Karmann has reportedly been saved from bankruptcy after it struck a €10 million (£8.6 million) deal with Volkswagen to produce electric vehicles.
Neither company has confirmed the reports in the German media, but it is believed that the insolvent coachbuilder will be reorganised to “focus on building electric-powered cars”, according to sources close to the deal.
The mass-produced EVs are expected to go on sale in 2011 and are likely to be small city cars.
Karmann has history of producing electric vehicles. Earlier this year it showed off its E3 Limousine, which had a claimed range of 90 miles and a top speed of 85mph.
The Quicc! DiVa by DuraCar electric van, which was seen at last year’s Paris motor show, was also set to be built by Karmann for the German market.
Electric conversions of the classic Karmann Ghia are also in existence.