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The question of whether increasing the fuel economy of light-duty natural gas fueled vehicles can improve their economic competitiveness in the U.S. market, and help the US Department of Energy meet stated goals for such vehicles is explored. Key trade-offs concerning costs, exhaust emissions and other issues are presented for a number of possible advanced engine designs. Projections of fuel economy improvements for a wide range of lean-burn engine technologies have been developed. It appears that compression ignition technologies can give the best potential fuel economy, but are less competitive for light-duty vehicles due to high engine cost. Lean-burn spark ignition technologies are more applicable to light-duty vehicles due to lower overall cost. Meeting Ultra-Low Emission Vehicle standards with efficient lean-burn natural gas engines is a key challenge.