Speedy electric cars will soon compete with gas-guzzling SUVs on Abu Dhabi streets as the oil-exporting emirate buys into alternative energy, including, on Monday, a stake in electric-car start-up Tesla Motors Inc.

Aabar Chairman Khadem Al Qubaisi, who led the purchase of a 4 percent Tesla share from Daimler AG, said the stake was one of several more planned as the world's third-largest oil exporter spends big on non-oil-related energy technology.

It's a small percent but the issue is more psychological, Qubaisi told Reuters in an interview.

Abu Dhabi has pushed hard to establish itself as a leader in renewable and clean technologies, and includes its $22 billion effort to build the carbon-neutral, solar-powered Masdar City for 50,000 residents in the desert.

Last month, the United Arab Emirates, of which Abu Dhabi is the capital, was named home to the 135-nation International Renewable Energy Agency, IRENA, after intensive lobbying.

California-based Tesla is one of the biggest players in the burgeoning electric car sector, while Aabar is viewed as a spearhead investor for the emirate of Abu Dhabi to diversify away from the energy sector.

Qubaisi said he expected the ultra-sleek Tesla cars to hit the streets of Abu Dhabi in a matter of days, where they will compete with fleets of lumbering sport-utility vehicles, the automobile of choice for many Emiratis.

'LOTS OF POWER'

Tesla says its carbon-fiber bodied Roadster, priced starting at $101,500, can reach 60 miles per hour in 3.9 seconds and costs pennies per mile to operate.

It's very nice, the acceleration. There's lots of power, Qubaisi said.

In March, Aabar bought a 9.1 percent stake in Daimler, saying then it would pursue joint strategic projects. In May, Daimler acquired an equity interest of just under 10 percent in Tesla for around $50 million.

Qubaisi said Aabar planned more joint ventures of a similar nature with Daimler.

There are a lot of things that we are discussing together and we are trying to finalize a deal, he said.

It's too early to speak about the companies -- in the next few months, he said. We closed this deal with Daimler because I think this would benefit Daimler a lot.

Aabar is an investment company controlled by the International Petroleum Investment Company (IPIC), which is wholly owned by the government of the emirate of Abu Dhabi.

IPIC is one of the investment vehicles used by the Abu Dhabi government to invest oil income. Abu Dhabi pumps most of the oil produced by the United Arab Emirates, the world's third-largest oil exporter.

The venture presents no small paradox.

The UAE and its Gulf oil-exporting neighbors are among the highest per capita carbon dioxide emitters in the world, according to statistics from the United Nations Development Program. The UAE is third on the list, after Qatar and Kuwait.

The UAE is also pursuing a $40 billion nuclear program that would see it build a number of reactors to meet its growing needs.

Aabar shares were down 2.25 percent after the statement. Daimler was up 2.84 percent.

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