The diminutive Smart car was Daimler AG's red-headed stepchild long before it came to American shores in 2008.

Once the novelty wore off in the home market of Europe after the first-generation Smart Fortwo launched in 1998, the 2-person city car remained on life support for a number of years, as sales stalled and rumors persisted that Daimler was prepared to pull the plug.

Smart survived its brush with death, thanks in part to improved small-car sales when fuel prices soared. The latest iteration of the Fortwo makes more sense than any to come before: an electric vehicle.

While the gasoline 1.0L 3-cyl. engine is crude, loud and underpowered, the 30kW (40-hp) magneto-electric motor driving the rear wheels is smooth and quiet and plenty powerful with 89 lb.-ft. (120 Nm) of torque readily available.

Where the brand's horribly outdated 5-speed automated manual transmission shifts like a drugged oxen, the Smart Electric Drive has just a single fixed gear ratio, requiring no shifting at all.

On the constantly congested streets of Brooklyn, the Fortwo EV is the smartest car on the road, producing zero emissions and consuming no energy when standing still in typical New York City traffic.

Big cities are warming up to EVs. New York already requires all new taxis to be hybrids, and Mayor Michael Bloomberg has rolled out the welcome mat to producers of EVs and the infrastructure necessary to support them.

So it's fitting the Big Apple will be one of five U.S. test markets for the Fortwo Electric Drive when it arrives this month. The New York test market extends from Washington, D.C., to Massachusetts.

The other four markets are: Portland, OR; San Francisco; Orlando, FL; and Indianapolis. In addition, all 77 Smart dealerships in the U.S., as well as Smart USA's regional headquarters in suburban Detroit, will have an EV for test drives.

Smart is starting small with its EV initiative. As part of the test fleet beginning in October, only 250 vehicles will be distributed for 48-month lease agreements, at the price of $599 a month. Baked into that tab is a $7,500 federal tax credit.

The lease limits customers to 10,000 miles (16,093 km) per year.

That's 250 vehicles spread across five major markets, so don't expect to see many. They will be recognizable for their white and lime-green color scheme, in coupe and convertible body styles.

About 80% of the leases are expected to be for corporate customers, meaning a mere 50 households will get a Fortwo Electric Drive. Customers are being chosen on a first-come-first-served basis, and the auto maker is compiling a list of interested parties via its website. Most of the cars already are allocated.

If the trial goes well, Smart plans to begin series production of next-generation EVs for retail sales in early 2012. How many of those will come to the U.S. remains to be decided, but Daimler executives have quoted a "5-figure" production estimate for global distribution.

The current lease pool of Fortwo EVs may sound small, but no one can blame Smart for its conservative estimate.

The auto maker is barely alive in the U.S., having sold only 4,357 vehicles through August. In 2008, its first year here, Smart sold 24,622 vehicles, then 14,595 in 2009.

The pool of 250 EVs for the U.S. is part of a production run of 1,500 units at the Smart plant in Hambach, France. They first appeared in Germany last year.

In Europe, leasing the Smart EV costs even more — €700 ($891) per month. This second-generation Smart EV follows a similar trial in London that began in 2007 with 100 cars.

Unlike the first-generation EV, the new Fortwo employs an advanced lithium-ion battery, located under the floor in between the axles, taking the place of the fuel tank. The packaging means there is no compromise in occupant or cargo space, which remains miniscule.

The battery, developed by California-based Tesla Motors Inc., delivers up to 16.5 kWh of electricity, and full charging for a depleted battery takes eight hours with a 220-volt outlet. With a more common 110-volt line, full charging takes between 12 and 14 hours.

Engineers say most test drivers are plugging in their cars at a 20% state of charge and spending about 3.5 hours to reach 80% battery capacity.

That 80% is more than enough juice to get city dwellers where they need to go, Smart assures, because the average commute is less than 40 miles (64 km).

At 100% charged, the Electric Drive's range is 84 miles (135 km), compared with 62 miles (100 km) in the previous EV.

At an average speed below 19 mph (30 km/h) — considered normal for city traffic — the new Fortwo EV can drive continuously for about five hours before it needs to be charged.

Charging is done via the new standard connector that follows the SAE J1772 protocol, meaning other EVs such as the Nissan Leaf will use it as well.

Range anxiety has not been a problem in the London trials since 2007. That's because executives say customers adapted to the rhythm of charging their cars at the optimum time, even while at work.

EVs make great practical sense in many cases because they are much more affordable to operate, he says.

"If you drive 100 miles (161 km) in a gasoline car at 25 mpg (9.4 L/100 km), it costs you $12. Go the same distance in an electric car and it's $2," says Derek Kaufman, vice president-business development for Smart USA. "Electric miles are cleaner no matter what you produce the electricity with."

The Smart Electric Drive will sprint to 37 mph (60 km/h) in 6.5 seconds, same as the gasoline version. The EV is limited at a top speed of 62 mph (100 km/h).

Helping temper speeds is the extra 308 lbs. (140 kg) from the battery and onboard charger, which boosts curb weight from 1,800 lbs. (816 kg) to a porky 2,100 lbs. (953 kg).

Smart intends its EV be driven conservatively, although an executive swears he beat a Ferrari Enzo from a traffic light in Monaco. That is, until the Enzo left the tiny car in its vapor trail.

PROS/CONS

  • Conventional car gives me gas
  • 220-volt charging is quick
  • $7,500 tax credit helps
  • Can't drown out city noise
  • Might need an electrician
  • $599/month isn't Smart money

'11 Smart Electric Drive

Vehicle type: Rear-drive, 2-passenger coupe/convertible

Engine: 30 kW magneto-electric motor

Battery: 16.5 kWh Lithium-ion

Torque: 89 lb.-ft. (120 Nm)

Power output: 20 kW

Curb weight: 2,100 lbs. (953 kg)

Base price: $599/month for 4-year lease

Range: 84 miles (135 km)

Competition: Nissan Leaf; Mitsubishi i MiEV; Mini EV