Lawrence Livermore, Sandia Livermore and Los Alamos National Laboratories have a joint project to develop an optimized hydrogen fueled engine for series hybrid automobiles. The major divisions of responsibility are: system analysis, engine design, and kinetics modeling by LLNL; performance and emission testing, and friction reduction by SNL; computational fluid mechanics and combustion modeling by LANL. This project is a component of the Department of Energy, Office of Utility Technology, National Hydrogen Program. We report here on the progress on system analysis and preliminary engine testing. We have done system studies of series hybrid automobiles that approach the PNGV design goal of 34 km/liter (80 mpg), for 384 km (240 mi) and 608 km (380 mi) ranges. Our results indicate that such a vehicle appears feasible using an optimized hydrogen engine. The impact of various on-board storage options on fuel economy are evaluated.Initial experiments with neat hydrogen and an available engine at Sandia Combustion Research Facility demonstrated NOx emissions of 10 to 20 ppm for an equivalence ratio of 0.4 and about 500 ppm for an equivalence ratio of 0.5. Hybrid vehicle simulation studies indicate that exhaust NOx concentrations must be less than 180 ppm to meet the 0.2 g/mile California Air Resources Board ULEV or Federal Tier II emissions regulations.Current experiments involve a first generation optimized hydrogen engine consisting of an in-house designed and fabricated cylinder head and an Onan single cylinder diesel block. This head currently features 14.8:1 compression ratio, dual ignition, water cooling, two valves and open quiescent combustion chamber to minimize heat transfer losses. Initial testing shows promise of achieving an indicated efficiency of 42 to 46% and emissions of less than 100 ppm NOx. Hydrocarbons and CO are to be measured, but are expected to be very low since their only source is engine lubricating oil. A successful friction reduction program on the Onan engine should result in a brake thermal efficiency in excess of 40% compared to today's gasoline engines of 32%. Preliminary engine test data on indicated efficiency, MBT timing and burn duration are reported. Based on system studies requirements, the next generation engine will have a displacement of about 2 liters and is projected to achieve 46% brake thermal efficiency with outputs of 15 kW for cruise and 40 kW for hill climb. The concept of the series hybrid includes on-off engine operation mode with all operation taking place at wide open throttle to minimize pumping losses.