The best near-term solution still comes from making the internal combustion engine burn cleaner and more efficiently, says Charles Territo, a spokesman for the Alliance of Automobile Manufacturers. "All manufacturers are working on new ways to get more miles out of a gallon of gasoline from an internal combustion engine," he says.

For instance, Ford has its EcoBoost system, which uses a turbocharger and direct fuel injection to cut the engine size in half, reducing its weight and improving fuel efficiency by roughly 20 percent. General Motors is employing a variety of strategies, including direct injection, which helped the 2010 Chevrolet Equinox SUV get rated at 32 miles per gallon.

Neither GM nor Ford would comment on Chrysler's MultiAir, but analysts praise the design. "I think MultiAir is a breakthrough technology," says Michael Omotoso, senior manager of global powertrain for J.D. Power and Associates. He says the design will help Chrysler not only keep up with Ford and GM but possibly pull ahead on fuel economy while maintaining profitability.

Another analyst, John McElroy, predicts that Chrysler will have MultiAir on every one of its gas engines within five years. McElroy, host of the webcast Autoline Daily, has tracked the auto industry for over 30 years. He says the technology could be far cheaper than hybrids, which involve two separate power systems and an expensive battery pack, and diesels, which require emission control systems that average between $3,000 and $4,000 for a six- or eight-cylinder diesel engine. By not needing any additional costly moving parts, MultiAir could also be cheaper than Ford's EcoBoost, which uses expensive turbochargers, McElroy says. On the 2011 Ford Explorer, EcoBoost is offered as a $995 option.

John German, program director of the International Council on Clean Transportation, is skeptical of Chrysler's claims that MultiAir can improve fuel economy by 25 percent. He estimates that it's closer to 10 percent to 15 percent, which would be less than what hybrids achieve. Even so, he thinks MultiAir is a "clever" system and applauds Fiat for answering the long-daunting question of how to control valves electronically.

Though Chrysler's Cappa is optimistic about MultiAir, he acknowledges that it won't be enough on its own for the company to meet the new fuel economy standards. "Transmissions, vehicle weight, and a number of other factors will all play significant roles in achieving the new standards," he says.