With the average gallon of gas costing nearly $3.60, drivers likely want to make every ounce last. And yet, according to startup GMZ Energy, approximately 66% of the energy put in to a vehicle gets wasted as heat through the exhaust system.

Now, GMZ Energy is looking to save some of that energy – and save drivers some money. The Massachusetts startup says it is developing thermoelectric power-generation solutions that capture waste-heat and turn it back into usable electricity.

“In an automotive situation, based on all the modeling, we can actually improve the fuel efficiency of a car by a little over 1% and if you look at the fuel regulations … automotive companies both in Europe and the U.S. and Japan have to meet these stringent requirements to actually improve their fuel efficiency by 1% every year,” said GMZ Energy CEO Cheryl Diuguid.  “So the fact that our technology can provide them a pathway to do that is very intriguing.”

So far, GMZ Energy has raised $20 million in funding from investors including Kleiner Perkins Caufield & Byers, BP Alternative Energy, Energy Technology Ventures (a joint venture between GE, NRG Energy and ConocoPhillips) and Mitsui Global Investment.

The company has also received government funding, in part to fund the development of thermoelectric solutions for military vehicles.

“[T]o put this on a Bradley fighting vehicle – if you look at the statistics, it said that on average, the delivered cost of fuel for the U.S. military is $43 per gallon,” explained Diuguid. “The delivered cost of fuel in a combat zone is $800 a gallon. So they’re really looking at the technology to improve the fuel efficiency, and be able to not have so many people in the field having to transport the fuel.”

Diuguid said GMZ Energy will be delivering the final version of its thermoelectric product to the U.S. military later this summer.

Next Steps for GMZ Energy

Diuguid said the company is looking to raise more funding.

“That would be specifically to move to a commercial position … Because we have so many strategic partners across so many applications, there are lots of opportunities to get to the first revenue-generating opportunity,” said Diuguid. She explained that GMZ’s thermoelectric solutions can be used for boilers, manufacturing processes, diesel engines and more.

With that said, Diuguid said GMZ’s business model is surprisingly capital-efficient – which is attractive, she said, to both investors and potential customers.

“The attractive thing about our patented technology is we use industry-standard manufacturing equipment … The equipment we buy is off the shelf, so it’s not as capital-intensive as if you had to design the equipment, and it also results in our product being cost-effective,” said Diuguid.

Follow Gabrielle Karol on Twitter @GabrielleKarol