Volvo has expanded their partnership with energy utility Vatenfall to create a new plug-in hybrid available by 2012.

Volvo is teaming up with Swedish energy utility Vattenfall to create a new plug-in hybrid.  The automaker claims a new diesel/electric vehicle will emerge from the partnership and hit the market in 2012.

The two companies began working together over two years ago to explore the technology that makes plug-in vehicles a reality.  In conducting research, the two companies agree that these autos are not only better for the environment, but have the potential to create many new jobs with the introduction of a supporting infrastructure.

Volvo and Vatenfall plan to use an electric motor deriving power from a lithium-ion battery pack.  Depleted batteries would charge in about five hours, presumably from a 220V wall socket.  Their vehicle will use regenerative braking to also help keep the batteries charged.  An extensive range is not expected.  Any vehicle created looks to be specifically for routine distances.

"Most car journeys are short trips, for instance to and from work. We will be able to offer a product that fulfils this transportation need. In order to cover longer distances as well, the car will also be equipped with one of Volvo's fuel-efficient diesel engines," writes Volvo head Stephen Odell.  Any car created will have at least an all-electric range of 50 km per charge.  This number would likely need to rise if their project is to be taken seriously.

However, the two companies acknowledge that any vehicle coming out of the partnership will be more expensive than a conventional car.  The reasons for this include the high price of batteries, and the cost of research and development.  Although electricity in Sweden costs a fraction of the cost of conventional fuels, getting customers to pony up extra cash up front in this economy will be difficult.  The two companies are hoping things will turn around by the time their new vehicle is released.  They also hope that a €3 per 100km running cost will be a big selling point.

Still, the environment will be a big selling point for any new Volvo plug-in hybrid.  As such, Vatenfall will allow customers to only purchase electricity from "green" sources, like windpower and hydropower.  Meanwhile, the utility claims they are working on reducing emissions across their entire electricity production lineup, in a push to be more sustainable.

"Through electric power, we avoid the emissions from each individual car. Instead of petrol or diesel, the energy is derived from a few large power sources and Vattenfall is working hard to eliminate carbon dioxide emissions from all electricity production. In Sweden, virtually all Vattenfall's electricity production is emission-free," said Vattenfall chief Lars G Josefsson.

Although still three years off, this summer the two companies will wheel out three Volvo V70 demo models to learn more about their customers' attitudes. Vattenfall is looking for the fastest, and most efficient methods to charge vehicles, while Volvo will be trying to get a better feel for driving habits.  Over time, the electricity utility also hopes to figure out how to reduce charging time to a minimum.

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