A long standing collaboration between Mercedes and Tesla, will spawn a production version of the Mercedes B Class E-Cell, according to a Tesla employee reporting to the website  GREON7  (which we suggest you do not open unless you speak Dutch).

Daimler, the parent of Mercedes (and SMART) fully owns 9% of  Tesla as part of an assistance/co-operation program from 2010.  A partnership that Tesla CEO Musk says was the salvation for the company.   Besides a nice return for Mercedes on their money since the company went public (9% is now worth almost $300 million), this car is the first physical seeds of that investment.

Tesla will apparently provide the entire powertrain for the B Class E-Cell, including the packs themselves.

2011 E-cell under
No definitive specs on the vehicle were reported by the insider, but one assumes the production A-Class EV would be similar to that of a test fleet of 500 E-Cells Mercedes put out last year Europe.  Those beta vehicles used two Tesla sourced batteries (36 kWh in total), which was good for almost 200 km to a charge (124 miles).

Worth noting is that the prototype E-cell's electric motor was only 50 kW, probably not an acceptable level of performance in the real world.  0-60 km (thats 37 mph) took almost 6 seconds to achieve.

The Mercedes B Class E-Cell  will likely be produced sometime in 2013, initially on a limited volume, and to select customers.  According to Tesla, the volume and scope of this project has been confirmed to be larger than work with Toyota on the RAV4 Ev.

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EDIT: Updated Info (07/02)