Mercedes-Benz says it has achieved a breakthrough in automotive battery development, saying it will use lithium-ion technology in its next S400 BlueHybrid scheduled to go on sale in Europe in the middle of 2009. U.S. sales are set to follow in Fall 2009.

The gasoline-electric hybrid would become the first series-production road car to rely on lithium-ion batteries for the storage of energy.

Making lithiom-ion batteries robust enough is the challenge facing companies like General Motors and Toyota. GM has announced that it will put a lithium-ion-based plug-in hybrid Saturn Vue on the market in 2010. GM also plans to use lithium-ion batteries to power its electric vehicles based on the Volt concept car.

GM plans to deliver its electric cars, which store power in batteries that are charged by plugging into the power grid via AC outlets, or by using small onboard gasoline or diesel engines or fuel cells to generate onboard power in 2010. GM’s aim is to have vehicles that can travel between 30-40 miles on an electric charge before the gas or diesel engine would start recharging the battery.

Mercedes says the S400 BlueHybrid, powered by a 3.5-liter V6 gasoline engine in combination with an electric motor will deliver a combined 299 hp and 277 lb-ft of torque. Fuel economy of the car would be nearly 30 mpg.

Mercedes expects to foollow the S400 with a second lithium-ion hybrid, the S300 Bluetec Hybrid, which combine a 2.2-liter, twin-turbocharged, four-cylinder diesel engine with an electric motor. That car will achieve almost 44 mpg.

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