Dresden  - The Mercedes-Benz parent company Daimler and Evonik are planning production of lithium-ion batteries for electric vehicles at a new factory in the eastern German city of Dresden by early 2011, the two companies have announced.

Work on the factory starts at Kamenz near Dresden later this year with full production planned for 2011. The two concerns have formed a joint venture called German Accumotive for the research, production and marketing of batteries for E-Vehicles.

Daimler's CEO Dieter Zetsche has announced plans to produce a small series of the smart fortwo electric drive vehicles with a lithium-ion battery by the end of this year. Plans are to give the E-Smart a range of 200 kilometres with a top speed of 120 km/h. (dpa)