An Ann Arbor company is playing a significant role in the effort of one favorite in competition for the $10 million Progressive Insurance Automotive X Prize, which kicked off today at Michigan International Speedway.

Raetech Corporation designed and assembled the internal-combustion engines used in two of the entries fielded by the Edison2 team, of Lynchburg, Va.

The X Prize is designed to inspire the creation of cars that will achieve fuel economy of 100 miles per gallon or the equivalent efficiency in electric vehicles.

The X Prize Foundation, which has also created competitions in aerospace and biogenetics, is sanctioning its first automotive event. As title sponsor, Progressive Insurance has put up the prize money.

More than two dozen teams participated in today’s unscored stage at MIS. Officials from Consumers Union, the publisher of Consumer Reports, monitored the cars as they went through a series of safety checks and inspections. On track exercises determined if the cars met acceptable levels of maneuverability, acceleration and braking.

Power sources in competing cars run the gamut from battery-powered electric to gasoline-burning internal combustion engines. A team from Colorado is using a gasoline engine supplemented with hydrogen.

The Edison2 Very Light Car is powered by the 250-cubic-centimeter engine that Raetech developed at its facility near the Ann Arbor airport.

Raetech president David Finch said his staff of eight to 10 engineers worked part-time on the project over the last year.

Design work included the development of a turbocharger for the Yamaha motorcycle engine that was chosen for use in the Very Light Car. The engine is fueled by E85 ethanol fuel.

“Where it’s most effective is very, very high-performance engines,” said Finch.

Edison2 founder Oliver Kuttner said the 750-pound Very Light Car has a number of patented innovations. For example, suspension components are mounted inside the wheels and weigh only 6.5 pounds.

Rights to the design hold tremendous financial potential, he said.

“I suspect it’s worth more than the X Prize,” Kuttner added.

Some entries are highly refined, with no expense spared, while others are ungainly home-built cars. Some look futuristic while others are merely modified conventional cars like the Ford Focus or Toyota Prius.

The competition take place in two classes. Mainstream-class cars must carry four passengers, have four wheels and be able to travel 200 miles. Alternative-class cars must carry two passengers and travel 100 miles.

After a second shakedown round May 6 and 7, competitive eliminations begin June 20.

After a break that starts June 29, cars return July 19 for final competition. An open-house will be scheduled in July.

Validation of finalists will be performed in August at the Environmental Protection Agency lab in Ann Arbor and at Argonne National Laboratory near Chicago.

The winners will be announced in September.

An opening ceremony is set for 10:30 a.m. tomorrow at the State Capitol, where Gov. Jennifer Granholm and officials of the Michigan Economic Development Corporation will welcome teams.