In a statement issued at its headquarters in Stuttgart, Porsche said its aim was to achieve average fuel consumption of 8.9 liters (2.35 gallons) per 100 kilometers (62 miles).

Presently, the Cayenne, with its conventional six-cylinder engine, guzzles 12.9 liters on average. That makes the sports utility vehicle, which weighs more than two tons, one of the worst emitters of carbon dioxide, a greenhouse gas that's considered a prime contributor to global warming.

Porsche said its decision to develop the hybrid motor -- which combines an electric motor and battery with a standard combustion engine in order to cut fuel consumption -- is a reaction to the raging debate on climate change in Europe and rising concerns among consumers about the environmental friendliness of their cars.

"In particular, a premium carmaker such as Porsche must offer competitive drivetrain solutions with low consumption- and emission levels," the company said in a statement.

German carmakers trail in green technology

The move comes as automakers and legislators across Europe tighten the screws on CO2 emissions amid mounting qualms about the environment.

In February this year, German carmakers were hit by new emission limits --130 grams (1.038 ounces) of CO2 per kilometer to be met by 2012 -- proposed by the European Commission. Only six German-made models within the bloc currently meet those requirements.

Though German carmakers rank among the best in the world, they are widely seen to have been slow in waking up to reality and developing an alternative to the fossil-fuel engine. Japanese carmaker Toyota is considered the world leader in hybrid technology.

Porsche, which is working together with Audi and Volkswagen on the project, said it plans to unveil its hybrid powertrain in 2009. The technology which combines an electric motor with a combustion engine is also slated to be used for Porsche's planned four-door sporting premium model, Panamera.