Smart has committed to dumping fossil fuels in favour of battery power by 2020.
The city car brand, which is owned by Mercedes-Benz's parent company Daimler, will be the first car company to transition completely from combustion engines to electric motors.
Locally, Mercedes-Benz stopped selling Smart cars when it could not strike a deal to import third-generation compact models for the right price.
But Mercedes-Benz's local boss, Horst Von Sanden, says the rejuvenated marque could be set for an Australian return as a green brand to rival the likes of Tesla.
“We keep looking at it - we are quite sad that we didn't get the business case working,” Von Sanden says.
“We can't have it if the business case doesn’t work.
“When electric cars become important in Australia, we will certainly look at it again.”
Von Sanden says electric smart hatchbacks would be “the perfect car” for Australian cities as parking pressures, ride sharing and pollution concerns gather momentum.
Daimler chief executive Dieter Zetsche says Smart has sold electric cars since 2007 and is ready to take “the next step”.
“We are planning to move our Smart brand entirely to electric drive in Europe and North America by the end of the decade,” he says.
“The rest of the world will follow shortly thereafter.”
Zetsche unveiled a new Smart concept car for the 2017 Frankfurt motor show on Monday, outlining the role the brand will play as a transport option in decades to come.
The Smart Vision EQ Fortwo concept car is an autonomous pod with no steering wheel or pedals that serves as on-call transport, combine attributes from popular services such as Uber and GoGet.