STERLING HEIGHTS, MI – A small car that averages 100 mpg (2.35 L/100 km), yet is powered by a conventional gasoline engine and can be sold at a profit for less than $10,000?

U.K.-based Lotus Engineering says it has solved that complex equation and is counting on its expertise to pull in additional work for its North American arm. Although it provides some development help to sibling Lotus Cars, 90% of the consultancy’s revenue comes from external customers, officials say.

The 100-mpg car springs out of a project to develop a lightweight Toyota Venza virtual clone for a study initially funded by the International Council on Clean Transportation and undertaken with the California Air Resources Board, U.S. Environmental Protection Agency and National Highway Traffic Safety Admin.

Results of the first phase of the project were released in March 2010. A second phase to evaluate the crashworthiness and cost-effectiveness of the lightweight design is just being completed, with a report expected to be circulated for peer review by CARB and the EPA by early next year.

“This is going to be an absolute game-changer,” Darren Somerset, CEO of Lotus Engineering’s North American operations, tells WardsAuto in a backgrounder at the company’s newly minted engineering center here.

Conclusions drawn by Lotus – that a 38% reduction in vehicle weight can be achieved using available technology and at little additional cost, with no detrimental effect on safety – is likely to generate controversy in an industry known for its reluctance to adopt new materials and manufacturing processes.

The regulatory agencies are expected to use the report as proof auto makers should be able to meet tough carbon-dioxide emissions curbs that would require fleet fuel economy of 54.5 mpg (4.3 L/100 km) for 2025.

The 2025 mileage bogey, proposed by the Obama Admin., has come under attack by political opponents and caught the ire of U.S. automobile dealers, who claim the standard would hike vehicle prices as much as $10,000 and put up to 200,000 jobs at risk.

“CARB and the EPA will be using this study to set legislation, ultimately,” Somerset says. “This study will be used to support that (mass reduction) can be done in a cost-effective manner (and) push the OEMs to implement some of the techniques we have developed here into their product-development cycles.”

The project called for development of a vehicle the size of the Venza but with 40% less body mass. No changes in the powertrain were allowed, and the vehicle had to be capable of being manufactured in high volume using technology expected to be available in 2017.

The engineering firm began by optimizing the interior. No weight-saving stone was left unturned, according to Gregory E. Peterson, senior technical specialist, who says replacing the gear selector with virtual push-button transmission controls on the navigation screen saved 6.6 lbs. (3 kg), and another 8.8 lbs. (4 kg) was cut by replacing the Venza’s mechanical parking brake with an electric one.

More weight was shaved by eliminating traditional steel seat-risers and attaching fiberglass seats to the body’s outer rail and center spine instead. There is no conventional instrument panel, eliminating the need for a heavy cross-car beam.

The redesign cut interior weight nearly 220 lbs. (100 kg) and, because of fewer parts, costs fell 4%, Lotus says.

It then went to work on the body and, after analyzing materials for crash performance, ended up with a structure that is 75% aluminum, 12% magnesium (front-end), 8% steel (B-pillars) and 5% composite (floor). Resulting torsional stiffness proved better than that of the BMW X5, considered a world-class benchmark by Lotus engineers.

In all, the number of parts was cut from 400 in the Venza to 170 in the Lotus design, and total weight was reduced 38%. That probably translates into a 24%-30% fuel-economy gain, the firm says, without optimizing the powertrain.

Complete results will be released in coming months, but Peterson says the vehicle scored well in modeling for 35-mph (56-km/h) front-impact tests and side-impact tests, and its roof-crush rating was six times the level needed to meet U.S. standards.

“NHTSA saw these results, and they were very satisfied with how well this car performed,” Peterson says.

Designing future vehicles along these lines would require a sea change in industry thinking, plus some investment, Lotus officials acknowledge. But the firm’s modeling suggests the cost of moving to a hybrid-body structure from steel is digestible.

“If you can’t manufacture it, you don’t have a solution,” notes Sunil Lall, chief engineer-chassis.

Lotus says the vehicle could be put into the mix at any assembly plant without serious line changes, but an all-new body shop would be required, an investment it pegs at $53 million for a volume of 60,000 cars annually.

Bodies would be pieced together using structural-adhesive bonding methods, friction spot-joining technology and rivets and fasteners, but Lotus says all techniques are or will be available for volume production by 2017.

Initially, the Lotus body-in-white would cost 18% more than the current Venza’s, but that drops to 8% after five years when the body-shop investment is fully amortized, the company says. Once design savings from other areas of the vehicle are factored in, the cost penalty falls to 3.24% at launch and 1.44% after plant amortization, Lotus says.

“We have strong financial numbers that back up all of these data areas,” Peterson promises, adding tooling for higher volumes could provide an even quicker payback.

Lotus officials admit the report may be panned by major auto makers, which likely will be skeptical of its conclusions and view the document as unwanted arm-twisting ammunition for regulatory agencies. But even traditional OEMs eventually will embrace these techniques, they predict.

“A lot of start-up companies that don’t have the legacy investment (in steel-body tooling) will be moving to this type of process going forward,” Somerset predicts. “And we’re at the forefront of being able to do that.

“But we’ve also got a number of studies under way with the major OEMs as well. They understand this is a way forward.”

Peterson sums up: “Other companies around the world will be stepping up to do this sort of thing, and our industry needs to remain competitive. We’re talking with people that are very interested in having Lotus help them pursue this type of reduction in mass and do it in a cost-effective manner.”

Jay Baron, president and CEO of the Ann Arbor, MI-based Center for Automotive Research, says a number of innovative concepts presented in the first phase of the Lotus study suggest “aggressive light-weighting strategies that may be feasible.”

But he cautions that broad, inaccurate conclusions are drawn too often from such research by third parties with an agenda. The ICCT’s backing of the study calls into question whether the potential of light-weighting is being overplayed in an effort to declare 2025 mileage targets attainable.

“Mass-compounding may be easy to achieve in design, but not in practice,” says Baron, who has yet to see the results of the study’s second phase. “Every vehicle has unique performance requirements, timing and other constraints.”

Until physical prototypes are built and tested, it will remain uncertain whether Lotus’ conclusions are accurate, he says. “A validated design will add cost and mass.”

Baron also says it would be impossible for the industry to switch from steel to a high percentage of magnesium content in vehicle-body structures. “The global supply of magnesium would be inadequate to supply the U.S. demand,” he concludes.

Lotus officials are more guarded on the details of the company’s 100-mpg concept car that utilizes many of these same design and construction philosophies.

Peterson says the vehicle features 1+2 seating, with a highly aerodynamic shape. It is powered by a 0.6L gasoline engine, has a top speed of 120 mph (193 km/h) and can do a 0-60 mph (97 km/h) run in less than 9 seconds. It would retail for less than $10,000.

A performance version of the car adds 50 hp and can achieve a top speed of 150 mph (241 km/h) and reach 60 mph from a standstill in about 5.5 seconds. Its fuel economy is pegged closer to 80 mpg (2.9 L/100 km) and selling price put at less than $15,000.

“We very much are believers that environmentally friendly cars don’t have to be boring, stodgy,” Lall says.

The firm says it could achieve an average 80 mpg using the same design techniques for a more conventional 4-passenger car that also would sell for less than $15,000.

Apply this technology and thinking to a car like the Cruze Eco “and the potential is really pretty impressive,” Peterson says. “We have the opportunity of really pushing the envelope for conventional-fueled vehicles as well as hybrids.”

Somerset indicates the vehicle likely will be revealed publicly soon.

Lotus, owned by Malaysian car maker Proton, also is planning to roll out several new production models, as well as an all-new V-8 engine, beginning in 2013.