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BMW is working on a tiny ‘mega city’ car, company CEO Norbert Reithofer has confirmed. The project, which was first revealed by Autocar back in April, is being driven by future fuel economy and pollution rules in both the US and EU.

“It’ll be a car with a completely new look, with two engines available. One will be a very efficient combustion engine and the other will be a purely electric model,” Reithofer told the German weekly newspaper Die Zeit.

The electric-powered microcar will comply with Californian regulations, which dictate that by 2012 a fuel cell or battery-powered vehicle must have a range of over 200 miles.

By the time the new city car arrives those rules will be in place, though the frugal and super-clean internal combustion engine will still be the big European seller.

There’s no news on whether the car will wear the BMW badge, but BMW has previously said it was considering launching a fourth, ‘green’ brand. Reviving the old Isetta marque is said to be one of the possibilities.

via Autocar.co.uk

Reithofer said given the current problems in the United States and deteriorating economic conditions in Europe, the company is burying its plans to produce the X7.

Industry observers have described the X7 as a super luxury SUV which would supposedly rival the Land Rover Range Rover.

via Forbes.com