Fiat (now part of Chrysler) plans to produce the funky-looking 500 as an electric vehicle in the US market, the company confirmed last week.

A concept version of the all-electric 500 was displayed at the North American International Auto Show in Detroit in January. In 2008, Chrysler announced that it would sell an electric vehicle by 2010, before dropping the plans in the wake of its financial meltdown last year.

The firm intends to begin production of the model in 2012, with a pricing similar to that of other electric vehicles in the market. Though since Nissan announced their incredibly low prices for the Leaf last week, they’ll have to work very hard.

The economical gas-powered version of the Fiat 500 (already available in Europe) is set to go on sale in the USA later this year.

The electric vehicle project represents the determination of Chrysler to work with its Italian parent company Fiat to turn around its fortunes in the US. Last year, the company announced that it would incorporate 13 Fiat-designed models by 2013, ending production of six to eight under-performing models and revamping all 12 models it intends to keep by 2012.

Scott Kunselman, engineering boss at Chrysler said, “The Fiat 500 is a small, lightweight platform perfect for integrating electric-vehicle technology.” And he’s correct, though the styling may be different to what North American buyers are comfortable with.

Chrysler is now playing catch-up with other Detroit giants such as Ford and General Motors when it comes to electric vehicles, desperate to keep up with the Japanese, and watching over their shoulders for the quickly advancing Chinese and Indian vehicle manufacturers.