After all the fuss and negativity (I'm looking at you, Justin) about the upcoming new Prius gaining three to four inches (still shorter than a Corolla) and some additional power, the really big news was left off the table. According to Auto, Motor Und Sport (paper version), Toyota has achieved its most important goals for the gen3 Prius: a 50 percent reduction of the hybrid components' weight and cost. In the words of a Toyota manager: "Our hybrid will then be cheaper than a modern diesel." Given that the new Prius will have a substantially more powerful electric motor and battery range than the last gen, this is impressive stuff. Despite Volt vaporware, or perhaps because of it (thanks Bob!), it looks like ToMoCo's gas – electric sedan is set to continue its domination of the American hybrid market. Last month, in a VERY down market, Prius sales rose 7.7 percent to 20,635 units.

Torque and towing aside, I am a diesel skeptic. These Interstate soot-belchers are on par with the jerk that pulls his finger and farts in a crowded room, laughing at everyone in his wake. And now that the good oil is far north of $4 a gallon, I feel truly vindicated. Or not. That's because my girlfriend needs a new whip, and her ultra-clean 2006 Jetta TDI took a serious depreciation hit. Not buying it? Neither is Carmax, to the tune of $2125 less than KBB's trade in value, over $2800 less than Edmunds. The No-haggle Superstore's appraisal said it all in two words, the "market conditions" are a changing. Sure, this ain't no Carter-era diesel Cutlass, but Jettas aimed at enviro-friendly gas savers just met the cruel reality of history repeating itself.

VW recently released details of its forthcoming North American-market diesel engine, known as Blue TDI, at the Viennese Auto Symposium. The common-rail turbodiesel boasts the latest and greatest in clean-diesel technologies, like a particulate filter and a maintenance-free NOX catalytic converter. Of particular note: the first-ever application of both high- and low-pressure exhaust gas recirculation systems on a diesel engine. VW says all the new-fangled diesel wizardry delivers a 90 percent reduction in acid rain-causing NOX emissions while delivering 140 hp and 320 nm of torque. Oh yeah, and meeting Euro 5 as well as U.S. 50-state, Bin 5 tier 2 emissions standards. Look for the Blue TDI as an option on US Jettas starting this summer.

At the Geneva Auto Show, VW showed off its 70mpg diesel-hybrid Golf Concept. The German automaker promised that "the model wouldn't just stay a show car". According to the in-depth preview of the Golf VI in the March 27 issue of Auto, Motor und Sport (print edition only), the "forward-looking diesel-hybrid is already a thing of the past." The culprit (once again): it's too expensive. "Eventually" there will be a hybrid Golf, but it will be a gasser, using the 1.4 TSI engine. In the shorter term, VW will rely on further engine downsizing and an optional start-stop system to meet efficiency targets. The Golf VI, which hits European streets this fall, will never see the USA anyway (except in GTI form, perhaps). In a contrast to the platform-globalization programs of the most other big manufacturers, VW is developing lower-cost replacements for the Rabbit and Passat to be produced in their future US plant. The current Passat costs $4k more than the (Camcord) competition, according to VW. Look to a return of twist-beam rear axles.

Find something bad to say about biofuels, and its defenders will likely simply point to second-generation biofuels as the way forward. The problem has been that nobody has actually been commercially producing a second-generation biofuel based on biomass instead of food-grade grains and oils. Until now, that is. Auto Motor und Sport reports that Choren, a joint venture of Shell, Daimler and Volkswagen, has opened the worlds first biomass-to-liquid (BTL) fuel plant in Freiberg, Germany. It will be a few months before the first drops of BTL diesel hit the market, but once production ramps up the plant will pump out 4.75m gallons of the fuel every year. Choren's BTL process involves relatively dry (10-15 percent moisture) biomass which is gasified under high heat and then liquified (biofuel wonks can check out more details at Green Car Congress), extracting a diesel fuel. The Institute for Energy and Environmental Research in Heidelberg reckons that although the BTL fuel is net beneficial when compared to Soy or Rapeseed-based biodiesel, there are emerging technologies which could better utilize the biomass used in the BTL process. The German Minister of Industry likewise warns that while production costs are low when making small batches using straw and forest waste, further research is needed to better understand the impacts of broad proliferation of the biofuel. At least it won't raise the price of beer!

That's right, today Chrysler sent out a press release announcing the introduction of its six-speed dual clutch transmission (a la VW's DSG), developed jointly with Getrag. Chrysler reports that it will "provide consumers with a fuel economy improvement and CO2 emissions reduction by 6%." The new cog swapper's going in the Avenger, Sebring and Journey in international markets, initially paired with a 2.0-liter diesel engine. Wait a second… we don't have that 2.0-liter oil burner in the United States. Does "international markets" mean "places that aren't North America?" Why yes, it does! Chrysler's biggest and most important market is not getting the dual clutch transmission from the git-go. But don't kvetch. Were you really considering buying a Sebring anyway? I didn't think so.

MotorAuthority has it on good, um, authority that Fiat will be offering gas and diesel-electric hybrid drivetrains by 2011. Research on the powerplants is still in the early stages, says Fiat Powertrain Technologies honcho Alfredo Altavilla, and the 2011 timetable could still be delayed if the development team runs into problems. The engines are said to be a 0.9 liter two-cylinder gas-hybrid with a dual-clutch transmission, and a larger 2.3 liter diesel-hybrid four-banger. European emissions standards are clearly the motivating factor here, and the tiny gas burner is expected to weigh in at 90g of CO2 per km driven, well below 2012 European Commission standards. With Fiat jumping on the greentech bandwagon, there's only one other major industry trend that the Italian giant has yet to announce its approach to: the demand boom from the developing world. And just like that, Paul Tan reports that Fiat is planning a new entry-level world car to be released by 2010. There's speculation that it may not be branded as a Fiat (no word on whether the boffins think an entry-level car would hurt the brand, or visa-versa) but the Torino firm could pull out the old Uno or Palio badges too. With its close ties to India's Tata Motors, Fiat could be placed to compete in the nosebleed market. We'll be watching.

Audi may be right on target with their plans to import diesels . A study by J.D Power (via the Detroit News ) shows diesels and gas-electric hybrids will have 17 percent of the U.S. market by 2015. Surprisingly, Power thinks diesels will outsell hybrids because of the higher cost of admission to the hybrid club; they predict by 2015 hybrids will increase to seven percent of the market (from the current 2.2 percent) while diesel vehicles will make up ten percent. Sales of four-cylinder gas engines are also expected to rise sharply as the automakers scramble to meet the new 35mpg CAFE standard. They don't think hydrogen fuel cells and pure electric cars will have much impact as they won't be available in any significant numbers during the years covered by the study. But what about E85? The proportion of vehicles available that can run on corn squeezin's will nearly double but few of them will be using it because it still won't be available in most places. That won't matter to the manufacturers, though, if the new CAFE standards have the ethanol loophole the current one does.

In spite of the high cost of diesel, Audi is anticipating the US passenger car market to be approximately 10-20% oil-burning in the next few years. Economic arguments to the side, Audi has announced its diesel product plans for the US in the near future. A 3.0 liter common rail V6 diesel engine, with 211 hp and 406 lb ft of torque is headed for the Q7 crossover and the new A5 coupe. In the A5, Audi claims it'll make 0-60 in 5.9 seconds. The A4 will also get this engine down the road. But in addition to the diesel V6, the Audi Q7 will also have oil-burning options of a V8 and V12. The V8 has 326 horses and 560 lb/ft of torque and Audi claims it will get 24 mpg combined. And if you really want to go the nose-heavy route, the diesel V12 with 500 horses and 737 lb/ft of torque will warp time and space as you hit 60 in 5.3 seconds. Since diesel fuel has suddenly shot up in price (oil manufacturers realized diesels get better mileage, and as such represented lower profit per mile?), Audi's right to argue the performance aspects of these engines rather than prioritizing their efficiency, which is still respectable considering the performance you'll get.

Citroen's C2, a fairly popular citycar over on the continent, has been refreshed. In addition to a new cutesy front fascia, it will now feature a 110 hp diesel engine (in some countries this has already been available as the "hot" model). There are some suspension upgrades too, but perhaps most important to buyers in this segment is that the C2 with the 1.6 turbo-oilburner will consume only 4.4 liters/100km, or 53 US miles per gallon and yet still cranks 175 lb ft of torque.

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David Kiley of Business Week (via MSNBC) dives into the CAFE issue, and in the process rounded up a wild-and-woolly collection of quotables from some of the biz' top bosses. The biggest news comes from Chrysler's Jim Press, who claims that that when he was at Toyota "the Japanese government paid for 100% of the development of the battery and hybrid system that went into the Toyota Prius." Although the revelation reeks of Japan Inc. business/government collusion, let's remember that our own government funneled over a billion to U.S. automakers at around the same time through the Partnership For A New Generation of Vehicles. The fact that the American people got little more than three concept cars is hardly the fault of the Japanese government or Toyota. Still, Press' revelation does shed some light on Toyota's current dominance of the hybrid market. Meanwhile, Bob Lutz continues to symbolize America's inability to meet the new demand for efficiency. In the same piece, Lutz unveiled the next generation of "Maximum Sticker Shock" for the forthcoming Chevy Volt: a cool $48k. Get some perspective on that number here.

With all of the downsides of corn-based biofuel now widely known, eco-friendly motorists are anxious to hear a little good news from the developers of so-called second-generation biofuels. One of the most promising of these new, non-food-based fuels comes from algae, which scientists have been breeding and researching since the Carter Administration. The March cover story at Green Fuels Forecast tells of the National Renewable Energy Labs Aquatic Species Program (ASP), which has been looking for biodiesel-producing algae since 1978, and is now providing the backbone of technology for some frenzied venture capital activity. When the program started, it was estimated that all of America's transportation and home-heating needs could be met by 15k square miles of algae farms. Of course in the 90's as petroleum costs dipped, the Clinton Administration axed the ASP in favor of further ethanol research. Now, the government's abandoned investment is attracting the big boys: Chevron, Shell and others are forming partnerships with start-ups who are building on the ASP's knowledge base. The upsides? Algae needs only sun and C02 to produce the oil which can be burned as fuel or used in a number of other applications which currently require petroleum products. In other words, the perfect fuel source for your favorite Waterworld-esque, post-apocalyptic fantasy.

Around here, our favorite items are of the "News That Will Shock No One" variety. Hot on the heels of yesterday's "shocking" revelations that Lutz hates oil burners and the April Fool's strike truckers' shutdown protesting spiraling fuel costs, no one here at TTAC is, well, shocked that Bentley isn't pursuing a diesel option. For the time being. Motor Authority is reporting that even though Bentley's marketing director feels mega-torque, slow-to-rotate mills are perfect for the brand, customers (shock) simply aren't interested. Especially here in the US of A, by far Bentley's largest market. However, as diesel motors are as popular as petrol engines in Europe (if not more so), and even stricter emission and fuel economy standards are just around the corner, Bentley's diesel hand might be forced. Luckily for the ultra-rich, Big Daddy VW has a lethal arsenal of killer no-spark plug motors– including and not limited to a simply mental new 6.0-liter V12 that delivers 500 hp. God can only guess at the torque. And he'd probably drive one, too.

In The Wall Street Journal [sub], Daimler CEO Dieter Zetsche and GM Car Czar Bob Lutz discuss their respective companies' approach to environmentally-friendly vehicles. Dr Z wants to sell more diesels. (And there you have it.) Maximum Bob eschews oil burners to hang his proverbial hat on E85. Of course, Lutz' preference for corn juice will cost consumers plenty through government spending on ethanol infrastructure and corn price supports. But the winner of TTAC's first annual Bob Lutz Award reckons developments in corn breeding will blunt E85's inflationary impact on food prices. "So I think that people who say, well, the ethanol industry is taking food from the mouths of babies and it's driving tortilla prices up– I think these are highly suspect conclusions." Meanwhile, both executives say Daimler's success selling the smart in the U.S. heralds the end of the efficiency vs safety debate. "There are no statistics that would support [the idea] that you are less safe in the smart than you are in any kind of vehicle," says Dr Z. Lutz appears equally oblivious the laws of physics, stating "If a vehicle is registered for sale in any developed market of the world, it is going to be an extremely safe vehicle."

During our recent audience with GM Car Czar Bob Lutz, Maximum Bob proclaimed "diesels are not the answer." While cynics might say that even a stopped clock is right twice a day, props to Bob for doing the math. Reuters reports the average price for a gallon of diesel has hit $4.06. It's as high as $4.60/gallon in places. As MB pointed out, "asking people to pay a 20 percent premium for a diesel engine and a 20 percent premium at the pump makes no sense at all." True dat. Without huge gains in fuel economy over regular gasoline counterparts, manufacturers are going to have a hard time getting people to switch to diesel-powered propulsion. The next step: the feds intercede to drive down the cost of diesel and diesel cars, as they are doing with ethanol and E85-compatible vehicles. And then high mileage U.S. oil burners will fly off the showroom floor. [Note to Bob: will GM be ready?] Lest we forget, $4.00/gallon diesel has a huge impact on our truck-based shipping infrastructure. And that could be a BIG problem… News of an April first trucker's strike to follow.