It will travel pollution-free for 62 miles for under £1 after a three-hour charge from the mains.
Volvo says its new green machine produces 66 per cent lower carbon emissions than the best hybrids available today.
And the car is no slouch, with a top speed of 100mph and acceleration of 0- 62mph in nine seconds.
The batteries have a life of 15 years, which Volvo engineers say is a major breakthrough in lithium battery technology.
On a 100-mile trip - with petrol power taking over after 62 miles - motorists would achieve the equivalent of 124 miles to the gallon.
A showroom version of the prototype could be on sale within three years priced at about £18,000.
Magnus Jonsson, of Volvo: "This is a groundbreaking innovation.
"A person driving less than 60 miles per day will rarely need to visit a filling station. It is exceptionally kind to the owner's wallet."
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