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I think just making the car lighter, more resilient, and more aerodynamic would help more than the small improvements they can make to engines. Is there a new technology that will give a 10% increase in efficiency made to an ICE engine? Was it in a car that was not also a Hybrid? Even in the lab? Lean burning engines have been around for a while now...
Make the body panels out of easily to replace plastic panels, including bumper covers. Make the frame stronger and stiffer (lots of known ways to do this) and also safer. Decrease drag and weight of the vehicle. It would be easier to repair, safer, and more efficient. People, like Amory Lovins from Rocky Mountain Institute, has been talking about this for a while. Then you could decrease the size of the engine if the car is lighter and save even more fuel.
Just a thought.
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