In a surprising decision, Ford Motor Company and Smith Electric Vehicles US have agreed to terminate the development project of an electric car-derived van that would have been based on the Transit Connect.

The UK-based Tanfield Group, Smith Electric Vehicles US’s parent company, announced that due to growing demand for its production ready Smith Newton, the forecast volumes for the electric Transit Connect did not in the short- to medium-term justify the investment required. What’s more is that proceeding with the Transit Connect would have meant limiting the working capital available to support the growth of the Newton, which has already commenced production at the assembly facility in Kansas City, Missouri, and has an order book of 255 trucks.

According to Tanfield, the Smith Electric Vehicles US Corporation believes investing in existing Smith platforms will make better use of its financial resources and there is concern that the market for electric car-derived vans would become increasingly competitive. However, Tanfield will remain as Ford of Europe’s official collaborator on commercial electric vehicles.

Now, Ford will partner Azure Dynamics Corporation to deliver a pure battery electric Ford Transit Connect van for the Canadian and US markets in 2010.

Azure Dynamics, which is based in Oak Park, Michigan, will integrate its battery electric drivetrain into the Transit Connect BEV, which will have a targeted range of 80 miles minimum on a full charge. The collaboration will build on the existing relationship between Azure Dynamics and Ford, as well as their shared experience with battery supplier Johnson Controls-Saft.