Toyota Motor Corp plans to market a new electric vehicle based on its iQ ultra-compact car in 2012 in Japan barely coinciding with its release in the United States, Kyodo news agency reported on Thursday.

The Japanese carmaker's planned EV will be fitted with a proprietary battery and is likely to run over a shorter distance than regular gasoline-powered cars.

The report said the company also aims to begin selling plug-in hybrids in 2012 to add cars with longer ranges to its eco-friendly vehicle offerings.

Toyota's entry into electric vehicle market is expected to intensify competetion among major carmakers with Mitsubishi Motors Corp and Fuji Heavy Industries Ltd. already selling eco-friendly cars even as Nissan Motor Co is due to release its model in December, the report said.

President Toyoda has given us a mission to do everything we can to keep a domestic production level of at least 3 million units a year. In order to protect the Japanese economy, and Japanese jobs, I feel that is something we need to do, said Satoshi Ozawa, executive vice-president of Toyota earlier this week.