Volvo-owned Polestar says it's working on the world's first fully climate-neutral car, the Polestar 0

• Volvo-owned Polestar is working on a climate-neutral electric vehicle called the "Polestar 0."
• The company said it would eliminate emissions from manufacturing rather than offsetting them.
• Fredrika Klarén, Polestar's head of sustainability, spoke to Insider about the project.

Electric-vehicle company Polestar, owned by Swedish automaker Volvo, is making what it claims is the world's first "climate-neutral car," it said Wednesday.

The company plans to make the vehicle, known as the Polestar 0, by 2030.

Rather than offsetting carbon emissions by planting trees, Polestar said it would focus on eliminating them in the first place by changing the way its cars are made.

"We're electric, so we don't have to worry about combustion engines producing toxic emissions - but that doesn't mean our job is done," Fredrika Klarén, Polestar's head of sustainability, said in a statement.

Polestar currently sells just two vehicle models - and they were both crowned Insider's 2020 Cars of the Year.

Read more: A boss at Volvo's Polestar EV firm explains how the brand plans to rival Tesla's dominance in 3 key ways

The company planned to eradicate all emissions stemming from production, she told Insider in an interview. This would include using renewable energy across its supply chain, and using climate-neutral and recycled materials, she said.

"Today, Polestar 2 leaves the factory gates with a carbon footprint," Polestar CEO Thomas Ingenlath said in a statement. "In 2030 we want to present a car that does not."

Klarén said that Polestar would make its cars as energy efficient as it could, and that it would rely on the cooperation of its supply-chain partners.

"We are fully dependent on them."

The price, production volume, and target market of the Polestar 0 hadn't been determined yet, she said.

Klarén said that scaling up production and generating consumer demand for carbon-neutral products were Polestar's biggest challenges. Consumers could ultimately "vote with their wallets," she said - but added that the pandemic has made people think more about their consumption habits.

She said that Polestar planned to raise awareness of the environmental impact of cars by adding sustainability declarations to all its future vehicles, disclosing their carbon footprint and the source of their materials. This would start with the Polestar 2, which Klarén said comes with carbon emissions of 26 tonnes.

When the Polestar 0 was released, it would have zero carbon footprint, she said.

Similar declarations are used in the food and fashion industries, but Polestar said the move would set a "unique transparency precedent" for automakers.

Klarén said many companies were declaring that they were carbon neutral by using carbon offsetting, such as planting trees. This was a "worrying development" that is not sustainable in the long-term, she said.

"The science doesn't back it up," she said.

She didn't name any specific companies.

Polestar announced the carbon-neutral vehicle goal in its annual review published Wednesday.

Polestar already integrates climate targets in its employee bonus system, and Klarén told Insider the company wants to be carbon neutral by 2040. It manufactures its vehicles at a factory in Chengdu, China, which Klarén said uses only renewable energy.

The announcement comes as Polestar expands its retail locations across the US. In March it announced plans to open new showrooms in 15 cities, including Boston, Atlanta, Dallas, and Detroit.