Electric vehicles are popularly perceived as the front-runner of the alternate fuel competition, but successfully developing EVs has proven to be a difficult and expensive task. To help share the burden and the expertise necessary to get an electric car to market, Daimler AG, parent company of Mercedes Benz, and Tesla, builder of the high-performance Roadster EV, have announced a new strategic alliance.

In a press conference held this morning, Daimler announced that it has taken a 10% equity stake in Tesla to help bring to market electric versions of its Smart ForTwo minicar. So far the only electric smart cars have been prototype versions used for internal testing.

Under the deal Daimler will receive batteries and the technical expertise needed to bring an electric car to market “at the highest possible speed,” company officials said. In exchange, Tesla will get an undisclosed payment from Daimler for the technology as well as the aforementioned 10% stake. Furthermore, Daimler will also help Tesla with the parts and engineering expertise it needs for its upcoming Model S sedan.

Today’s announcement is actually an extension of a deal first formed between the two companies back in 2007. The original partnership consisted of a contract from Daimler for the manufacture by Tesla of an initial run of 1,000 all-electric powertrains.

Previous reports have indicated the electric Smart ForTwo would be arriving in 2010. The car is expected to require around 12kWh per 100km of travel - an energy expenditure low enough to reduce operating costs to about 2.5 cents per mile - and be available for sale both in the U.S. and Europe.


Follow Motor Authority on Facebook, Twitter, and Google+.