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GM’s new 4.5L Duramax diesel engine promises a 25% increase in fuel economy while providing 310 hp and 525 lb-ft. The new oil-burning powerplant also needs to pass 50 state emissions while providing the efficiency customers are demanding. GM has already provided some details of the Duramax 4.5L, including that the new diesel is roughly the same size as the General’s compact small block V8, which means it can fit in more than just trucks and SUVs. The 4.5-liter also reduces the parts count with integrated aluminum cylinder head exhaust manifolds and an integral cam cover intake manifold. GM talked to Automotive News about new features of the lower half of the 4.5L Duramax, and they’re just as extensive as the top.

According to MotorTrend, General Motors is considering fitting its 4.5-liter Duramax V8 Turbodiesel inside the Cadillac CTS sedan as a stepping-stone between the standard V6-equipped CTS and the barn-burning CTS-V.

The report contends that the Duramax V8 would be an easy fit inside the confines of the CTS’ engine bay with the addition of the CTS-V’s bulging hood. The dual-overhead cam, four-valve diesel V8 puts out 310 hp and a tire decimating 520 lb.-ft. of torque and GM already has a transmission that can handle the grunt. The oilburner currently meets the tougher 2010 emissions standards which would allow it to be sold in all 50 states, and with a reported 20-25% increased fuel economy over the V8 model, the diesel CTS could provide some competition to similar offerings from Audi, BMW and Mercedes-Benz. According to MT, the amount of modifications would be minimal and the addition of the CTS diesel would help to boost GM’s CAFE certification to meet the stricter 35 mpg requirements in 2020.

Bob Nardelli, Chrysler’s current CEO, has given his employees the closest thing to an admission as we are likely to see that the company has been in serious negotiations with other automakers regarding future product plans and possibly even mergers. As has been widely reported over the weekend, Chrysler has apparently had discussions with General Motors regarding a tie-up between the two automakers, and the rumormill is churning away with stories that GM isn’t the only suitor. Carlos Ghosn already has a history of merging automakers, and his Nissan/Renault partnership has naturally been recalled as a possible mate with Chrysler, as have Fiat and Tata Motors.

Remember that there’s nothing concrete here to report, just speculation. At this point, all we know is that Nardelli admits that there are “third parties who are interested in exploring future possibilities with Chrysler” and that “as the company evaluates strategic options to maximize core operations and leverage its assets, we engage in a dialogue with these parties.” Sounds pretty vague, wouldn’t you say? These talks can be routine or they could be much more. We’ll just have to keep an interested eye on the news.

Our heads are still reeling from one of the most tumultuous financial weeks on record, and the auto industry was far from immune. But despite our best efforts to drown our concerns in Racer5 IPA, the hits keep coming, and this time it’s courtesy of the New York Times.

The Gray Lady is reporting that General Motors and Chrysler have been in talks about a possible merger for the past month, that “negotiations are not certain to produce a deal,” “would most likely still take weeks to work out” and that two unnamed sources say that the chances of the merger going through are “50-50.” Obfuscate much?

With GM’s stock prices ending the week below $5 a share and Cerberus – the private equity firm that owns Chrysler – grasping at the flimsiest of straws, including continued talks with Nissan/Renault, a merger of unequals is two parts disturbing and one part intriguing.

Cerberus’ people haven’t been returning phone calls and the only comment offered to the NYT from the General’s spokesperson, Tony Cervone, was, “Without referencing that specific rumor, as we’ve often said at GM officials routinely discuss issues of mutual interest with other automakers.” Broad, unclear and exactly what we’d expect.

The merger of GM and Chrysler would put Cerberus in charge of an “unspecified equity stake” in the corporation, making the two-headed General-Chrysler (or Chrysler Motors?) the world’s largest automaker, controlling over 35 percent of the U.S. vehicle market, causing rifts among brand faithful and offering more potential (vehicle) cannibalization than the Donner Party. Not to mention both automakers’ labor contracts, supplier dealers and slipping market share. Shocked? Don’t be. We give it a snowball’s chance on the Sun. Thanks to ALL who tipped in.

UPDATE: Official statement from Lori McTavish, Executive Director, Communications, Chrysler LLC:

Chrysler LLC as a matter of policy does not confirm or disclose the nature of its private business meetings. As we have said, the Company is looking at a number of potential global partnerships as it explores growth opportunities around the world. Beyond those partnerships already announced however, Chrysler has not formed any new agreements and has no further announcements to make at this time.

It’s been a crazy few days as news broke that Chrysler and General Motors have been in talks to combine operations. It turns out that there’s a pretty significant back-story to these proceedings, and it involves Cerberus Capital Management’s possible desire to shed its car-building operations and acquire the rest of GMAC, of which it already holds a controlling stake of 51%, with GM holding holding the other 49%. According to reports, Cerberus would like to combine Chrysler Financial with GMAC, which would allow it to merge the offices of the two financial institutions and reduce costs. All right, that might make some sense, but what about merging the two automakers? That’s the part that seems so confusing to analysts and us meager bloggers. Somehow, we feel certain that there’s more to this story, which we’ll be hearing about for some time.

The rumormill is a funny thing, and sometimes it can run amok. This appears to be one of those times. The DigitalCorvettes.com forum posted a note earlier this evening saying that Corvette ZR1 production has been halted (Bowling Green is shut down this week, so no Vettes are being built at the moment) and suggesting that the ZR1 may be cancelled. A post on dealer Rick “Corvette” Conti’s blog, linked in the referenced DigitalCorvettes thread, added to the intrigue.

Autoblog has contacted GM’s Terry Rhadigan, who handles global communications for the Chevrolet brand. We presented the DigitalCorvettes link and asked for an official response. His was very clear:

“Not true.”

Now that the California Air Resources Board (CARB) has an agreement with General Motors regarding how to measure the fuel mileage of the 2011 Chevy Volt, our attention turns to the EPA, which now has to decide what official mileage rating will appear on the new car’s window sticker and how to determine what that number will be. The first recommendation comes from the Automotive X-Prize, the foundation of which will award $10 million from Progressive Insurance to the winner of its competition to design a production-viable car that people would want to drive that gets 100 MPGe or more.

What’s with that little ‘e’ after the familiar miles per gallon? Basically, the X-Prize crew wants to convert all units of energy to a figure that’s equivalent to the power from a gallon of gas. That way, a car’s powerplant – regardless of where it gets that energy from – earns a rating that can be easily compared with everything else. So, EPA, the ball’s in your court… still.

Inside Line kicked up a dust storm yesterday by claiming that the 2011 Chevy Volt could not recharge its batteries while driving using its on-board, range-extending 1.4L gas engine. 40 miles of electric-only drive was it, and then the battery packs become “400 pounds of uselessness” was what IL said. They got this impression from a press release issued when the production Volt was unveiled to the public, which stated that the gas engine could only “sustain” the battery pack’s charge and not increase it. GM got its communications crossed and apparently confirmed IL’s take, but has thought about it some more and today reconfirmed what we initially thought was true, that the Volt’s gas engine can recharge its batteries while underway.

What the Volt’s gas engine can’t do is completely recharge the battery pack to its full capacity. Rather, when load conditions are light the gas engine will send surplus electrons to the battery pack, which will also be receiving extra charge from regenerative braking, as well. That sounds about right to us, as we’ve always been told that constantly charging a battery to its maximum will shorten its life, as the optimum charge range is usually between 20 and 80 percent, not completely drained and not completely charged. GM is determining right now just how much it wants to let the gas engine charge the Volt’s battery pack, but rest comfortably knowing that your future Volt won’t be carrying around 400 lbs. of uselessness when the charge runs out.

According to General Motors E-Flex spokesman Rob Peterson, the automaker has reached an agreement with the California Air Resources Board (CARB) that would see the 2011 Chevy Volt get a unique classification different from other current hybrids. This new classification takes into account the fact that the Volt’s 40-mile battery range allows it to complete the bulk of the emissions and economy test procedure without ever running the engine, which would likely give it a mpg rating of 100 mpg or better.

This is problematic for the EPA, which considers dual-power vehicles like the series hybrid Volt no different than a parallel hybrid like the Prius. Currently the EPA is expecting the Volt to complete the test cycle with a charged battery, which means the engine would have to run a lot more and essentially kill the charge sustaining control plan. According to Peterson, GM is still a long way from reaching an agreement with the feds on how to test the Volt, despite what the Detroit Free Press says. However, having CARB consider the Volt essentially an electric car is certainly a bargaining chip in GM’s favor.

GM is not going to let the Volt or its E-Flex powertrain get lonely. The first Volt — the one due in late 2010 — hasn’t been finished yet, yet is so popular that GM is publicly theorizing about how far it can spread the technology through the empire. Ideas include a smaller car with a smaller battery pack that could go 20 miles on pure electric, and be much cheaper. A proper wagon, just “a little bit bigger,” could also make the cut.

And those variants don’t all need to be Chevrolets. Other GM brands will certainly be blessed with Volt technology, if not an outright case of brand engineering. Cadillac is one of the wolves thought to be circling the Volt’s henhouse, and using Volt systems in a Caddy might allow GM to make a profit on such a car without tax breaks. If there were a more economical Volt with a shorter electric range, Saturn would seem to be a prime candidate.

It looks like the sole E-Flex powertrain option not planned is an electric-only car, one without a range-extending gasoline engine. GM feels that people would find it too risky to have no backup. But back to that first car, the plain vanilla Chevy Volt that’s still two years away from showrooms – a Volt team member doesn’t appear to have forgotten the prime directive: “You always have to do the first car right and well.” Amen.