Leave it to Audi AG’s clever engineers, who helped pioneer direct-gasoline injection and turbocharging with the Audi R8 Le Mans racer, to be first to market with a 4-cyl. that achieves a near-perfect balance among such oft-conflicting attributes as performance, fuel economy and grin-inducing driveability.

As a result, the auto maker’s 2.0L TFSI (Turbocharged Fuel Straight Injection), introduced in the U.S. in 2005, has been a Ward’s 10 Best Engines winner for three consecutive years.

In Europe, the punchy turbo-4 also was recently voted “Engine of the Year” – Audi’s third such award – by a jury of more than 60 journalists from 30 countries.

They called the 2.0L TFSI dominant in its class and “not only incredibly versatile and clever, but also remarkably powerful.” And they commended Audi for doing the best overall job of engine development in the 1.8L-2.0L segment over the past year.

This delightfully fun and frugal four is transversely mounted in Audi’s A3 hatchback (where Ward’s editors enthusiastically tested it last fall) and TT sports cars, as well as in parent Volkswagen AG’s GTI, Passat and new Tiguan cross/utility vehicle, among others.

It’s mounted longitudinally in Audi’s A4 range, churning out an eager 200 hp at 5,100 rpm and 207 lb.-ft. (281 Nm) of torque between 1,800 rpm and 5,000 rpm in either configuration.

With such low-end torque and very little turbo lag, it can launch the A3 from rest to 60 mph (97 km/h) in 6.7 seconds and through the quarter mile in 15.5 seconds with either the standard 6-speed manual or optional S-tronic dual-clutch transmission. At the same time, it delivers a U.S. Environmental Protection Agency city/highway rating of 21/29 mpg (11.2-8.1 L/100 km) with the manual and 22/29 mpg (10.7-8.1 L/100 km) with the S-tronic DCT.

By comparison, GM’s turbocharged 2.0L Ecotec 4-cyl., also with DGI, in the Pontiac Solstice GXP, Saturn Sky Red Line and European Opel GT roadsters is more powerful at 260 hp and 260 lb.-ft. (353 Nm), but less smooth and refined.

The Ecotec can launch the ’08 Chevrolet HHR SS, which weighs about the same as Audi’s A3, to 60 mph in 6.3 seconds, while delivering the same fuel economy with a 5-speed manual. Opting for the conventional 4-speed automatic, however, lowers the efficiency to 19/28 mpg (12.4-8.4 L/100 km).

In an ’08 Audi A4 sedan with front-wheel-drive, the 2.0 TFSI delivers an impressive 20 mpg (11.8 L/100 km) city and 31 mpg (7.6 L/100 km) highway through the standard 6-speed manual. The least-efficient Quattro all-wheel-drive/Tiptronic automatic combination serves up 19/27 mpg (12.4-8.7 L/100 km), according to the EPA.

The A4’s natural competitor, BMW’s 3.0L, 6-cyl. 328i, ranges from 17-19 mpg (13.8-12.4 L/100 km) in the city and 25-28 mpg (9.4-8.4 L/100 km) on the highway, with Volvo’s 5-cyl. S40 serving up about the same.

Derived from VW/Audi’s DOHC, naturally aspirated FSI 4-cyl. family, the 2.0L turbocharged version utilizes a cast-iron block for high strength and lower noise, yet boasts state-of-the-art electronic engine management, drive-by-wire throttle control, mapped ignition curves with cylinder-selective ignition and adaptive knock control.

Its development began in 2001, well before the first non-turbo derivative reached production in Europe in 2002.

Other applications of this versatile family, ranging from 1.8L to 2.0L and 125 hp to 265 hp, power various VW and Audi products all over the world.

In addition to its DGI, high-compression-ratio combustion system and integrated turbocharger module, key mechanical differences distinguishing the TSFI engine from its normally aspirated cousins include a specific cylinder head, pistons and balance shaft, as well as newly developed lubrication and cooling systems.

Audi engineers say their key development goals for it were “outstanding low-end torque, superior fuel economy and a high degree of functional integration of components and subassemblies.”

As in other DGI engines, injecting fuel directly into the cylinders enables a high compression ratio for improved combustion and thermal efficiency. The resulting boost in low-end torque is a major advantage over small-displacement turbocharged engines with conventional port injection.

Given this particular engine’s lofty 10.5:1 compression ratio, Audi recommends but, thankfully, does not require high-octane premium fuel. It will operate safely and effectively on lower-octane grades, but with somewhat reduced performance and efficiency.

Testing the 2.0 TSFI in the ’08 A3, Ward’s editors praised its excellent, lag-free throttle response and unusually broad torque band that delivers nearly all of its 207 lb.-ft. of peak torque from just off idle up to just shy of redline.

Audi engineers point out the TFSI’s integrated-exhaust-manifold design, tumble flaps in its intake track and the operation of its BorgWarner Inc. variable-nozzle turbocharger are major contributors to the highly satisfying feeling of instant thrust.

“The 2.0L TFSI combines the advantages of direct injection with the dynamic characteristics of turbocharging,” says Marc Trahan, director of technical service and aftersales for Audi of America Inc. “The combination of those two technologies – which Audi applied first with direct-injected turbocharged diesels in 1989 – provides high power and torque from a very compact and fuel-efficient engine.”

Will this engine continue to proliferate and, in some cases replace larger V-6s, as corporate average fuel economy requirements toughen in future years?

“Yes,” Trahan says. “The strategy of downsizing – providing the same or better power and torque with smaller-displacement engines – and ‘downspeeding’ – moving the torque curve lower in the rev range and using longer gear ratios to let the engine rev lower at a given vehicle speed – will be seen more and more.”

As good as it already is, will further gains in performance and/or fuel economy be realized with the next generation of this engine?

“Of course,” he says, noting the version in the all-new ’09 A4 benefits from optimized combustion and friction characteristics, along with improved hardware and software features. A new 2-stage Audi valvelift system (AVS), in addition to variable-valve timing, is particularly helpful in improving performance.

Audi confirms this next-generation 2.0 TFSI in the new A4 pumps out 211 hp and a whopping 258 lb.-ft. (358 Nm) of torque, while delivering approximately 15% better fuel economy, depending on the engine and drivetrain combination.

A bit farther down the road, still-higher output is both possible and likely, Audi engineers say.

Among other gains, injection pressures potentially could increase to as much as 2,900 psi (200 bar), twice the 2008 system’s level, which could result in peak outputs approaching 270 hp and 300 lb.-ft. (407 Nm).

A special aluminum-block variant used in low-volume Audi S models in Europe already approaches those numbers, they add.

However, higher-volume VW/Audi FSI and TFSI 4-cyls. will continue with the somewhat heavier cast-iron block due to its lower cost, better acoustic characteristics and ability to reliably deal with high-boost levels.

Despite the wide variety of gasoline quality around the world, Audi aims to incorporate DGI on all of its U.S. engines by next year and on all global variants by 2011. If so, that should make high-pressure fuel pump and injector suppliers Robert Bosch GmbH, Hitachi Ltd. and Siemens VDO, now Continental AG, very happy.

As high-fuel-efficiency/low-carbon-dioxide requirements and customer demand continue to grow around the globe, the industry will have little choice but to incorporate DGI and turbocharging across the board in increasing numbers to enable small engines to effectively replace larger, heavier and less-efficient powerplants.

Audi and VW, at the leading edge of this trend, can be expected to earn many more awards and recognitions for its future efforts with TFSI.