NEW YORK – Mercedes-Benz said it will have a demonstration fleet of practical electric vehicles on the road in two to three years. They’re expected to run 80 miles or more on lithium-ion batteries the German automaker is developing. Regular production could begin a few years later, according to www.usatoday.com. The announcement followed its recent declaration that it will be first in the U.S. market with a gasoline-electric hybrid using a lithium battery pack.

The first-to-market Mercedes hybrid using lithium-ion batteries will be a gasoline-electric version of its S-class sedan in 2009. Its V-6 gasoline engine, helped by an electric motor, will feel like a V-8 but use less fuel.

A key hurdle to using auto-scale lithium batteries is that they require careful temperature management and monitoring of the charge in each individual cell. Mercedes said it has solved those issues for the hybrid batteries and hopes to say the same soon for a different version needed for its pure electric car based on its Smart brand of tiny two-seaters.

Mercedes’ lithium batteries will come from a new factory in France, operated by JCS. That’s a joint venture between U.S. components supplier Johnson Controls and French battery company Saft.

Even though Mercedes expects to be first with hybrids using lithium-ion batteries, General Motors aims to be first to field a showroom-ready pure electric vehicle using lithium. Its Chevrolet Volt two-seater is planned for late 2010 or 2011, priced about $35,000, according to www.usatoday.com.

Unlike gas-electric hybrids, electric cars such as Volt and the Smart will be propelled entirely by an electric motor running on batteries. They can be recharged by plugging into an outlet for six hours or more.

Lithium batteries’ extra storage capacity would allow plug-in hybrid electric vehicles (PHEVs) to go farther before needing help from their gasoline engines. PHEVs, like electric cars, can be recharged by plugging into an electric outlet. PHEVs and electric cars need more robust lithium batteries than conventional hybrids, because the batteries undergo a more severe duty cycle, charged to the brim then nearly drained.

Toyota Motor is also expanding lithium battery development and production.