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Toyota to build electric town car, plug-in hybrids

The world's biggest auto company will introduce an "urban commuter" all-electric car in 2012 and will start testing a plug-in Prius with a lithium-ion battery later this year.

Toyota Motor Sales announced an expanded commitment to electric vehicles on Saturday, disclosing plans to manufacture an all-electric city car by 2012 and a wider fleet of gas-electric hybrids.

At the North American International Auto Show (NAIAS) in Detroit, Toyota showed off a concept car called the FT-EV, a battery-powered four-seat compact car. Although it's concept car, Toyota said it will release an "urban commuter" electric car in 2012.

Based on an existing car sold in Japan called the iQ, the FT-EV runs entirely on batteries and has a range of about 50 miles. Like many all-electric cars planned for release in the next few years, the FT-EV is designed for commutes and short trips, potentially as a second car.

In a statement, Toyota Motor Sales' group vice president of environmental and public affairs Irv Miller said that even though gasoline prices have dipped substantially in the past half year, the auto industry should focus on fuel-efficiency.

"We must address the inevitability of peak oil by developing vehicles powered by alternatives to liquid-oil fuel, as well as new concepts, like the iQ, that are lighter in weight and smaller in size. This kind of vehicle, electrified or not, is where our industry must focus its creativity," he said.

A number of auto companies, including Mitsubishi, Nissan, and Think, plan to bring out small all-electric cars in the next two years. The commitment of Toyota--maker of the iconic Prius hybrid car--adds more validity to the small electric commuter car category.

Toyota's FT-EV, a concept car that will be the basis for an all-electric commuter car due in 2012. Toyota

Still, Toyota said the the gas-electric powertrain of the Prius represents its "core" technology because it can be used with larger vehicles.

On Sunday, the company said that it will move up its previously announced plan to test plug-in hybrid cars using lithium-ion batteries. Current Priuses use Nickel-metal hydride technology but most auto makers are pursuing lithium-ion chemistry for an upcoming wave of electric cars.

At the end of 2009, it will begin testing a fleet of plug-in electric Priuses using lithium-ion batteries. Of the 500, 150 will be made available to U.S. customers for lease.

Toyota's goal is to sell one million gas-electric hybrids a year in the early 2010s. It will have 10 new hybrid models in that time, including the third-generation Prius and the Lexus HS250h, both of which it introduced this week in Detroit at the NAIAS.