"We're are preparing an electric Smart for 2010 and an electric Mercedes for the same year," Zetsche told the Frankfurter Allgemeine Zeitung in comments to be published on Saturday.
He did not give details on the price but said it would depend on how the vehicles were sold.
"We will either sell the cars with a battery, or the battery will just be rented," Zetsche explained.
He estimated however that the number of clients willing to pay more for "clean" cars was limited.
Electric vehicles are under development by most auto manufacturers, and one produced by the Bollore group with Italian design firm Pininfarina is to be available commercially in June 2009.
US giant General Motors plans to sell its Volt model by 2010, while Peugeot Citroen of France and Mitsubishi Motors of Japan said recently they would join forces to develop electric power trains.