UPDATE 1-Hyundai aims to launch first U.S. hybrid in 2010

(Adds details, background on hybrid sales, bylines)

ANN ARBOR, Mich, Aug 20 (Reuters) - Hyundai Motor Co 005380.KS expects to release its first hybrid in the U.S. market as early as 2010, featuring cutting-edge lithium-ion battery technology, an executive said on Wednesday.

John Krafcik, vice president for product development at Hyundai, said the automaker would offer a hybrid version of the Sonata sedan for American consumers and would unveil a prototype of the vehicle in November.

“Our first U.S. hybrid is going to be the Sonata,” Krafcik told reporters at an event hosted by Hyundai. When asked about the timing, Krafcik said the Sonata hybrid was likely to be launched in the 2010 calendar year.

That timing could make the upcoming Hyundai hybrid one of the first mass-market vehicles on U.S. roads featuring lithium-ion batteries, now widely used to power consumer electronics including cell phones and laptops.

General Motors Corp GM.N is readying a rechargeable electric vehicle, the Chevrolet Volt, using lithium-ion batteries. The Volt is also on track for a 2010 launch.

In contrast to the Volt, Krafcik said the Sonata hybrid would not be rechargeable. “It’s not a plug-in,” he said.

The new Hyundai hybrid will join an increasingly crowded field of hybrids and electric cars that major automakers are readying in response to higher gas prices and the sudden premium on fuel efficiency in a U.S. market long dominated by pickup trucks and SUVs.

Toyota Motor Corp 7203.T has scored a sell-out hit with its market-leading Prius and is converting a plant now under construction in Mississippi to build the hybrid.

For its part, Honda Motor Co 7267.T is readying a new dedicated hybrid model for an April 2009 launch in the U.S. market. The No. 2 Japanese automaker has said that new hybrid will sell for less than the Prius.

Existing hybrid cars, including the Prius, use nickel-metal hydride batteries. Lithium-ion technology is seen as key by automakers and suppliers to extend the electric-only range of hybrids although the batteries are also expected to add thousands of dollars to the cost of cars, depending on their capacity.

Krafcik said Hyundai would detail its hybrid plans at the Los Angeles Auto Show, which has emerged in recent years as a forum for major automakers to show off environmentally friendly models still in development.

Separately, Hyundai has considered bringing its fuel-sipping i10 microcar to the U.S. market, but has decided against such a plan for now, Krafcik said.

“I think it’s very unlikely,” Krafcik said of the prospect of importing the i10 hatchback city car. “We’ve looked at it.”

Hyundai’s U.S. sales have slipped almost 3 percent this year but it has gained share in a collapsing U.S. market. Overall U.S. light vehicle sales were down 11 percent.

Korean battery maker LG Chem 051910.KS is supplying Hyundai with lithium-ion batteries for its hybrid vehicles and is in the race to supply batteries for GM's Volt.

Auto supplier Continental AG CONG.DE and A123 Systems are collaborating in a rival bid for the contract. (Reporting by Kevin Krolicki; Editing by Derek Caney, Dave Zimmerman)