From the demands on the development of cars the criteria for the development of engines are derived. It follows from the thermodynamic analysis that the Diesel engine has still a big development potential. In addition to the low fuel consumption it is well known for its low emissions and its multi-fuel ability. From a discussion of the fuel combustion and soot/NOx formation the research needed on the Diesel engine may be derived.Basic research on the Diesel engine is very complex and costly. Therefors in Europe it is carried out jointly by an association of European car manufacturers (Fiat, Peugeot SA, Renault, Volvo and Volkswagen). Following on initial investigation and modelling of the flow in the cylinder and the flame propagation a joint European project called IDEA (Integrated Diesel European Action) was started. These activities are also subsidized by the Commission of the European Communities and the National Swedish National Board for Industrial and Technical Development.The results of the research will support the design of more efficient engines and thus conserve energy resources and reduce harmful effects on the environment. It will also enable companies to reduce the time and costs in developing new engines and enable European industry to maintain its leadership in world Diesel technology.