• The Wall Street Journal, Tuesday, May 6, 2008 10:02 AM

A slew of tiny car companies is springing up in Europe and the U.S., all of them betting that soaring demand for fuel-efficient vehicles will allow them to survive alongside the giants of Detroit, Stuttgart and Tokyo.

The upstarts are working on a new generation of hybrid and electric vehicles. Most of the companies were founded in the last 12 months and have financial backing from venture-capital firms. They are headed by former top engineers and designers from the likes of Germany's Volkswagen AG and storied UK racecar builder McLaren.

Many of the green start-ups are hoping to ride the coattails of California-based Tesla Motors. Founded in 2003, the Tesla roadster went into production last month and has pre-sold the first year's output. One problem: Daimler, Toyota, General Motors, Renault and Mitsubishi are all developing new-generation electric vehicles of their own.

Read the whole story at The Wall Street Journal »