Volvo, the Swedish car maker owned by Zhejiang Geely Holding, has joined the fray to tap China's buoyant new-energy vehicle market by announcing its plans for the new Polestar brand.
The company unveiled its Polestar 1 model in Shanghai on Tuesday night, a luxury four-seater hybrid coupe expected to hit the market in 2019.
Volvo and its Chinese parent formed a joint venture to support Polestar's development and pledged investment of 5 billion yuan ($1b) into high-performance electric cars, following their combined efforts to build mid-priced cars under the Lynk brand, according to South China Morning Post.
They will set up production facilities in the western Chinese city of Chengdu, capital of Sichuan province, to build Polestar-branded coupes and sport-utility vehicles (SUVs).
Their aim is to grab a sizeable share of the electric-car segment currently dominated by Tesla.
Thomas Ingenlath, chief executive of Polestar, said that the brand would have different types of vehicles, ranging from small cars that will compete directly with the Tesla 3 to high-performance models aimed at car lovers and collectors.
"The future [for the car industry] will be different," he told reporters at a launch event for Polestar 1.
"Looking at our portfolio, I think it's diverse, with a nice spectrum of cars. Within a very short time, we will have an attractive portfolio of offers."
With a price tag of 150,000 euros ($247,000), just 500 Polestar 1 units will be made annually, Ingenlath said.
The Polestar 2 model will take on the Tesla 3, whose starting price is US$35,000 ($48,000), while the Polestar 3 will be an SUV.
Volvo bought Polestar in 2015 and turned it into an electric car brand.
Beijing has been encouraging the development, production and sales of new-energy vehicles to cut environmental pollution for the past few years.
The Chinese government hopes a fifth of vehicles sold on the mainland in 2025 will be electric or plug-in hybrid cars.
Ingenlath would not disclose Polestar's projected sales.
"We are not afraid that with a target of 500 cars produced a year, we will have a problem in finding customers or car lovers to absorb the volume," he said.
Polestar also aims to compete with Mercedes' AMG division.
Early this year, Geely and Volvo jointly launched the Lynk brand whose goal is to challenge the mainstream segment currently dominated by global carmakers like Volkswagen, General Motors, Ford and Toyota.
Geely, founded by Zhejiang billionaire Li Shufu, is leveraging its ownership of Volvo to embark on a go-global strategy by marrying European styling and technology with Chinese production costs and manufacturing might.
Analysts said Geely had emerged as one of the biggest winners in the Chinese car market as it gradually assimilated Volvo's technologies and designs.