Daimler AG announced on Wednesday that it plans to have a battery-powered heavy-duty truck on the market within five years, following claims made last week by Tesla Motors Inc. CEO Elon Musk that a Tesla Semi is in development.

In the statement, the company indicated that the 26 metric ton Mercedes-Benz Urban eTruck will have a range of 200 kilometers on a single battery charge. Daimler claims that the truck will be ideally suited for inner-city deliveries, a segment that it says accounts for 10 percent of material distribution.

The eTruck is based on a distribution truck from Mercedes-Benz which has been re-engineered to use an electrically-driven rear axle with electric motors adjacent to the wheel hubs. Power for the truck will be supplied by a battery pack containing three lithium-ion battery modules that offer a total capacity of 212 kWh.

Daimler maintains that the the eTruck has become viable as a result of advances in technology that will result in the cost of batteries dropping by 60 percent and increasing in power by 2025 compared to levels in 1997.

The IHS has predicted that electric versions of medium and heavy duty trucks may make up 4 percent of the units sold in the European Union and U.S. by 2015.