Tesla seals Smart battery deal and gears up for car production

Electric sports car maker Tesla was a late addition to the Detroit show – but it provided the big news on Day Three by announcing that it would supply battery technology for Daimler's electric Smart city car.

Tesla will supply the battery pack and charger for 1,000 Smart EVs, which will go on sale in the US in 2010. This could lead to mass production of an electric Smart by 2012.

"If the 1,000 vehicle fleet makes sense and the economics are compelling, that will expand to tens of thousands of vehicles per year," said Tesla founder Elon Musk. As well as developing its own car, Tesla is offering its EV technology to other automakers.

Tesla showed its Roadster model, which is based on the Lotus Elise platform, at Detroit. Tesla has so far delivered around 100 roadsters to customers.

Musk detailed the company's ambitious plans to develop a range of EV models and build a factory in San Jose, California, capable of building 20,000 cars a year.

This would cost between $300-400 million, Musk said. It would involve production of a new pure EV model, the Tesla S, a sedan model, with a family of different body styles to follow including a crossover, wagon and minivan.

This is likely to cost around $50,000 – less than half the $109,000 roadster - and is said to offer a 225-mile range on a single chargeof its Lithium Ion batteries.

However, Musk is looking for Government loans to help it proceed with the project. Musk, the entrepreneur who started Tesla in 2004, is one of the founders of online payment service PayPal.