The way I read it (from leftlanenews on the same story) was that it wouldn't necessarily replace the Cobalt cause it'll be smaller.
They are looking at a small car to house a 1.4L Turbo engine to make like 140hp and 40mpg or something.
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While a standard engine is powered by a belt connected to the crankshaft, a turbo engine runs on its own exhaust steam, making it more energy efficient. -- CNN
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