The new BAIC engine, an evolution of the 2.3L 4-cylinder turbocharged PFL gasoline from Saab, was designed, built, and tested with close collaboration between BAIC Motor Powertrain Co., Ltd (BMPC) and Southwest Research Institute (SwRI). The upgraded engine was intended to achieve low fuel consumption and a good balance with high performance and compliance with Euro 6 emissions regulation. Low fuel consumption was achieved primarily through utilizing cooled low pressure loop exhaust gas recirculation (LP-EGR) and dual independent cam phasers, improving intake and exhaust design, optimizing combustion chamber design, and minimizing mechanical friction losses. Cooled LP-EGR helped suppress engine knock and consequently increase compression ratio and improve thermal efficiency of the new engine. Dual independent cam phasers reduced engine pumping losses and helped elevate low-speed torque. A low-inertia and high-efficiency turbocharger was matched to recover waste heat and achieve desired engine performance. Moreover, reduced friction technologies were applied to piston, piston pin and ring pack, and bearings of engine balance shafts. A high-efficiency water pump was also applied to further improve mechanical efficiency. With applications of the aforementioned technologies the new BAIC engine achieved overall fuel consumption reduction by 10 – 11% and fuel economy improvement by up to 15% at high load conditions. Engine emissions were significantly reduced as well. The max brake thermal efficiency (BTE) of 37.4% was obtained. The new engine also output a torque level of 330Nm at 1400rpm and max torque of 350Nm.