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The plug-in version of the Volkswagen Up boasts 257mpg potential and an EV-only range of 31 miles.
It runs a modified version of the hybrid driveline technology features in the XL1 and was revealed by Hans-Jakob Neusser, the head of Volkswagen's research and development operations.
He described the new Up iteration as "an engineering prototype", but did note that there is potential for it to be produced on a larger scale in the future.
The electric motor in the Twin-Up has been upgraded from that which featured in the XL1, while engineers have also fitted a larger battery, which raises its capacity to 8.6kWh.
The hybrid powertrain is combined with a dual clutch 7-speed transmission, allowing the car to hit 60 mph from a standing start in under 16 seconds.
Its top speed has been limited to 87 mph and the CO2 emissions will stop at 27 g/km.