Eleven years ago, the head of Volkswagen popped out of a capsule-shaped vehicle barely able to hold two people and announced his ambition to construct the most efficient car the world has ever seen. Today, VW revealed the production version of that car known as the XL1, which it vows will travel 261 mpg on a gallon of diesel fuel. It's an amazing engineering feat, a Beetle reborn for the 22nd century — but the world may not be ready for it.

Saving energy in an automobile usually requires running a smaller engine, cutting weight and reducing aerodynamic drag to a minimum, and in the XL1, VW pushes all three steps to their modern limits. Power comes from a two-cylinder, 0.8-liter diesel — essentially half of VW's standard 1.6-liter four-cylinder diesel plant — mounted in the rear of the XL1, linked to a 7-speed transmission, a 5.5 kWh lithium-ion battery and electric motor. The two-seat body of the XL1 has a 0.189 coefficient of drag (a Toyota Prius has a 0.25 Cd) and it weighs just 1,752 lbs., about half of a typical American midsize sedan.

That combination allows the XL1 to travel 31 miles on electricity alone, and over 310 miles on a tank of fuel, for what VW claims is a mileage rating of 261 mpg (or 313 mpg by European standards) — better than any other gas, diesel or electric-powered vehicle. That's twice as efficient as the most miserly car for sale in the United States, the Scion iQ electric — which can only travel 38 miles on a full charge.

To build the XL1, Volkswagen also had to use engineering extremes usually not found outside a racetrack. The body of the XL1 will be made from carbon fiber, although using a process VW claims will be far cheaper than those applied by supercar builders such as Ferrari and Lamborghini. The XL1 will be assembled by hand in a special section of VW's Osnabrueck factory in Germany. And to ensure the safety of the passengers in case the XL1 rolls over, the scissor doors can be blasted open with explosive bolts.

But that efficiency comes with a few sacrifices, with speed first among them. Together, the electric motor and engine produce 68 hp and 103 lb-ft of torque. VW says that's enough to launch the XL1 to 62 mph in 12.7 seconds — although it suggests not doing so. Top speed is limited to 99 mph. And the two seat interior of the XL1 has to look stylish, because there's nothing behind the seats; the XL1 will offer a limited amount of space under the hood. To save weight further, only a cutout of the windows roll down, like the old Subaru SVX.

Given the combination of exotic materials, engineering costs and low-speed, hand-built production, there's no way the XL1 will make a profit for VW. It exists only due to the will of VW Chairman Ferdinand Piech — grandson of Ferdinand Porsche, the designer of the original Beetle — who has pushed VW to refine the idea of the XL1 for more than a decade. For all that VW revealed today, it didn't announce prices, and that's the one bit of data that will determine whether the XL1 makes sense as anything other than a corporate science project.