NEW YORK (CNNMoney.com) - Engineers at BMW have created a new type of hybrid powertrain for cars. Instead of electricity, though, this system relies on steam power to boost the engine's performance and save fuel.

About 35 percent of the energy created when an engine burns gasoline is lost as heat, according to the book "The Isaac Newton School of Driving: Physics and Your Car," by Barry Parker.

BMW's Turbosteamer system relies on a heating unit that replaces the muffler. It heats water to temperatures up to 550 degrees. The resultant steam is then carried to what is essentially a small steam engine.

With much of its heat energy converted to motion in the engine, the cooler steam -- now about 150 to 200 degrees -- goes through a system that combines the steam's heat with heat from the car's regular cooling system.

That second system is used to operate another, lower temperature, motor that further boosts the car's power.

A more refined system may be ready for production in about 10 years, the company said.