Mean, green racing machines: £10m prize for the inventor of the world's fastest eco car

This year, the future of the motorcar may be decided not in the BMW boardroom, nor on the Fiat factory floor, but around the kitchen table of a home inventor with a very big idea. Such is the democratising power of the Automotive X Prize, or AXP, which will offer a $10m (£5.1m) pot and a manufacturing deal to whoever can design and build the world's fastest car that will do 100 miles per gallon or better and be suitable for mass production.

"The beauty of a prize like this is that you can never say who's going to win," says Cristin Lindsay, one of AXP's senior directors. "When Charles Lindbergh flew across the Atlantic to win the Orteig Prize, he was the underdog. Nobody believed he could win with only the backing of a few people in St Louis."

The competition and its rules won't be formally announced until March, yet already more than 50 teams from eight countries are committed to taking part. Some of their designs, from the Knight Rider styling of the Avion, which its creators claim is "the lightest car made in America", to the ladybird-like three-wheeler of German team Twike, are already in the public domain – though modifications may be required once the rules are clarified.

This early enthusiasm is down to the pedigree of the prize, funded by the not-for-profit X Prize Foundation. Established in 1996 with a mission to encourage "revolution through competition" for the benefit of humanity, the foundation is modelled on the Orteig Prize, which gave the fledgling aviation industry the take-off it needed, and which Lindbergh won in 1927.

In 2004, the Ansari X Prize of $10m was awarded to the aerospace engineer Burt Rutan after he designed a small, re-useable spacecraft that would advance the possibility of low-cost, private spaceflight. Originally financed by Microsoft co-founder Paul Allen, Rutan is now working with the Virgin boss Sir Richard Branson on a viable space tourism programme.

Now under way is the Archon X Prize competition, intended to transform human genome sequencing by offering $10m to the first team that can cheaply sequence 100 anonymous human genomes in 10 days. The Lunar X Prize competition, sponsored by Google, was launched in September last year, with the aim of landing an unmanned private spacecraft on the Moon.

The potential in the more down-to-earth Automotive X Prize is huge. It will have an instant and substantial impact on millions of car-buyers and, the organisers hope, on the environment. The plan is to transform the market into one that demands – and expects – efficient, environmentally sound cars.

The last time the automotive industry saw such a radical shake-up was when Henry Ford began mass-producing the Model T, a car that could achieve 25mpg. It was taken out of production the same year Lindbergh made his Atlantic crossing. Today, the average US driver gets only a miserly 20.2mpg from their vehicle. The UK average is a slightly better 32mpg, but that's little consolation in the context of accelerating climate change.

"After the success of the Ansari X Prize, the priority for the foundation was to focus on the automotive industry, with the goal of slimming our addiction to oil and the effects of climate change," Cristin Lindsay says.

Hitting the 100mpg target is just the start. The final part of the competition, in 2009 and 2010, will be a long-distance road race taking in about 10 major US cities, giving the public a good look at the cars they might be driving in years to come. The designs will be tested in all conditions and climates the US can throw at them, from the inner city to the mountains. They will all be fitted with "black boxes" allowing web-users to follow their progress and monitor efficiency. The 100mpg car with the fastest overall race time will win the $10m.

But before the prototypes even make it to the starting line, they'll have to meet four vital criteria: "The teams have to prove that their designs are safe, affordable, backed by a business plan to produce 10,000 vehicles per year, and have all the features a consumer expects from a car," Lindsay says. Those features are likely to include at least four seats, air conditioning and a stereo. "The only requirement we place on fuel is that the teams prove that their fuel or energy source is available and widely acceptable to consumers today. That's one of the reasons we don't outlaw gasoline-powered vehicles. If they can meet the fuel efficiency target and emissions standards, they're clean enough."

As well as the 100mpg target, entrants have to design a vehicle that emits less than 200g of greenhouse gas per mile. The Toyota Prius and its fellow celebrity hybrids won't necessarily make the cut. And, because they tend to derive their energy from the fossil fuel-hungry national grid, electric vehicles aren't as saintly as they are billed, either. So the AXP organisers have calculated a "well to wheels" emissions equivalent that demands such cars hit not 100mpg, but 133mpg, to qualify.

Petrol may not be forbidden, but that hasn't stopped some teams experimenting with rather more outlandish fuels. One French-US team, Zero-Pollution Vehicles, uses compressed air technology (CAT) to power its car, the MiniCAT. And they are no outsiders – India's Tata Motors, which this month revealed a car it intends to sell for £1,300, has signed up to use the CAT technology.

For those who like their cars a little different, the AXP boasts a second "alternative class" for cars that stick more faithfully to the Hollywood version of the future. The sci-fi streamlining of the Typ-1 three-wheeler, developed by the Aptera company, means that it requires just a tiny 50kw electric motor to break the speed limit. Aptera is based in – where else? – California.

Another potential fuel source is hydrogen, which, by the time of the competition's final stages, may be considered a viable fuel. So says Dr John Davis, the director of Dragonfly, one of two British teams already developing an AXP prototype. "The organisers don't want to award the prize to a car that requires fuel from a single station somewhere in the depths of Dakota," Davis says. "But the possibility of home hydrogen generation is real, and there may be a hydrogen supply infrastructure in place sometime in the near future."

The crucial element of Davis's design is not the fuel source, but the powertrain: those components that turn the fuel into movement. Luckily, Dragonfly – a team composed of skilled Formula One veterans – had already been working on a high-mileage car concept for some time when the AXP came along.

"My particular project doesn't need a specific prime source of energy," Davis says. "It doesn't matter whether it's diesel, petrol or hydrogen. The key thing is the efficient use of it: energy storage and energy control. The intention is to put our powertrain system into a standard car. It's a mechanical hybrid, which stores energy in a flywheel rather than a battery, and has a patented gearbox configuration."

Davis is convinced that a competition like AXP is the best way to force change in the habits of both motorists and the big car-makers. "People are still happy to squander fuel – you only need look at the SUV market to see that people aren't yet buying cars based on their miles per gallon. Until the price of petrol hits £2 or £3 per litre, the incentive for the car companies to develop something new just doesn't exist. So you can either wait for that to happen, or you can turn to people who like to do things for the sake of it and say, 'You go off and prove what can be done.'"

Cristin Lindsay thinks that, as the competition rules are finalised, some of the major industry players will enter the race. "Those who have come forward early are primarily innovators who wouldn't normally work on building an efficient car. The more standard industry players will come forward after we have officially launched."

Dragonfly's John Davis adds: "One day there will be nuclear-powered cars that will run for ever and cost nothin g. But if we wait for the perfect energy system, then nothing will happen.

"These cars will only be an interim measure, but let's assume that the petrol engine has a few years to go. It shouldn't be doing less miles per gallon than a Model T Ford. The objective of the AXP is to make things happen. The organisers don't really care whether the winner is the one who gets the cars out there. If cars increase their miles per gallon, the winner will be the environment."

See www.auto.xprize.org.Read Tim Walker's blog at www.independent.co.uk/wildweb

APTERA TYP-1

The all-electric Typ-1 is so light that it needs only a 50kW (67bhp) motor to race. Aptera claims it can achieve the equivalent of 340mpg. Classed as a motorcycle, it is in the "alternative" category of the AXP competition.

VELOZZI

Velozzi's electric supercar has an on-board battery charger that runs on ethanol, methanol, biodiesel or petrol. The race hybrid can outrun a Lamborghini Gallardo, yet does between 100 and 200mpg. You can plug it in to recharge – using green electricity, of course.

FUEL VAPOR 2

Capable of 0-60mph in five seconds, the bullet-shaped Fuel Vapor 2's highly efficient engine is powered by fuel vapour rather than liquid fuel. The Canadian-built car can currently hit a very healthy 92mpg, but will have to add another 8mpg to its tally to qualify for the prize.

COMPRESSED AIR VEHICLESFrench Company MDI's Minicat runs on compressed air – a technology that could transform the motoring industry. As with electric vehicles, this creates zero pollution at point of use, but draws on the electricity grid to recharge.

TANGO

Commuter Cars of Washington state claims its box-like, one-seater electric car, the Tango, can squeeze between gaps in traffic jams with the ease of a motorcycle, beating congestion and shrinking its carbon footprint.

ZAP

ZAP's range of electric cars are already available in more than 75 countries. The sportiest of the bunch is the Alias three-wheeler, which is classified as a motorbike and can hit a top speed of 156mph.