You've heard of the Golf GTi. Now say hello to the Golf GTE. That's E for electric, in case you were curious.

To readers of a certain age, GTE in the context of a performance car might be associated with another brand. When Pocket-lint was still in baby grows, it was Vauxhall that owned the GTE moniker, as seen stuck on the back of cars like its hot Astras.

But Vauxhall's loss is clearly Volkswagen's gain, as it gives the German maker a neat and easy-to-understand badge strategy for its range of performance cars. So in Golf world, it's GTi for (injection) petrol, GTD for diesel, and GTE for plug-in hybrid electric – although this isn't a purely battery powered Golf (you'll need an e-Golf for that).

The Golf GTE mates together a chunky battery pack that you can plug in and recharge (unlike a regular hybrid like, say, a Toyota Prius) with a 1.4 TSi petrol engine. This engine sometimes keeps itself quiet and lets the battery do all the work, sometimes works together with the battery and (if the battery's drained) can propel the car on its own. It depends on what mode you put the car in, state of charge and so on.

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The benefit to you of all this? Well, 31 miles of range on the battery alone – which VW figure is enough to get most of us to work and back each day. But then the sort of performance you get from the regular GTi when the battery and petrol motor are working together and producing their combined total power output of 204hp. In between times – and depending how often you charge the battery up, the GTE promises much greater economy than its petrol equivalent – officially, 166mpg and 39g/km of CO2.

We could bore you at length about the GTE's numerous modes (pure electric, GTE, charge battery etc) and various degrees of super cleverness. Instead we'll simply talk about how it drives.

Set off with e-mode pressed, and the Golf travels under the power of just its battery, so long as you keep the speed below 81mph. It's quiet, serene and nippy without feeling outright fast in a way that so many electric cars do. Both the electric motor and engine drive through the standard 6-speed DSG automatic gearbox, but in electric mode it's very difficult to discern any real kind of stepping, gear-changing feel. And that's all part of the appeal. It's a fuss-free experience.

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Press the GTE button, and the petrol engine joins in – not that you'll necessarily notice at first. Like all hybrids, just because you've called on the petrol engine doesn't mean it's always running. Slow down to a junction and come to a halt and it'll switch itself off. It starts back up via a starter-alternator, meaning there's no clatter of a starter motor to upset refinement.

But from here on in, flatten your right foot on the accelerator and the Golf leaps forwards, with both battery and petrol motor firing the GTE to 62mph in just 7.6 seconds from rest, which is decent warm hatch performance. It's got that familiar stream of torque from low speed too, which characterises cars that use an electric motor. Its performance therefore feels even more muscular at times than the figures suggest.

Occasionally, the petrol engine can sound just a little diesel-like, but its general refinement is exemplary and the petrol engine shuttles in and out of activities with barely a whisper.

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Other than a slightly firmer ride that's a result of stiffer rear spring and damper rates to cope with the battery sat under the boot floor, there's precious little to dislike in the driving experience. In fact, if you enjoy the way the regular GTi and GTD go, there's every chance you'll find this similarly rewarding and engaging. The steering is nicely weighted, the cabin a great place to sit, overtaking is easy, and the fact that you can run silently or on electricity alone feels like a real bonus.

With such a positive report card, we suspect you're wondering where the "but?" comes in. There are precious few compromises, but you do make some for the GTE's cause. The boot capacity's slightly smaller than most other Golfs as there's no underfloor space (instead there's battery gubbins). There's that slightly harder ride we've already mentioned. And unlike the fully electric e-Golf, the Golf GTE can't use the roadside DC fast chargers. Still, its smaller battery pack means it charges up in just 3 hours 45 minutes from a 13A house plug. Or 2 hours 15 from a wallbox arrangement.

The big surprise is that while you'll be thinking you pay more for the privilege of the new tech, that's not necessarily the case. The GTE starts at £33,035, but can be had currently for £28,035 thanks to the UK Government's £5,000 Plug-in car grant. Which compares favourably with £27,590 for the regular diesel GTD in 5-door form (the GTE only comes as a 5-door).

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For that price, you get all the usual Golf accoutrements, and an exterior design package and interior trim that mirrors the GTi and GTD – including those great seats with their tartan-like trim. The only difference with the GTE is that the highlight elements are blue, rather than red or grey.

We do wish VW had made the navigation system standard, with a function to see how far you can get on electric charge alone. Instead you get a 5.8-inch touchscreen as standard, with DAB, SD card readers and a multi-device input connector. But you'll need to stump up £1,765 for Discover Navigation Pro to get all the full navigation functions, along with an 8-inch screen, 64GB hard drive, traffic sign recognition and traffic information. We suggest you might also add the £360 winter pack for heated seats – as this is a much more efficient way of warming yourself up than using the car's air con unit to heat the entire cabin, especially when you're running on battery power.

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Small moans about spec aside, the Golf GTE represents a very appealing proposition. It lacks the stand-out futuristic feel of something like a BMW i3. But nonetheless it is a very appealing way of driving an advanced powertrain car – it asks very few compromises, and keenly priced as it is, represents a very interesting alternative to the other performance Golfs. What's more, if you're a company car driver it will certainly save you money in tax.

Most pleasing about it, is that Volkswagen has produced a car that not only provides a more efficient, electrified means of getting around, but one that's still ultimately fun to drive and provides the feel good factor that its petrol and diesel GT siblings have in spades. Given they're all so good, the only challenge if you're choosing a new performance Golf, is to decide exactly how you want it to be powered.