It has been learnt that an electric version of Daimler's popular Smart car's batteries would be made by Tesla Motors Inc.

The customers would be able to buy the new version of Daimler's two-person Smart by the end of this year. Tesla, based in San Carlos and was initiated by Elon Musk, makes and sells an electric sportscar called the Roadster. At one point of time, Tesla even eyed New Mexico as a site for building its manufacturing plant.

It has been reported that during a speech in Detroit, this deal was revealed by Musk, who made his fortune starting PayPal, which was bought by online marketplace eBay.

However, no such announcement regarding the deal has been made by Daimler and neither does Tesla have news about it on its Web site or company blog. Musk announced in his speech that his business would make 1,000 battery packs that Daimler could use in the Smart car.

Nearly 24,000 of the gasoline-powered Smart cars were sold by Daimler in the United States in 2008.

"The Company hopes to move to a new headquarters in San Jose, but the company has also been affected by the economic crisis in the United States.

The Company has sold about 150 of its electric sportscars and hopes to make more money selling battery and power components," said Tesla last year.