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A major challenge for combustion engine development is to optimize the engine for improved fuel economy, reduce greenhouse gases. Stringent CAFÉ and emission norms require the customer to pay higher capital on vehicles. To offset the cost of ownership- cheaper and alternative energy sources are being explored. Ethanol blend with regular Gasoline, and CNG are such alternative fuels. Reducing the consumption of Gasoline also helps India’s dependence on import of crude oil. The study was carried on turbo-charged gasoline direct injection engine. The effect of ethanol on engine and vehicle performance is estimated and simulated numerically. The work is split into three stages: first the base 1D engine performance model was calibrated to match the experimental data. In parallel, vehicle level Simulink model was built and calibrated to match the NEDC cycle performance.