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The goal of hydrogen engine research is to achieve highest possible efficiency with low NOx emissions. This is necessary for the hydrogen car to remain competitive with the ever-improving efficiency of conventional fuel's use, to take advantage of the increased availability of hydrogen distribution for fuel cells and to achieve better range than battery electric vehicles. This paper examines the special problems of hydrogen engine combustion and ways to improve efficiency. Central to this are the effects of compression ratio (CR) and lambda (excess air ratio) and ignition system. The results demonstrate highest indicated thermal efficiency at ultra lean condition of lambda ≻ 2 and with central ignition. This need for this lean mixture is partly explained by the higher heat transfer losses.