The Mercedes car uses fuel cell technology where electricity is generated through the chemical reaction between hydrogen and air, emitting only water vapour.

"It (commercialisation) will start in 2012," Herbert Kohler, Vice President of the Body and Powertrain research unit at DaimlerChrysler told reporters in Brussels, on the margins of a hydrogen car technology exhibition.

But there are still technical obstacles to overcome such as extending fuel cells' reliability and durability; ensuring that they start at sub-freezing temperatures; reducing costs, and storing enough hydrogen in a small enough space to be workable.

The car industry is also waiting for the roll-out of hydrogen filling stations.

Shell Hydrogen Chief Executive Jeremy Bentham said once consumers demanded hydrogen filling stations, energy companies would meet it.

"We see that these vehicles have the potential to be attractive to consumers," he told reporters. "Our job is to make sure we are prepared for that business."

Hydrogen is already produced in refineries for industrial purposes and the energy industry needs to build the infrastructure to sell it to consumers, said Bentham.

He said Europe would need 50 million tonnes of hydrogen per year to power cars.