French car giant PSA Peugeot Citroen believes that it can put an air-powered car on the road by 2016, the Daily Mail reported.

Its scientists say it will knock 45 percent off fuel bills for an average motorist, and when driving in towns and cities costs could be slashed by as much as 80 percent because the car will be running on air for four-fifths of the time.

The system works by using a normal internal combustion engine, special hydraulics and an adapted gearbox along with compressed air cylinders that store and release energy. This enables it to run on petrol or air, or a combination of the two.

Air power would be used solely for city use, automatically activated below 43mph and available for ‘60 to 80 percent of the time in city driving’. By 2020, the cars could be achieving an average of 117 miles a gallon, the company predicts.

The air compression system can re-use all the energy normally lost when slowing down and braking. The motor and a pump are in the engine bay, fed by a compressed air tank underneath the car, running parallel to the exhaust.

The revolutionary new ‘Hybrid Air’ engine system – the first to combine petrol with compressed air – is a breakthrough for hybrid cars because expensive batteries will no longer be needed.

Cars fitted with Hybrid Air will be about 1,000 pounds cheaper to buy than current hybrid models.

For more than two years, 100 elite scientists and engineers have been working on the air-powered car in top-secret conditions at Peugeot’s research and development centre at Velizy, just south of Paris.

Hybrid Air is the centrepiece of Peugeot chief executive Philippe Varin’s efforts to restore the fortunes of the historic car maker.

The revolutionary system will be able to be installed on any normal family car without altering its external shape or size or reducing the boot size, provided the spare wheel is not stored there.