Diesel is a very efficient option. They are known for longevity and high mpg. The VW mid-sized cars get very good mileage.
Cars are coming with more and more speeds in their transmissions in order to keep a more constant (and optimal) engine speed. It seems to me that if a car was equipped with a diesel powered generator, powering electric motors on the wheels, it should be very efficient. The transmission would be eliminated, there would be no need for a large battery, and the engine would operate at a constant speed.
Diesel-electric hybrid cars already exist, just not offered here. Citroen most notably, but also VW getting into it. Hybrid electric systems are expensive, diesel engines are expensive. Combine the two and the market just is not there in the US, or so goes the reasoning.
Mercedes could probably pull it off if they cared to do so, being already perceived as a premium luxury marque, the cost penalty wouldn’t be quite such a game killer. It would have to be a status symbol even among Mercedes and competing vehicles, though. The ground that Tesla has staked out, essentially.