In this project Volvo experimented with light weight materials to build the engine, such as aluminium, magnesium and plastics.

The engineers started work in 1979; they were given a clean sheet to create a car meant for the year 2000, maximizing low fuel consumption.

Norsk Hydro, one of the world's foremost magnesium producers provided the technical know-how.

[5] There were two types of three-cylinder turbodiesel engines for this car, one was a magnesium 1.3-liter (1279 cc) powerplant developed together with British diesel specialists Ricardo, pushing 39 kW (53 PS; 52 hp) and weighing 98 kg (216 lb),[2] and a 66 kW (90 PS; 89 hp) cast-iron 1.4-liter Elsbett (ELKO) engine with a KKK turbocharger that could run on a variety of fuels such as low-octane gasoline and sunflower oil (biodiesel).

A five-speed manual did not provide quite enough gear ratios, so Volvo also used the CVT technology they had received when they purchased DAF.