The new high-efficiency 1.5-liter engine comes with a brake thermal efficiency of 43 percent—the world’s highest thermally efficient engine. This figure easily beats Toyota’s Dynamic Force powertrains and even Mazda’s revolutionary Skyactiv-X.

The Xiaoyun engine packs a lot of technological advancements such as a high compression ratio of 15.5:1 (by comparison, the Skyactiv-G engine has a 14:1 compression ratio), an increase bore to stroke ratio, Exhaust Gas Recirculation (EGR), and an Atkinson cycle for improved combustion. Moreover, it contains a series of friction-reducing measures and an engine control system that’s prioritized for fuel efficiency.

For the first time ever, they have implemented split cooling technology for an engine. Through on-demand cylinder head and cylinder block temperature measurements, this enables precise and accurate cooling for the engine to reach optimal running temperatures. By mitigating heating losses, this shortens the length of warming up the engine after a cold start by 15 to 20 percent, reducing fuel consumption and CO2 emissions during the process.

BYD’s new engine takes full advantage of electrification as well. It removes the traditional front-engine accessory drive—belts and all—further reducing wear-and-tear, and improving efficiency.

As efficient as it is, BYD has also worked to dramatically improve the NVH performance. They’ve done so by optimizing the designs for the crankshaft, bearings, cylinder block, intake manifold, oil pan, timing cover, cylinder head cover, and other components of the plug-in hybrid system.

The announcement of the high-efficiency Xiaoyun engine is in line with the Chinese’s government’s New Energy Vehicle Industry Development Plan. By 2025, electrified vehicles are expected to account for 20 percent of new car sales in China. Among these, BYD says plug-in hybrids or PHEV shows the most potential.