As early as 1987, 4 years before the launch of the 850 these photos were taken. The questions were, is this the new 700 hatchback? like the Audi Avant? The car that was shot during a heat test in the desert aereas in the USA was disguised. Compared to the 740 the midline was raised thereby the windows are unpropornairy. The rear light was thought to be borrowed from the competitive Saab 9000 CC. 

The car was thought to be a disguised 760 with the new rear axle but confusing was that did it really need all this disguise for this? The most common answer would be that this was a handmade car that Volvo were testing whether there was a possibility or demand for a car like this in their range. 

This prototype was thought to be in the stage were questions had to be solved whether to produce or just forget the new model. As  we know now the car was built and became the Volvo 850 in June 1991. (Thumbnails click to enlarge)