XC40 was available with a D4 diesel or a T5 gasoline four-cylinder Drive-E powertrain. Further powertrain options, including a hybridized as well as a pure electric version, will be added later. The XC40 is also be the first Volvo model to be available with Volvo Cars’ new 3-cylinder engine.

The new XC40 was recently named 2018 European Car of the Year and has already amassed more than 60,000 orders globally since its launch in late 2017, even though Volvo Cars is yet to open order books in China.

The early success of the XC40 supports Volvo Cars’ expectations of strong demand for its new small SUV in China. These expectations are also underpinned by growth forecasts for the segment over the next five years, as well as a growing middle-class population and China GDP growth trends driven by domestic consumption.

China is Volvo Cars’ largest individual market and this year delivered a 23.3% first quarter sales increase, contributing to the company’s first-quarter global sales growth of 14%. Volvo car sales in China last year passed 100,000 units for the first time.