The car maker hopes to have in-house electric motor production by 2025.
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Volvo has announced it will invest almost AU$110 million to set up its own in-house manufacturing of motors for electric cars.

The Swedish-born car maker, which is today owned by Chinese company Geely, says it will equip its existing powertrain plant in Skövde, Sweden, to assemble and eventually manufacture e-motors before the middle of the decade.

While other car companies rely on outsourcing parts for electric powertrains, Volvo will follow in the footsteps of Tesla by bringing at least some of these operations in-house.

"In a first stage, the Skövde facility will assemble e-motors. At a later stage, the company intends to bring the full manufacturing process for e-motors in-house into a facility in Skövde," Volvo Cars said in a statement.

The whole transition will involve the investment of roughly 700 million Swedish Krona, or AU$110 million over the next five years.

Volvo has already outlined its goal of becoming a "premium electric car company" with 50 per cent fully electric car sales by 2025, with the rest of its sales made up of hybrid models.

The company has conducted operations out of the Skövde plant since it was founded in 1927, with the first Volvo ever built containing an engine built in the facility.

Volvo says bringing its e-motor development in-house will allow engineers to further refine performance, efficiency and electric drivelines in forthcoming Volvo cars.

Currently, Volvo conducts all the design for its electric motors and batteries at hubs in Gothenburg, Sweden, and Shanghai, China.

Once the Skövde engine plant fully transitions to electric motor production, the production of internal combustion engines (ICE) will be transferred to a subsidiary of Volvo Cars named Powertrain Engineering Sweden (PES).

PES is in turn going to merge with the internal combustion operations of Geely, Volvo's parent company.

“The team [at Skövde] is highly skilled and committed to delivering on the highest quality standards. So it is only fitting that they will be a part of our exciting future," Javier Varela, Volvo's senior vice president of Industrial Operations and Quality, said of the announcement.