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Volkswagen will release a more powerful and economical version of the 3-litre V6 turbo-diesel engine it uses in the Touareg sports utility vehicle.
The revised engine increases power and torque to 176kW (up 11kW) and 550Nm (up 50Nm) respectively, while German figures indicate average fuel consumption with the six-speed auto will drop from a current urban 10.7 litres/100km to 9.9 litres.
VW claims the updated vehicle sprints from zero to 100km/h in just over eight seconds, about a second quicker than the current Touareg.
Meanwhile, VW is among the founding members of an alliance of German industries that will invest around $820 million to develop high-performance lithium-ion batteries.
The project will strive to substantially increase the energy and performance density of the batteries and to accelerate its use in production.
The other companies include BASF, Bosch, along with the German Ministry for Education and Research.
"In the future, there will be parallel use of various automotive drive systems, all the way to purely electric drive, and a high-performance lithium-ion battery as the energy carrier will be a key technology," said VW head of group research, Juergen Leohold.
"For Volkswagen, this initiative is an important step on the way to zero-emission operation of vehicles."