Volvo Cars said it would replace its current paint shop at its Torslanda, Sweden car manufacturing plant with a new one which would reduce energy consumption and emissions by at least a third.
This is in line with the automaker's aim to have climate neutral global manufacturing operations by 2025.
The new paint shop would cost a multi billion kronor sum with construction set for 2020.
Torslanda plant is Volvo Cars' largest assembly plant by volume and built 291,000 cars in 2018. It employs around 6,500 people.
The introduction of a new paint shop allows for more efficient manufacturing processes.
"We have identified our paint shop operation as one area in which we can achieve significant reductions in energy consumption and emissions," said Javier Varela, head of manufacturing and logistics at Volvo Cars. "This investment also strengthens our plans for the Torslanda plant to remain globally competitive."
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By 2025, Volvo wants at least 25% of the plastics used in every newly launched model to be made from recycled material.