A regular flex-fuel engine can operate on any blend of fuel between pure gasoline and E85. Flex-fuel engines have relatively low efficiency on E85 because the hardware is optimized for gasoline. If instead the engine is optimized for neat ethanol, the efficiency may be much higher, as demonstrated in this paper.The studied two-liter engine was modified with a much higher compression ratio than suitable for gasoline, two-stage turbocharging and direct injection with piezo-actuated outwards-opening injectors, a stratified combustion system and custom in-house control system. The research engine exhibited a wide-open throttle performance similar to that of a naturally aspirated v8, while offering a part-load efficiency comparable to a state-of-the-art two-liter naturally aspirated engine. NOx will be handled by a lean NOx trap.Combustion characteristics were compared between gasoline and neat ethanol. Particles numbers were about 15% from ethanol in comparison to those from gasoline at 2000 rpm, 2 bar BMEP and fuel consumption ~300 g/kWh (with numbers for ethanol converted to gasoline's heating value). The highest load was limited to 12 bar for gasoline due to knocking, but ethanol could be run at optimum ignition and with λ=1, up to at least 16 bar BMEP, where fuel consumption was 215 g/kW h, corresponding to 37% efficiency.