The Mercedes ML450 is only available for lease—either 36 or 60 months at $659 or $549 per month, respectively. Mercedes cited “limited supply of batteries” as the reason.

Mercedes-Benz has long been known for its diesels. In fact, it introduced the 260D, the world’s first passenger car powered by a diesel engine, back in 1936. But proud of its reputation for advanced technology in general, it has been hedging its bets with hybrids as well.

Gasoline, Or Diesel, Or Hybrid?

At the New York Auto Show in April 2009, it unveiled its latest hybrid project, the 2010 Mercedes-Benz ML450 Hybrid. It’s the latest expansion in its ML sport utility line, and it makes the ML the first vehicle in the world to offer gasoline, diesel, and hybrid alternatives.

Compare the Mercedes ML450!

If you’re thinking about buying a Mercedes ML450, you might also consider a Lexus RX450h or a Mercedes ML 320 Bluetec. Compare these vehicles.

The three drivetrains return a range of mileage figures. The all-wheel-drive ML350 with a standard gasoline engines gets 15 mpg city / 20 mpg highway, with larger V8 versions doing far worse. As for the green alternatives, the clean diesel ML320 BlueTec delivers 18 mpg city / 24 mpg highway, and now the ML450 Hybrid model tops the list, with 20 mpg city / 24 mpg highway.

The new ML model, built in Tuscaloosa, Alabama, is fitted with the Two-Mode Hybrid system jointly developed by General Motors, Daimler, Chrysler, and BMW.

Bigger, Better Battery—And Cooler Too

The Mercedes-Benz version of the Two-Mode system combines a 275-horsepower, 3.5-liter V6 gasoline engine and two electric motors. Together, the complete powertrain delivers 335 horsepower and 381 foot-pounds of torque. But Mercedes-Benz has fitted its own, larger nickel-metal-hydride battery pack, which at 2.4 kilowatt-hours is almost half again as large as the packs used in GM’s various Two-Mode hybrids. And Benz uses liquid cooling to keep its pack healthy and the cells operating at best efficiency, complete with a “super chiller” to blast the pack with coolant when the electrical system is under stress—towing a trailer uphill in desert heat, for example.

None of those components comes cheap, though Mercedes-Benz may have more leeway to charge higher prices than more mass-market big SUVs like the Chevy Tahoe/GMC Yukon twins.

Like other hybrids, the Two-Mode can move the car at low speeds purely on electric power for short distances. But unlike “single-mode” full hybrids, including the archetypal Toyota Prius, the pair of electrical motors and several gear-sets also provide electrical assist to the gasoline engine at highway speeds—hence the name “Two-Mode.”

Externally, the only difference between the new Hybrid and other MLs is the grille and a slightly domed hood—to clear the power electronics, mounted up front on top of the engine. In an odd transposition, the company’s AMG tuning unit liked the looks of the humped hood so much that it is using that part on its high-performance versions of the ML as well.

During a test drive in Manhattan traffic and up the West Side Highway along the Hudson River, the ML450 Hybrid clearly distinguished itself from the GM Two-Mode sport utilities—even the posh Escalade version. Drivetrain noise is all but imperceptible, and the sound damping (known as NVH by auto engineers, for Noise-Vibration-Harshness) is exemplary.

In fact, most drivers might only figure out that this ML was a hybrid by the engine tone, which like most hybrids doesn’t rise in parallel with road speed. Instead, this hybrid and others sound like cars with continuously variable transmissions—which their hybrid systems simulate by shifting power among the modes and running the engine at its most efficient speeds, taking up the slack with the electric motors.

Simulating An Eight-Speed Automatic

Nonetheless, Benz is concerned that some ML owners might find it unpleasant to experience that disconnect between engine speed and road speed. So, the company developed a “Shift” mode that controls the engine to simulate the behavior of an eight-speed automatic transmission. According to hybrid control systems engineer Konstantin Neiss, using Shift mode imposes about a 3-percent penalty on fuel economy.

Unlike Japanese makers like Toyota and Honda, Mercedes-Benz is using hybrid technology to improve the mileage of its largest, heaviest vehicles—recognizing that upcoming gas-mileage regulations will hit its lineup disproportionately hard. With the diesel and hybrid ML variants competing head to head, industry analysts will eagerly be watching to see how much wealthy Mercedes-Benz buyers value various levels of mileage, whether hybrids prove more appealing than oil burners and, most importantly, at what price points. It should be a fascinating model year for Mercedes.