The age of electric vehicles is nearly upon us, with everyone from Nissan to Peugeot to General Motors at various stages of development. Daimler has now announced that it too will join the ranks of electric vehicle builders by 2010, with both a Smart-branded city car and a Mercedes-branded luxury vehicle on offer.

Testing for the cars is set to begin soon, with the electric Smart ForTWo scheduled for a 2009 test-run in the U.S. Mercedes' new S400 hybrid is due out next year as well, and could be a stepping-stone to the EV in 2010. Mercedes has also been testing a handful of fuel-cell vehicles, including a B-Class prototype, ahead of a planned 2010 launch. Fuel-cell vehicles are technically electric vehicles that store their power in hydrogen or other fuel form instead of batteries, so that may be the direction Mercedes is heading with its first EV. The prototype could also be nothing more than a testing platform for the engine and control systems while a battery pack is in development.

The version of the electric Smart set to begin testing next year is expected to feature a second-generation electric drive system with lighter and more efficient lithium-ion batteries. Consuming just 12kw-hours per 100km, the average cost of running the car is around two and a half cents per mile and it takes just 5.7 seconds to accelerate from rest to a reasonable driving pace of 60km/h.

One of the primary concerns Daimler has with its EV sales program is how it will handle the battery packs, reports Automotive News Europe. Like GM with its Volt plug-in hybrid, Daimler is considering a lease scheme for its batteries, since the technology will be both expensive and a wear item. To keep the cars cost-competitive with combustion-powered models at introduction, a lease scheme may be necessary.