Volvo has confirmed it will be building plug-in electric hybrid cars within three years.

The Swedish brand has announced a joint venture with Nordic electricity firm Vattenfall for the development of the cars and lithium-ion battery technology that will lead to cars being mass-produced in 2012.

The car will be a diesel hybrid, with power coming primarily from recharging from the home supply, or the network of recharging points that Volvo hopes will be in operation by the time the car arrives. The battery will take around five hours to fully recharge. There’s no word yet on which model will form the basis for the plug-in hybrid car, but Volvo will reveal three V70 “demonstration models” this summer.

“Our partnership with Vattenfall allows us to take a giant step toward offering our customers cars with an even smaller environmental footprint,” said Stephen Odell, boss of the Volvo Car Corporation.

Volvo claim electric models consume around 20% of the fossil fuels needed to power a car by conventional means.

Volvo has yet to reveal the full details of which markets will be first to get the plug-in electric hybrid model, with much depending on how Governments develop their electric vehicle infrastructure in the next couple of years. London mayor Boris Johnson has recently stated his aim to make the city a worldwide leader for electric vehicles, and the Government has announced a grant scheme offering £5000 per car for electric vehicles from 2011.

“We’d obviously like it to come to the UK but a lot depends on the maturity of the network in terms of recharging,” said a Volvo spokesman.