CEO Elon Musk, founder and chairman of Tesla Motors Inc., announced that they have been working with Daimler AG since 2007 to produce the Smart Car Electric microcars, with Tesla providing the battery packs and chargers need for initial plan to deliver 1,000 vehicles by the end of the year. During the North American International Auto Show, Musk told the Society of Automotive Analysts, “If the 1,000-vehicle fleet is a success and the economics make sense and the product is compelling, that will expand to tens of thousands of vehicles per year.”

Musk stressed that Daimler is looking at this joint project very seriously. Last year, Daimler brought the Smart fortwo to the United States during the time when gas prices skyrocketed. It reached more than 24,000 in sales, at US$12,000. The two-seater call is less than 9 feet long and carries a three-cylinder engine that produces 41 mpg (5.7 liters per 100 kilometers) during highway driving.

Musk didn’t reveal the price of the electric counterpart but Daimler spokeswoman Julia Engelhardt confirmed that it will be available in the market in late 2009. Musk further added that the partnership with Daimler was not exclusive and that they are looking forward to work with other automakers.

“Nothing can be further from the truth. We’ve actively sought to work with major car companies to supply them with electric powertrain technology,” Musk said. He subtly added that the Tesla Roadster Sport will be out in June with an enhanced 0-60 mph acceleration to 3.7 seconds.