Range Extended Electric Vehicles (REEVs) are gaining popularity due to their simplicity, reduced emissions and fuel consumption when compared to parallel or series/parallel hybrid vehicles. The range extender internal combustion engine (ICE) can be optimised to a number of steady state points which offers significant improvement in overall exhaust emissions. One of the key challenges in such vehicles is to reduce the overall powertrain costs, and OEMs providing REEVs such as the BMW i3 have included the range extender as an optional extra due to increasing costs on the overall vehicle price.This paper discusses the development of a low cost Auxiliary Power Unit (APU) of c.25 kW for a range extender application utilising a 624 cc two cylinder automotive gasoline engine. Changes to the base engine are limited to those required for range extender development purposes and include prototype control system, electronic throttle, redesigned manifolds and calibration on European grade fuel.Modifications to the intake/exhaust manifolds were initially modelled using GT-Power and validated by engine tests. These modifications improved the engine torque in the APU planned operating range, and the new control system achieved improved BSFC up to 4000 RPM with European grade fuel. The use of European grade fuel also allowed operation at lambda 1 across a marginally wider portion of the engine operating range to improve fuel economy. Further modifications include replacing the mechanical coolant pump with an electric pump to reduce engine warmup duration and improve fuel economy.