A plug-in hydrid version of the VW Golf has been unveiled and the company has plans to launch production units by 2010.
CEO Martin Winterkorn introduced the car at a forum hosted by the German government.
The plug-in system, called TwinDrive, uses an electric engine that is supplemented by a petrol engine for long-distance driving.
The test vehicle produces a combined 130 kW and can run up to 50 km on electric power only.
VW also said it was adapting electric motors, hybrid drive systems and lithium-ion battery packs for other engines in its range.