WASHINGTON, DC—It’s heady times for Volkswagen. At the same time the company is actively considering a merger with part-owner Porsche, it is also undertaking the daunting task of convincing Americans to buy diesels. Which Stefan Jacoby, president of VW Group of America, says are much cleaner than hybrids. Honest.

Every European automaker builds diesels, and thanks to tax incentives more than half of the cars on the road there are diesel-powered. European demand for diesel grows is growing at an annual rate of 4.4 percent, according to Andrew Reed of Boston’s Energy Security Analysis. Diesels are far cleaner than they used to be, and this year Europe is joining first-mover the U.S. in requiring low-sulfur diesel fuel.

In Europe, Volkswagen sells BlueMotion diesels that get as much as 60 mpg, better than the new version of the Toyota Prius. Jacoby told MNN that VW is considering making Blue Motions (which are green diesel versions of several existing platforms) at the company’s $1 billion plant under construction in Chattanooga, Tennessee. “We’re deeply considering that,” he said.

Volkswagen and partner Audi are already fielding a range of TDI diesels in the U.S., including variations on the Audi A3, the VW Jetta and Touareg, and the big Audi Q7. I took a spin in the Jetta TDI and found it a dramatic departure from past diesels. It’s not noisy, smelly or slow—in fact, shift its auto transmission into sport mode and it takes off like, well, an Audi.

According to Audi’s U.S. president, Johan de Nysschen, Americans need to rediscover diesels as competiton to the “politically correct” hybrids they’ve been favoring. Both de Nysschen and Jacoby point out, with an air of impatience, that hybrids only excel in stop-and-go traffic. Diesels offer 25 percent fuel-economy improvements virtually all the time.

VW is also investing in hydrogen, and it had two of its fuel-cell Caddy Maxi panel vans in DC. I took a ride and found it very sophisticated, not quite as quiet as the state-of-the-art Honda FCX Clarity. But in Washington, VW and Audi made it plain that commercial fuel-cell cars are 20 years away. They wanted to talk about diesel, not hydrogen. But I did get that hydrogen powered ride:

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