Gallery: Mercedes S400

The hybrid of the future

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The Mercedes S400 BlueHybrid is the world's first production car to shift from the nickel-metal-hydride batteries in today's hybrids to a lighter, more powerful lithium-ion battery designed expressly for an automobile.Daimler AG

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The large, luxurious flagship sedan returned 29 highway mpg during our testing--a 30 percent gain over the V8-powered S550 version--and 21 mpg in the city. It achieves these numbers by combining a downsized V6 with a 20-horsepower electric motor and a 0.9 kilowatt-hour li-ion battery for a total of 295 horsepower, giving it a 0-60 time of 5.4 seconds.Daimler AG

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A closer look at the S400's lithium-ion battery and electric motor. Unlike with most hybrids, the compact battery doesn't hog trunk space (it fits under the hood), saddle the car with excess weight, or add several thousand dollars to the price. Starting at $88,825, the Mercedes actually costs $3,650 less than the V8 version.

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Mercedes says the entire S-class lineup could go hybrid in coming years. This fall at the Frankfurt Auto Show in Germany, Mercedes unveiled a glimpse of that future in the concept S500, a plug-in hybrid S-class that could top 70 mpg while delivering a 5.5-second blast from stoplight to 60 mph.