It's called the VW XL1, and it's powered by a tiny 800cc diesel engine and a separate electric motor and battery pack. This gives the plug-in hybrid a 0-62mph time of 12.2 seconds and a top speed limited to a modest 99mph.
While that speed is pretty impressive, Volkswagen says this car is more about being environmentally friendly. They say it should be capable of a record breaking 313mpg.
It can also cover a distance of up to 31 miles in all electric mode. This is where it will emit zero carbon dioxide.
The car company says it will build 50 models at first. Only thing is, the company hasn't said how much the car will cost.
The XL1 will be on show at next month's Geneva Motor Show, and the first models will be produced by the end of 2013.
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