As it struggles with declining sales and an uncertain regulatory environment, Volvo is hoping to realign its fortunes by overhauling its electric vehicle plans. And a big part of that is a bet on hybrid technology — or more specifically, extended-range electric vehicles (EREV).

At a factory tour in Ridgeville, South Carolina, Volvo made a series of announcements, including an updated EX90 SUV with an Nvidia-supplied computer and the start of production on the gas-powered XC60. But chief among them was the news that the automaker would begin production of an unnamed EREV, developed specifically for the US market.

In a roundtable with reporters, Volvo CEO Håkan Samuelsson described it as the automaker’s “second-generation hybrid,” with all the acceleration and driving agility of a regular battery-electric vehicle, but with improved range thanks to a small gas engine.

“The technology needs to be decided,” Samuelsson said, “but it’s more an electric car with a backup engine than the first-generation [hybrid], which is a combustion car with some batteries.”

EREVs are basically plug-in hybrids with a small internal combustion engine to recharge the EV battery for more range. They function as EVs, with the electric motors driving the wheels, and batteries that can be plugged into EV chargers. The gas generator is intended to relieve any range anxiety that some customers may have about buying a full EV.

Many automakers are turning to EREVs, as the imminent expiration of the federal EV tax credit is expected to result in a drop in EV sales. Ford, Ram, Hyundai, Nissan, and Scout Motors are just some of the companies that have said they intend to release EREVs in the near future.

Volvo is owned by Geely, a massive Chinese automaker that also produces a lot of hybrids, so the company hopes to utilize some of that internal knowledge in developing this new vehicle program.

“We’re fairly global,” Samuelsson said. “I have engineers in pretty much all continents … the majority of which are in Sweden. So that’s always going to be the center of gravity.”

But the vehicle will be built in the US, as Volvo — as with many automakers right now — looks for ways to minimize the impact that President Donald Trump’s tariffs are having on its bottom line. The company has had a rough summer, with sales dropping each month thanks to rising prices and declining EV demand. It even had to stop selling some of its models in the US, as tariffs were making it too expensive.

As such, Volvo is tailoring its new hybrid for the American market, focusing on a “bigger car” specifically for families, Samuelsson said. That would seem to point to an SUV with three rows, much like the XC90 or EX90. That said, Volvo’s design team still hasn’t decided what kind of car it will be.

But once that decision is made and the EREV goes into production, then Volvo’s South Carolina factor will be at capacity. Volvo is staking its future on a 50 percent volume increase over the next five years, anchored by a $1.3 billion investment in its factory in Charleston, South Carolina. The automaker had planned to become an EV-only company by 2030, but had to push that back a decade to 2040 as a result of weaker demand and slower sales.

“It will take longer time than we thought five years ago,” Samuelsson said, “and that’s why we need to be pragmatic and have this type of plug-in or bridge solutions.”

With additional reporting by Jennifer Pattison Tuohy.