50% reduction of CO2 and fuel consumption have been achieved with the newly developed gasoline engine for the Toyota Hybrid System. This is achieved due to the combination of electric motors and the internal combustion engine which is optimized in the size, swept volume and heat cycle. By delaying the intake valve close timing a high expansion ratio (13.5:1) cycle has been realized. Electricmotor assist enable to cut the maximum engine speed, and friction loss. A best fuel consumption figure better than 230 g/kWh has been achieved. Elimination of lightload firing, motor assisted quick start and improvement of catalyst warm up makes to achieve the clean emission level such as 1/10 of Japanese `78 regulation limit. 10 refs., 16 figs., 1 tab.