The Toyota Prius is a car. The XL1 is a transporter.

Already pared down to a catalogue of lightweight, sophisticated components rendered from carbon fibre, magnesium and aluminium, the XL1 lacks those useful pieces of hardware that attentive drivers know as mirrors. Volkswagen compensates for this seeming handicap with two cameras integrated into each of the XL1’s butterfly-hinge doors, which gaze rearward along the car's flanks and send real-time video to two door-mounted cabin screens. The cameras also do a respectable job of capturing the rear view, eliminating the need for a mirror on the windshield.

The XL1 giveth and the XL1 taketh away, and this is the fundamental dynamic at work in VW’s 261mpg marvel. Get an Audi-calibre steering wheel, lose the power-assisted steering; get the lowest aerodynamic drag of any production car in the world, lose the side-view mirrors; get an injection-moulded, carbon-fibre-reinforced-polymer (CFRP) substructure, lose any semblance of sound insulation. Such are the trade-offs in a time machine.

Because the XL1 is most assuredly from the future.

The diesel-electric hybrid was made available for brief drives on 25 June around Volkswagen’s headquarters in Wolfsburg, Germany, where the first examples emerged from a genesis that began in 2002 with the 1-Litre concept car. XL1s pictured here are among an initial run of 50, and VW has committed to building 250.

From any angle, the XL1 sooner evokes a 1930s streamliner locomotive than it does a passenger car. It perches on narrow Michelin tires, with rear wheels mounted to a shorter axle than those up front, imparting a gawkier, more nose-heavy stance than any other virtue-mobile on the road. The Toyota Prius is a car. The XL1 is a transporter.

Settling into one of the vehicle’s two carbon fibre seats – slightly offset to prevent shoulders from bumping – the sci-fi overtones soften. Here is a tight-diameter, leather-wrapped steering wheel, here a cluster of analogue gauges, here a radio scanner and climate control knobs. No question, you are in a car.

Drivers of battery-electric and plug-in hybrid vehicles would find nothing extraordinary about the XL1’s startup sequence. Press the start button and watch the gauges illuminate. Pull the dual-clutch transmission into gear, apply light throttle and the XL1 builds speed under purely electric power, albeit with half the alacrity of modestly powered EVs like the Nissan Leaf. Tromp on the accelerator and a .8-litre two-cylinder diesel engine joins in with a gurgle. When all electricity is spent after a manufacturer-estimated 31 miles, the diesel engine feeds power back into the battery.

The XL1 is in no hurry, but it keeps pace with traffic on the perimeter roads and roundabouts outside VW’s sprawling campus. The entire powertrain is housed mid-ships, so the driver senses engine and motor noise directly behind those handsome carbon fibre seats. If there is anything jarring about the XL1’s repertoire, it is the sandpaper-on-chalkboard clamour produced with every application of the ceramic disc brakes. A noise that the XL1 all but eliminates, though, is wind; at highway speeds, the loss of those aerodynamically unfriendly side-view mirrors never seems shrewder. Low-rolling-resistance Michelins do their best to fill the aural void, but they do not intrude to an unreasonable degree. The XL1 is a chatty little thing, yet you find yourself forgiving its faults because of that 261 number.

Volkswagen has tested the XL1 to 261mpg, a figure so gaudy that it recalibrates one’s conception of “good” fuel economy. In an industry quick to ballyhoo a 2mpg advantage over a competitor, the XL1’s fuel-economy rating is 500% better than that of a Toyota Prius C – a car deemed the greenest of 2013 by the American Council for an Energy Efficient Economy. Not for nothing is a “1” in the XL1’s name.

But that singularity also muddles the conversation. Volkswagen has affixed no price to the XL1, nor has it disclosed development costs. The first 50 cars are being loaned out gratis to urban planners, green entrepreneurs and futurists of all stripes in Germany for four-week periods, with the remaining 200 allocated for paying customers, also in Germany. Whether these customers build equity in their XL1s or only lease them, VW will not yet say, nor will the company comment on the XL1’s prospects for reaching other markets. Brand communications have all the transparency of encrypted diplomatic cables.

“Business case” is a phrase heard a lot around Wolfsburg. If the XL1’s virtuosity can be siphoned off in small, scalable doses to benefit the Golfs and Ups in the product portfolio, VW might deem its 1-Litre project a raging success. But the time machine is already built. It would be a shame not to do some exploring with it.

Vital stats: Volkswagen XL1

  • Base price: N/A
  • Price as tested: N/A
  • EPA fuel economy: N/A (manufacturer-estimated 261mpg combined)
  • Powertrain: .8-litre, 48-horsepower two-cylinder diesel engine, 5.5kWh, 27hp electric motor, seven-speed dual-clutch (DSG) automatic transmission
  • Standard equipment: carbon-fibre-reinforced-polymer safety cell, four-wheel ceramic disc brakes, park assist, Garmin navigation system
  • Major options: N/A