California - Volkswagen plans to launch all-electric vehicles in 2013 and expects these zero-emission vehicles to account for 3 percent of its sales by 2018, Chief Executive Officer Martin Winterkorn said on Monday.

We aim to boost the share of E-vehicles in our annual sales to 3 percent by 2018, he told reporters ahead of an event showcasing the redesigned Jetta sedan. In urban centers, this share could be a lot higher.

Winterkorn said the company is planning to launch an all-electric vehicle such as the E-Up and E-Golf by 2013. In the meantime, Volkswagen will launch hybrids like the Jetta Hybrid in 2012.

The challenge to mass producing electric vehicle was still the high cost of the battery, he said, adding that battery costs are currently between 500 euros and 1,000 euros ($647 and $1,294) per kilowatt hour today.

Batteries must not only get smaller and lighter, above all they must get cheaper, he said at the automaker's Electronics Research Laboratory in Silicon Valley.

Volkswagen is researching and developing electric batteries at the lab and has roped in Martin Eberhard, the co-founder and former chief executive of recently listed electric car maker Tesla to run its battery lab.

Eberhard is researching into packaging off-the-shelf lithium-ion batteries, similar to those found in laptop computers, to power cars. Eberhard's former firm Tesla also uses similar technology.

He was, however, was quick to say that while the concept is similar, the technology being researched is much different from the one used by Tesla.

The group's flagship unit Volkswagen would be the main brand leading the drive toward mass market launch of electric vehicles but its other brands such as Audi also plans to introduce electric-powered cars.

Ultimately we do see a large percent of our cars as electric drive, Eberhard said, adding that the industry is spending a huge amount of money to make the battery better.

Volkswagen has ambitious plans for the U.S. market. The company has said that it expects the redesigned Jetta to help U.S. sales of the car by as much as 25 percent by 2012.

Volkswagen has said higher sales of the Jetta could also boost the company's share to between 3.5 percent and 4 percent in the next two to three years.

The company's U.S. market share is about 2.2 percent through the first half of 2010, according to Autodata.

(Editing by Lincoln Feast)

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