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The paper describes a new hybrid vehicle design option having very low energy storage capability, and in particular, a parallel hybrid with hydraulic storage and reapplication of braking energy. The operating efficiency of the propulsion system at light loads is substantially improved by splitting the engine into two segments, and finding ways of shutting down one or both engine segments whenever possible. The hybrid vehicle utilizes primarily current technologies. A diesel powered parallel hybrid as described demonstrates a reduction in fuel consumption of 53.9% on a volume basis when compared with an equivalent baseline vehicle.