NEW YORK --- Mercedes-Benz announced plans to have a demonstration fleet of small electric vehicles on the road in two to three years, USA Today reported.

The Smart cars are expected to run 80 miles or more on lithium-ion batteries that the automaker is now developing. A few years later, regular production could get underway.

Earlier this month, Mercedes-Benz said it would be first in the U.S. market with a gasoline-electric hybrid using a lithium battery pack, USA Today reported. This vehicle will be a gasoline-electric version of the automaker's S-class sedan in 2009.

Mercedes' lithium batteries will be manufactured by JCS in France. It's a joint venture between Johnson Controls and Saft, a French battery company.