In Volvo's view, the combustion engine is going the way of tailfins and ashtrays.
Volvo will begin producing electric motors on all its cars from 2019, becoming the first traditional automaker to forgo the combustion engine altogether.
The Swedish company, which has been making cars since 1927 and has in recent decades become famous for its station wagons and safety features, said Wednesday that the decision was prompted by the wishes of customers, describing it as "one of the most significant moves by any car maker." Electric cars are gaining attention from investors as well as drivers, with electric-car maker Tesla (TSLA) recently surpassing the market value of larger automakers, including Ford (F) and General Motors (GM).
Volvo said a public listing is possible, although it declined to discuss a potential initial public offering, according to The Wall Street Journal.
Volvo Cars said it aims to reach its target of selling 1 million electrified cars by 2025, with a range of models, including fully electric vehicles and hybrid cars.
"This announcement marks the end of the solely combustion engine-powered car," CEO Hakan Samuelsson said. "People increasingly demand electrified cars and we want to respond to our customers' current and future needs."
Volvo, which since 2010 has been owned by Chinese firm Geely, will launch five fully electric cars between 2019 and 2021. Three of them will be Volvo models and two will be electrified cars from Polestar, Volvo Cars' performance car arm. It also plans to supplement them with a range of gasoline and diesel plug-in hybrid and mild hybrid, or 48-volt, options on all models, which the company said would be one of the "broadest electrified car offerings of any car maker."
Volvo Cars has said it is committed to help improve the environment and make cities cleaner by reducing carbon emissions, aiming to have climate neutral manufacturing operations by 2025.
Last year, the company had record sales of 534,332 cars in 100 countries, up more than 6 percent from 2015.
Teslaits lower-priced Model 3 car on Friday. The car is to start around $35,000 and with a $7,500 federal electric car tax credit, could cost $27,500. Tesla says the five-seat car will be able to go 215 miles (133 kilometers) on a single charge and will be sporty, accelerating from zero to 60 miles per hour in under six seconds.
Volvo shares were up 1.4 percent at 146.7 kronor in midday trading Wednesday in Stockholm.