The race for electric vehicles is on.

Tesla’s Model 3 goes into production this week. And now Volvo, the Swedish auto maker, has announced its new cars will only be hybrids and full electrics starting in two years.

Volvo's first fully electric vehicle will be a compact SUV and will come on the market in 2019. It's the first of five planned electrics Volvo will bring to market between 2019 and 2021.

As existing cars in the Volvo lineup go through their usual update cycles, they too will be converted to hybrids and electrics. By 2025, it's likely Volvo will no longer produce any cars that run solely on fossil fuel.

Volvo's announcement comes at a time when gas prices are low, reducing sales of both hybrids and EVs. But the company is positioning itself for stricter emissions regulations in China as well as the European Union. 

China will soon impose quotas for EV sales to force car companies to sell electric vehicles, and the EU will also require vehicles to emit one-third fewer carbon dioxide emissions in 2020 — a feat that can only be achieved through electrification.