The stinky, steaming air that escapes from a car’s tailpipe could help us use less gas.

Researchers are competing to meet a challenge from the U.S. Department of Energy: Improve fuel economy 10 percent by converting wasted exhaust heat into energy that can help power the vehicle.

General Motors Corp. is close to reaching the goal, as is a BMW AG supplier working with Ohio State University. Their research into thermoelectrics — the science of using temperature differences to create electricity — couldn’t come at a better time as high gas prices accelerate efforts to make vehicles as efficient as possible.

GM researcher Jihui Yang said a metal-plated device that surrounds an exhaust pipe could increase fuel economy in a Chevrolet Suburban by about 5 percent, a 1-mile-per-gallon improvement that would be even greater in a smaller vehicle.

Reaching the goal of a 10 percent improvement would save more than 100 million gallons of fuel per year in GM vehicles in the U.S. alone.

“The take-home message here is: It’s a big deal,” Yang said.

The DOE, which is partially funding the auto industry research, helped develop a thermoelectric generator for a heavy duty diesel truck and tested it for the equivalent of 550,000 miles about 12 years ago.

John Fairbanks, the department’s thermoelectrics technology development manager, said the success of that generator justified the competitive search in 2004 for a device that could augment or replace a vehicle’s alternator. Three teams were selected to participate in the program, with GM and thermoelectrics manufacturer BSST separately working on cars and a team from Michigan State University focusing on heavy-duty trucks.

Fairbanks said thermoelectric generators should be on the verge of production in about three years.

“It’s probably the biggest impact in the shortest time that I can think of,” he said.

The technology is similar to what NASA uses to power deep space probes, a perk being it doesn’t seem to be susceptible to wear. Probes have used a thermoelectric setup for about 30 years.

Thermoelectric devices can work in two ways — using electricity to provide heating or cooling, or using temperature differences to create electricity.

The second method is Yang’s focus, and for good reason.

In an internal combustion engine, only about a quarter of the total energy from gasoline is used to actually turn the wheels, while 40 percent is lost in exhaust heat and 30 percent is lost through cooling the engine. That means about 70 percent of the available energy is wasted, according to GM.

“If I can use some of that heat energy and convert it to electricity, you can improve the overall efficiency,” Yang said.

A Suburban produces 15 kilowatts of exhaust heat energy during city driving, which is enough to power three or four air conditioners simultaneously.

But it’s not possible to harness all the exhaust heat a vehicle produces, so when the Suburban is cruising between 50 and 60 mph, the generator can produce about 800 watts of power, Yang said. That electricity could go to accessories such as a GPS device, DVD player, radio and possibly the vehicle’s water pumps.

Yang’s prototype device is to be tested in a Suburban next year. A similar prototype created by Ohio State scientists and BSST should be tested in a BMW in 2009.

The thermoelectric generator works when one side of its metallic material is heated, and excited electrons move to the cold side. The movement creates a current, which electrodes collect and convert to electricity.

While it’s not clear how much the device would add to the price of a vehicle, the whole point of the research is to make it cost-effective, Yang said.

“There are several other steps that are required to commercialize the material, but we’re cautiously optimistic that these steps can be carried out successfully,” said Lon Bell, president of BSST, a subsidiary of Northville-based thermoelectrics supplier Amerigon Inc.

BSST also is working with Ford Motor Co. to develop climate control systems based on thermoelectrics.

Ford wants a system that would target a person’s extremities when it’s cold or the back of the neck in summer heat, rather than blow out a lot of air to change the temperature of the entire vehicle.

“We think we can make people feel cooler more quickly, feel comfortable more quickly, and that will translate into less power in the central AC system,” said Clay Maranville, a Ford senior research scientist.

Honda Motor Co. also has supported university research into thermoelectrics, but a spokesman said the automaker doesn’t have its own research program.

AM General, which produces the Hummer H2 for General Motors Corp., hopes to begin making wheelchair-accessible transit vehicles for a Michigan company at its plant in Mishawaka in 2010.

AM General is not expected to hire any new workers to build the paratransit vehicles, company spokesman Craig Mac Nab said Monday.

“It’s probably best thought of as work for people we’ve already got. It’s a little too soon to say what the long-term implications will be,” Mac Nab said. “It’s very good news.”

The news follows a GM announcement last month that several outside parties are interested in buying its Hummer brand.

The new vehicle includes an automatic ramp that will provide quick and easy access for individuals who use wheelchairs, motorized scooters and other mobility devices.

The vehicles, which will be made for commercial and municipal paratransit markets in the United States and Canada, will be built for Troy, Mich.-based Vehicle Production Group LLC. The company hopes to begin production during the first quarter of 2010, said Mark Hogan VPG chief executive officer.

“It’s a brand new vehicle and the typical product development time for a new vehicle is 24 to 36 months. We’re going to do it in a little bit faster than 24 months,” he said.

The company already has reservations for 3,500 units without any aggressive marketing, Hogan said.

“Suffice to say we think we think we’ll produce more than the 3,500. We’ve got pretty strong confidence this vehicle will be in high demand,” he said.

The announcement was made after VPG received $160 million in financing for the project.