Volvo needs its high-performance S60R and V70R models for image-building reasons.
"We wanted to get rid of our old image of being a maker of boxy-looking cars once and for all," said Lex Kerssemakers, Volvo's vice president for global marketing.
Volvo will only produce 8,000 to 9,000 of these R versions a year.
"And 300hp will be the limit, since we won't compete in the international horsepower race," said Kerssemakers.
Instead, Volvo will invest in LPG (liquefied petroleum gas) and CNG (compressed natural gas) bi-fuel hybrid-engine technology.
Volvo does not plan engines larger than six cylinders.
Volvo CEO Hans Olov-Olsson said: "I don't think that any of our Premier Automotive Group V-8 engines would fit into the S80 anyway."