The smart fortwo is produced at "smartville" in Hambach, France. System partners on site deliver the prefabricated modules directly to the production line. Protecting the environment, energy efficiency and preservation of natural resources are hallmarks of smart brand. It starts with smart development through to the production of the cars in smartville. For example, only water-soluble paints are used for the smart's three basic colors – black, white and yellow. Painting the tridion safety cell is done by the powder-coating process. This removes the need for solvents. The body panels with molded-in color are fully recyclable. Environmental management is a high priority in Hambach. smart is dedicated to protecting the environment with future focused recycling and an environmental policy that makes a strong statement.

The smart fortwo is also classified as an Ultra-Low Emission Vehicle (ULEV) on account of its extremely low exhaust emissions. The catalytic converter is positioned close to the engine for a quick response. An electric pump blows fresh air into the exhaust port when the engine is cold to almost completely oxidize the carbon monoxide (CO) and hydrocarbons (HC) and render them harmless.