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The New York Times is reporting that Daimler has decided to proceed with production of a fleet of 500 Mercedes-Benz A-Class E-Cell vehicles early in 2011. Like the Smart ED, the battery packs and power electronics for the electric A-Class will be supplied by Tesla Motors. According to Tesla chief technical officer JB Straubel, Daimler decided to move forward with the project after Tesla took the initiative and converted an A-Class for demonstration purposes.

After at least two years of trying to determine what it was going to do about its next-generation Mercedes-Benz A and B-class compacts, Daimler has announced that it will commit €600 million to update and expand the factory that builds them. We still don't know what platform Mercedes will use for the new small cars, but they will start production at the Rastatt factory in late 2011. Part of the updates to the factory will include a 710,000 square foot body shop to produces the shells of the