Just in: Fuel-efficient 2014 Mercedes-Benz E250 BlueTec luxury sedan

Mercedes-Benz has long been known for its diesel-powered sedans. Following the gas crisis of 1979, the company offered virtually its entire lineup of luxury cars with diesel power to boost fuel economy, and the German automaker sold almost nothing else through the 1980s.

Gas prices have again soared, motivating Mercedes to once again offer more diesel powertrains. The company has sold powerful turbocharged diesels in a handful of models recently, and the fuel economy benefits have been dramatic, especially for its SUVs. Mercedes has carried a diesel E-Class sedan for years, a car that has always done well in our testing. In fact our last one, we said, had a “magic carpet ride.”

With the 2014 model, Mercedes is aiming for even better fuel efficiency with a downsized (compared to last year’s turbodiesel V6) 2.1-liter four-cylinder turbodiesel—shared with the GLK250 BlueTec—that puts out 195-hp and 369 lb.-ft. of road-bending torque. With an automatic start-stop system and standard seven-speed automatic transmission, the E250 earns an EPA rating of 28 mpg city and 42 mpg highway. That compares with 22 and 33 for the previous V6 E350 BlueTec. Like all modern Mercedes diesels, the E250 requires periodic refills of diesel exhaust fluid (urea), designed to be replenished at every oil change.

Base price for the E250 is $54,825, but that figure skyrockets with options–to the tune of $8,155 extra on our test car. That heady figure includes the Premium package with navigation, Mercedes-Benz apps, Harman Kardon surround-sound stereo, voice control, a backup camera, and Mercedes’s mbrace2 accident alert system. We also added keyless entry, electronic trunk closer, split-folding rear seats, and a cool but fussy built-in folding trunk box to contain grocery bags. We also wanted to try Mercedes’s new Lane Tracking and Lane Keeping Assist systems, blind-spot monitoring, and Advanced Parking Assist; the active safety gear set us back $1,845 in total. The bottom line came to $62,980–pretty steep for a four-cylinder diesel.