Audi is investing in a startup, Paris-based Global Bioenergies, that says it can make cheap gasoline from sugar and other renewable sources. The strategic partnership includes stock options and an unspecified amount of funding.

As with conventional biofuel production, Global Bioenergies technology uses microӧrganisms to ferment sugars to produce fuel. But its process eliminates the second most costly part of producing biofuels—the energy-intensive distillation step. And by making gasoline instead of making ethanol, the startup skirts a major problem hampering growth in biofuels—the fact that the market for ethanol is saturated.