NEW YORK (TheStreet) -- One year from now, Mercedes will launch its all-new electric car thathas been co-engineered with Tesla (TSLA) - Get Report.

What is this car, and why isMercedes staking its future on Tesla?

One occupational hazard of living where Tesla test-drives its carsunder development is that as long as I'm not asleep or fetching stufffrom the basement, all I need to do is to look out the window andevery few minutes I will see these cars passing by. So forover a year now I have been looking at the future Tesla-basedMercedes as often as every hour, whether I like it or not.

Sometimes, the Tesla-based Mercedes test cars are parked on a publicstreet. I took this picture (among many) last October:

This Tesla-based Mercedes is of a similar size and shape as

Ford Motors'

( RIMM) C-Max, which is sold as both a regular hybrid and as a plug-in hybridversion -- and which I recently drove 1,247 miles in a high-speed

endurance test.

In other words, it's a short and somewhat tall station wagon.

Obviously, unlike the Ford C-Max, this Mercedes is a pure electriccar. The batteries are, just like in the Tesla Model S, laying flatinside the floor, which is about 5 inches to 6 inches thick.

Tesla also helped Toyota bring to market an all-electric version ofits very popular RAV4 small/medium-SUV. Only 2,600 of those cars arebeing made, and sales started last September. I have driven thisoutstanding Tesla-based


(TM) - Get Report


multiple occasions.

I highly recommend the Toyota RAV4 electric to anyone interested inan all-electric car, and for whom 110 miles of range will fit theintended purpose.

The main difference between the Toyota and the Mercedes is this: Inthe case of Toyota, Tesla took an existing car and re-designed it tomake it an all-electric car. In the case of Mercedes, it looks likeTesla took part in the engineering from Day 1 and is therefore able tobetter optimize the car for all-electric duty.

How will this manifest itself in terms of differences between theToyota and the Mercedes? The Toyota has a 42-kW battery, and judgingfrom crawling under the Mercedes on a reasonably clean street, I'd saythe Mercedes has a 36-kW battery.

42 kW vs. 36 kW: So does this mean the Mercedes will haveslightly less range than the Toyota's 110-mile average? Notnecessarily. There are a couple of reasons for this:


The Mercedes is a more aerodynamic car and sits lower to theground. Once you start going above 50 miles per hour or so, aerodynamics mattermore, and this should help the Mercedes perform more economically thanthe Toyota, especially on the freeway.


Seeing as it appears Tesla was part of the engineering of thisMercedes from Day 1 as opposed to it being an engineeringafter-thought, it should be able to optimize the weight of the carbetter. I would not be surprised to see the Mercedes be at least200 lbs lighter than the Toyota. This should compensate for thesmaller battery in the Mercedes.

All in all, I would not be surprised to see the Mercedes equal orbetter the Toyota's typical 110-mile average range, despite theslightly smaller battery. My guess is the Mercedes could average120 miles, which would put it almost on par with the base Tesla ModelS.

I didn't take any pictures of the Tesla-based Mercedes interior but Ilooked at it carefully and it looks just like any other MercedesB-Class car, which is sold in Europe and Canada. In my view, it isreasonably pleasant. The driving position is great and it's easy toget in and out of the car, thanks to the car being a little bit talljust like the Ford C-Max.

What about the Chevy Volt comparison?

I have driven almost 21,000 miles in the

General Motors

(GM) - Get Report

Chevrolet Volt, and I havealso driven almost every other electric and plug-in electric car inthe market, cumulatively thousands of miles.

In my view, it takes alot of commitment to drive an electric-only car. You have toconstantly think about the remaining range, especially in the contextof an unscheduled trip or re-routing coming up.

In my view, as long as the number of available electric chargingstations is too low to not having to think about it, a plug-in hybridcar is far more realistic than an all-electric car. This is where theChevrolet Volt comes in. The Volt is in most relevant ways azero-compromise car. It gives you 25-50 miles of pure electric drive,after which you can drive another 340 miles on gasoline. Refuel atany time, as necessary. Nothing to worry about, ever.

No car in the market today at any reasonable price (say, under$100,000) matches the Volt drivetrain's capability of driving 25-50miles on electric, and then continuing like any other car.

One yearfrom now, BMW will start to deliver the i3, which will be a variant ofthe Volt, but with a greater emphasis on the electric part rather thanthe gasoline engine. It will be the

first really interesting suchcar,

in my opinion.

You can think of it as this: A battery-electric drivetrain and asmall gasoline/diesel engine go together like peanut butter and bananaon an Elvis Presley sandwich. They complement each other almostperfectly. Drive on electric most of the time (90%, 99%, whatever)and then have the small gasoline engine ensure you never get stuckwhen you eventually have to drive longer.

So what about the all-electric car? There is some market for thisalready today -- just witness Tesla's sales success. I thinkall-electric cars can soon exceed 1% of the total car market, evenwithout much incremental development of a charging infrastructure.Tesla, Toyota, GM, Ford, Mercedes, BMW and other brands will capturethis market, and of course some of them have already started.

Just like Tesla helped Toyota ensure the Toyota RAV4 became anoutstanding all-electric car, it is likely ensuring the newall-electric Mercedes becomes an outstanding car as well. It shouldbe on sale in the first half of 2014 for what I estimate to be $46,000before tax incentives.

The Tesla-based Mercedes will have enormous torque, silent andvibration-free operation, one-pedal driving with regenerative braking,and make for a near-zero maintenance experience over the car'slifetime. Just inflate the tires correctly, rotate the tires,eventually replace the tires -- and once every 200,000 miles or sorefresh the brakes.

That's all there is to it. Range anxiety aside,an all-electric car has some very unique and positive properties.

At the time of publication the author had no position in any of the stocks mentioned.

Follow @antonwahlman

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