Volvo Cars to stop developing new diesel engines: CEO

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A ideal storm could spell the end for Volvo's diesel engines, according to company CEO Hakan Samuelsson.

"From today's perspective we will no longer develop any new generation diesel engines", Håkan Samuelsson told the daily Frankfurter Allgemeine Zeitung (FAZ). But the cost to keep them compliant with stricter pollution standards would not be worth it. Volvo is likely to continue producing the current list of diesel engines until about 2023.

Samuelsson later said in a statement to Reuters that diesel could still play a role in coming years to help Volvo meet targets to reduce carbon dioxide emissions and meet norms set by the European Union till 2020 as they are more fuel-efficient than petrol engines.

Volvo will invest in the electric and hybrid cars, with its first pure electric model due on the market in 2019.

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Samuelsson said that in view of Tesla's success in the electric vehicle segment, Volvo should be able to come up with worthy contenders in the electric auto category which offer customers high quality and attractive design.

The money, machine and manpower saved will be invested in developing electric and hybrid powertrains instead. "In this area, there should also be space for us, with high quality and attractive design", Samuelsson said.

Volvo Cars has come down with a case of electric fever, and the cure is "no more diesel engines". Since Volvo recently launched a new line of diesel engines, there is no immediate need to make a decision on future diesel development, Samuelsson added.

While Europe is still very much a diesel auto market - diesel cars make up over 50 percent of the continent's passenger fleet - impending regulations and the growing popularity of electric cars could bring about diesel's demise earlier than expected.