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People don't care enough about economy to make that happen.
Reference: The Geo Metro, the Audi A1, the new Mitsubishi Mirage...
Manufacturers release non-hybrids with fantastic economy from time to time, but the cost savings versus "ordinary" cars isn't high enough to encourage the bulk of the car-buying public to choose these cars over more "normal" looking/sized cars.
Hybrids and EVs, fromthose same manufacturers, on the other hand, even if they also suffer poor sales, can be justified as a marketing expense, giving the manufacturer a "green" halo.
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