Volkswagen, Toshiba to develop electric car

FRANKFURT (Reuters) - Volkswagen AG will team up with Toshiba Corp to develop an electric-powered version of its subcompact Up! concept car after signing a letter of intent on Thursday, Europe's largest carmaker said.

"The objective is a cooperation for the development of electric drive units and the accompanying power electronics for Volkswagen's planned new small (car) family," it said in a statement.

"Furthermore, Volkswagen and Toshiba are planning the development of battery systems with a high specific energy density for the next generation of electric vehicles."

Most global carmakers are rushing to roll out affordable vehicles designed to run solely on electricity stored in a lithium-ion battery.

General Motors has staked its reputation on bringing the Chevrolet Volt to the market late next year, using lithium-ion battery cells from South Korea's LG Chem Ltd to drive 40 miles on a single charge.

(Reporting by Christiaan Hetzner; Editing by David Holmes)