A private US foundation is offering a $25m award for the first mass-produced vehicle that offers a revolutionary jump in fuel efficiency. The California-based X Prize Foundation is still working out the rules and the goals for its competition, but it plans to offer a prize to any group that sells 10,000 vehicles capable of 250mpg.

Mark Goodstein, executive director of the foundation's automobile prize, said the guidelines pose several problems, such as just how to measure efficiency.

The foundation is working on the basis of two assumptions, Goodstein said. 'One is that the technology exists today to give us an order of magnitude improvement in efficiency, however you measure it. The second is that the prize ought to be defined by the market.' Goodstein said one set of suggested rules would encourage groups to offer modifications to existing vehicles that would increase their fuel economy to 200mpg and cost less than $10,000 per car or truck. That figure is almost 10 times greater than the average fuel economy of a vehicle sold in the US last year.

Previous vehicles that have managed that target, such as a 2002 Volkswagen AG experimental vehicle that reached 264 miles to the gallon, thanks to a one-cylinder diesel engine. Goodstein, a dotcom entrepreneur, said the foundation was close to signing a sponsor that would provide the $25m prize. While such a figure is relatively small for major carmakers, Goodstein said there could be other rewards for the team that wins, such as investment from venture capital firms or manufacturing contracts. He said he was still getting in contact with several groups, including carmakers, and had received mostly positive feedback.