And this is why Toyota is going to take over. 113 mpg by 2008. Sweet Jesus!

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The firm’s next Prius will be so efficient it will be the first production car capable of returning more than 110mpg. The newcomer is being developed to try to improve European sales. While the car has been a success in the US, it has met a mixed reaction on this side of the Atlantic, due to the popularity of diesel models. But now we’ve been told that engineers working on the new Prius have a fuel economy target of 40km/litre - a mind-boggling 113mpg.

“The whole electrical system has been redesigned to improve economy” said one Toyota engineer. “We are working on a prototype that runs solely on the electric motor in slow traffic, but switches to engine and motor drive when higher speeds are needed.” The secret lies with the batteries. The current Prius uses nickel-hydride items, which currently offer the best balance between cost and performance.

But engineers are working on new lithiumion cells, which are lighter, smaller, generate more power and last longer. Subaru and Mitsubishi both plan to sell electric cars by 2010, but Toyota hopes to get its new model on the road as early as 2008.

And improved economy isn’t the firm’s only goal, as engineers are working on reducing the current car’s 10.9-second 0-62mph time by more than a second.