click above for more images of the Tata Nano

Those in emerging markets hoping to get their hands on the cheapest car in the world may soon have a few more option boxes to consider checking. Chairman Ratan Tata has said in the past that an electric-only version of the Tata Nano is likely, and now industry sources are saying that a diesel engine is also in the works. Displacing 800cc and including common-rail injection from Bosch and a Honeywell turbocharger, the diesel engine has been designed by German powertrain specialist FEV, the same firm that India's Mahindra reportedly contacted for help with its latest diesel hybrid engine.

We don't yet know what kind of fuel mileage the diesel would offer, but the twin cylinder gas engine standard in the Nano is good for 54 U.S. miles per gallon and the diesel should better that figure somewhat, though most likely for a slight increase in price.

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