This is a series hybrid, without the battery. It is the same idea as used in a diesel-electric rail locomotive. Since the generator and the motor would each be less efficient than a mechanical transmission, the whole system would be less efficient than just using a transmission.
Why would use expect fuel use to be minimal? What theory are you basing this on? All of the energy to drive the vehicle comes from the engine which drives the generator, and more energy will be needed than with a mechanical transmission (due to the inefficiency of the electric generator and motor), so the engine will burn more fuel than it would with a mechanical transmission.The amount of fuel the generator would use would be minimal and there would be no need for any batteries of any kind... In theory.