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Japanese automakers Toyota and Honda Motor launched the hybrid revolution in the 1990s, and their U.S. counterparts are busy following suit. European automakers, however, initially resisted the trend, instead focusing on diesel-powered automobiles whose fuel efficiency rivaled even the best gasoline hybrids.

Now, though, amid rising gas and diesel prices and anxiety over an emerging technology gap with international competitors, European automakers suddenly look set to join the hybrid trend – by combining hybrid technologies with efficient diesel engines, whose air compression and fuel combustion cycles are fundamentally more efficient than the spark-plug cycles in gasoline engines.

Paris-based PSA Peugeot Citroën last month became the first manufacturer to seize the opportunity, promising diesel hybrids in its showrooms starting in 2010. Although PSA declined an interview with Technology Review, last month its CEO, Jean-Martin Folz, predicted in Paris that the diesel hybrid would provide “a true technological rupture.”

PSA is well positioned to tackle diesel hybrid technology. It’s the top manufacturer of advanced “common rail direct injection” diesel engines, which feed fuel through engine valves at high pressure and thereby increase combustion efficiency. The company also produces electric vehicles. And this winter it is touring hybrid versions of its popular Peugeot 307 and Citroën C4 compact diesel cars on the auto-show circuit.

The nonhybrid 307 and C4, built on a common platform, are already among the cleanest and greenest vehicles in their class, consuming just 4.8 liters of diesel fuel per 100 kilometers (49 mpg) in mixed driving. The hybrid versions do much better by supplementing the diesel engines with nickel-metal hydride batteries and electric motors akin to those in the Toyota Prius and in Ford’s Escape hybrid SUV.

The PSA diesel hybrids start on electric power exclusively, avoiding the use of diesel in low-power, low-temperature modes where the engine is least efficient. During braking, the vehicles recover energy by recharging their battery packs. Fuel consumption falls to just 3.4 liters per 100 km (or 69 mpg), setting a record for a European compact family car, and far surpassing the benchmark Prius (which delivers around 50-55 mpg).

Further distinguishing PSA’s diesel hybrids from existing hybrids is a button on the dashboard labeled “ZEV” that enables the driver to put the vehicle into a battery-only, “zero-emissions” mode at speeds up to 50 kilometer per hour. That feature could be handy for drivers navigating the increasing number of European cities that are banning conventional vehicles from their congested downtown streets.

PSA’s diesel hybrids are not alone on the auto-show circuit, though. Last year GM demonstrated a diesel hybrid sedan built at its European International Technical Development Center in Russelsheim, Germany. Ford, which co-produces diesel engines with PSA for its European vehicles, has been testing a diesel hybrid van in the U.K., and unveiled a sporty diesel hybrid at this winter’s auto shows. PSA, however, is the only maker committed to actually producing a diesel hybrid vehicle.

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