PARIS – DaimlerChrysler AG’s beleaguered Smart brand is exploring electric powertrains in case changing economic conditions spark an interest in the technology, says the auto maker’s president, Ulrich Walker.

A fleet of 200 electric cars is destined for the streets of London in a bid to exploit a tax loophole. London recently instituted an emissions tax on cars entering the city, dramatically affecting traffic in some areas, but electric Smarts don’t spew pollutants.

“We have deliberately decided not just to pursue a single technology,” Walker tells journalists at the Paris auto show here. “Smart is working on developments in many directions – from hybrid and micro-hybrid drives to gas or electric drives.”

And if, after the current London experiment, consumer demand is piqued as fuel prices continue their anticipated upward trend, “we will be in a position to offer production-ready solutions in a very short space of time,” Walker says.

Such heady talk is consistent with the confidence executives display for Smart, which throughout its 8-year existence has been a constant drain on its corporate parent.

As part of a €1 billion ($1.25 billion) restructuring of the Smart division, production of the 4-seat ForFour was phased out in June. Now, with the entire organization focused on developing the next-generation of Smart’s lone remaining model, the ForTwo, executives are confident the brand will thrive.

Plans to bring the ForTwo to the U.S. in 2008 remain on track. The auto maker has a deal to distribute the quirky car through dealer chain United Auto Group Inc.

But DaimlerChrysler Chairman Dieter Zetsche is reluctant to forecast when the brand will generate sustained profitability.

“I’m convinced that we will be (successful) next year and then on an ongoing basis,” he tells journalists at the show. “The Smart brand, despite all the bashing – the self-inflicted bashing based on financial failure – is extremely strong. It puts a smile on the face of everyone who is concerned with it.”

The next-generation Smart, Zetsche adds, “will offer more of everything Smart offers today in a better way. And doing that with significantly better costs.”

The new-generation car was not shown here. Until it is unveiled, Walker says the brand will trade on its fast-growing cult status that peaked when characters in the high-profile movie, “The Da Vinci Code,” used it as a getaway vehicle.

Next year, the ForTwo will be on the silver screen with Russell Crowe in “A Good Year,” Walker says.

emayne@wardsauto.com