We are not happy because we could sell more [plug-in hybrids], he said. We underestimated the demand.

We are tripling the capacity from what we had about a year ago to where we will be at the end of this year.

Volvo avoided a slowdown in sales of its plug-in hybrids that stung rivals when Europe’s new WLTP emissions testing regime was introduced because the automaker’s customers for such cars value enhanced performance over fuel economy. Volvo still has very high demand for plug-in hybrids, CEO Hakan Samuelsson told Automotive News Europe. "We are not losing those customers."Samuelsson believes that customers have kept buying plug-in hybrid versions of models such as the XC90 flagship SUV because it offers more than 400 hp of combined power, which is crucial in the highly a competitive segment that includes competitors such as the Audi A8 and BMW X5."Otherwise, it would just be an exercise in reducing CO2, which it is not for us,” he said. “We have a high share of plug-in hybrids because people appreciate the technology."

Volvo sold 26,800 plug-in hybrids in Europe last year, up from 16,000 in 2017, and there was no noticeable decline in the automaker's volume for the electrified models after the new rules took effect, according to figures from market analyst JATO Dynamics.

By 2021 Volvo expects that a quarter of the vehicles it produces worldwide will be plug-in hybrids.

Volvo says that plug-in hybrids currently account for 10 percent to 15 percent of sales in the model lines where they are offered. This includes the XC90 and XC60 SUVs, S90 and S60 sedans as well as the V90 and V60 station wagons.

The company has a waiting time of up to six months for vehicles with the technology because of the high demand, Samuelsson said.European sales of plug-in hybrids, led by the Mitsubishi Outlander midsize crossover, soared 46 percent to 94,999 in the first half of 2018, according to figures from industry association ACEA. That rapid growth slowed starting last September as automakers had to conform to new emissions regulations known as the Worldwide harmonized Light vehicle Test Procedure (WLTP).WLTP is much tougher on plug-in hybrids than the previous emissions protocol, known as the New European Driving Cycle or NEDC. Volkswagen, Mercedes-Benz and Porsche were among automakers that temporarily halted sales of some of their plug-in hybrid cars in Europe because they were no longer classed as emitting less than 50 grams per kilometer of CO2, the figure below which the car is rated as being ultra-low emission and therefore eligible for tax breaks. At Volvo, models that previously had a CO2 emissions rating of 50g/km rose to 65g/km to 80g/km.The new rating meant that Volvo, like many other automakers, no longer qualified for a number of tax incentives. Felipe Munoz, a global analyst for JATO, expects overall plug-in hybrid sales will continue to decline. “These cars are still strongly dependent on incentives, so any change in the support has a big impact,” he said.

Analyst firm LMC Automotive, meanwhile, believes European plug-in hybrid sales “will get back on track after the WLTP hiccup.” Full-year plug-in hybrid sales rose 21 percent to 174,200 units in 2018, according to JATO.