Electrifying the Volvo C30
With zero CO2 emissions and a range of up to 93 miles, prototypes of the car are already being tested in Sweden.
Volvo's announcement follows news that Ford is to test a Focus Battery Electric Vehicle (BEV).
The C30's electric motor will be housed under the bonnet, but Volvo is still deciding where to place the lithium-ion battery pack.
However, the company has said that safety, comfort and space will not be compromised over the standard car.
Recharging the battery would take around eight hours via a standard domestic power socket.
Don't expect to see the electric C30 on the roads any time soon – Volvo is concentrating its efforts on a plug-in hybrid due for launch in 2012. Its extra range and reduced reliance on an expensive battery makes this a more viable commercial alternative.