I understand that owners of the diesel powered VW Jetta get very good mileage (40+). It seems that if they eliminated the transmission and had the diesel mated to a generator that would power electric motors on the wheels, it would be very efficient.
They would only need a regular battery for starting. And the Jetta has room for 4 or 5. I am not really a VW fan, but the new diesels seem very fuel effecient.