daimler to produce lithium powered car, page-4

"Aren't lithium batteries an environmental hazard in themselves and very difficult to recycle?"

Not really. Lithium itself is non-toxic and water soluble. They aren't exceptionally difficult to recycle its just not very economic at the moment due to the small size of the batteries. Batteries big enough for a car would almost certainly be recycled.

"Don't they have problems with overheating and exploding?"

A lot less so than combustion engines. If they have been poorly designed and you short them they may catch fire. If you drop a match in a tub of petrol it may catch fire too. Its not really that difficult to make them safe enough. The major car manufacturers wouldn't bother with them if they were.