Mazda plans to develop a diesel engine that is cheaper and more efficient than anything offered by a hybrid car by 2011.
The Japanese firm wants to improve fuel efficiency by advancing internal combustion engine technology, rather than relying on heavy and expensive electric systems.
Seita Kanai, Mazda’s research and development chief, said, "We believe that improving today's conventional engines at a low cost is the most effective way to get fuel-efficient cars to proliferate."
He added that Mazda was working on a 2.0-litre diesel engine that was as fuel-efficient as a 660cc petrol motor or a mild hybrid car.
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