After years of arguing that clean diesel is a better efficiency strategy compared to hybrids, Volkswagen is switching gears. In a statement issued more than a year ago—on the eve of the 2010 Geneva Motor Show—Martin Winterkorn, VW chairman of the board, said, “We will take the hybrid out of its niche status with our high-volume models. In the future, the heart of the brand will also beat with electricity.”

A hybrid version of the Jetta will be offered in the U.S. in 2012—followed by Passat and Golf Hybrids in 2013. The Volkswagen press release states with no lack of confidence: “Starting in 2013, the high-volume Golf and Jetta models of the Volkswagen brand are expected to dominate the hybrid and electric vehicle market.” In fact, the company says that hybrid and electric vehicles will account for three percent of the German carmaker’s global sales by 2018.

What Do We Know About Jetta Hybrid?

Wrapped in the sheet metal of the newly introduced 2011 Jetta, the gas-electric model will be a full hybrid, using VW’s twincharger TSI in-line four-cylinder engine. It’s not confirmed if the 2012 Jetta Hybrid will use a 1.4-liter twincharger engine, or larger versions that Volkswagen is developing.

Volkswagen describes the Jetta Hybrid as having “best in class” fuel economy—most likely stacking up against (but probably not reaching) the Honda Civic Hybrid’s 41 mpg—while besting the Civic and other competition for horsepower.

Pricing has not been revealed, but expect a significant premium over the Jetta’s base price to push the price into the low- to mid-$20,000s. To achieve its lofty sales goals, VW will need to be competitive—something the company was willing to do when the 2011 Jetta was priced about $1,700 less than the previous version.

While the Civic Hybrid first appears to be the closest competition, the Jetta Hybrid more logically stacks up against the TDI version of the same Jetta. (The Jetta will represent the first time an automaker offers hybrid and clean diesel options on a cost-competitive model.)

The Jetta TDI clean diesel, rated at 30 in the city and 41 on the highway, carries a base MSRP of $22,995. Expect city and highway fuel efficiency numbers to be reversed in the Jetta Hybrid—with city driving in the 40s and highway mileage in the mid-to high-30 neighborhood. Consumers are likely to make the hybrid versus diesel decision based on driving cycle. Do you mostly drive on the highway? Go diesel. Mostly city driving? Take the hybrid. (Of course, we’ll have to wait and see how a VW hybrid handles the road.)

“VW as a brand takes the electrification of the automobile very seriously, and we have a longtime strategy for growing that business,” promised Toscan Bennett, a VW product strategist. “The Jetta hybrid is our first entry in that strategy.”