(CNN Business) Polestar, a plug-in performance car brand that was spun off from Volvo, revealed its first all-electric car Wednesday. The Polestar 2 will be a direct competitor to the Tesla Model 3.

The base price for the Polestar 2 will be around 40,000 euros, the equivalent of about $45,000. That's roughly the starting price of a Tesla Model 3 today. Like Tesla, though, Polestar will produce more expensive versions of its car first. The Launch Edition of the Polestar 2, which will be made during the first 12 months of production, will cost about 60,000 euros, the equivalent of about $68,000.

The Polestar brand will sell only plug-in cars.

Production will begin in early 2020 in China, home of Geely Holding Group, Volvo's parent company and Polestar's co-owner.

The four-door all-wheel-drive car will have two electric motors with an expected driving range of 500 kilometers on a full battery based on European and Chinese standard driving tests or 275 miles based on US EPA driving tests. The company promises zero to 60 acceleration in under five seconds. An optional Performance Pack will give the car performance-tuned shock absorbers, brakes and tires for better handling.

Like Tesla's cars, the Polestar has "vegan" interior materials, rather than leather. Drivers will be able to use their smart phones like a remote key fob, another feature found on Tesla cars. An optional Pilot Package will give the car automated driving assistance features, such as Lane Keeping Assistance — which keeps the car in its lane — and the ability to park itself without a driver in the car, a Polestar spokesman said.

The grill on the Polestar 2 houses sensors for automated driving and parking.

Read More