The report concludes that the added complexity of hybrid systems with their batteries, electric motors and internal combustion engines won't be able to overcome the cost advantage of a modern diesel engine, even with the expensive exhaust treatment systems needed to make diesels meet our new stricter emissions requirements.
Toyota, however, is projecting that it will achieve cost parity between hybrids and conventional drivetrains in the next few years. More likely is a scenario in which fuel efficiency and emissions requirements reach a point where diesel-hybrids become a necessity. As batteries improve and Series Hybrids like the Chevy Volt become a reality, diesels will be the likely choice as range extenders. In the short term, diesels are moving full speed ahead, at least from European manufacturers, so we'll just have to wait and see how American drivers take to them.