Internal combustion engine (ICE) fuel efficiency is a balance between good indicated efficiency and mechanical efficiency. High indicated efficiency is reached with a very diluted air/fuel-mixture and high load resulting in high peak cylinder pressure (PCP). On the other hand, high mechanical efficiency is obtained with very low peak cylinder pressure as the piston rings and bearings can be made with less friction. This paper presents studies of a combustion engine which consists of a two stage compression and expansion cycle. By splitting the engine into two different cycles, high-pressure (HP) and low-pressure (LP) cycles respectively, it is possible to reach high levels of both indicated and mechanical efficiency simultaneously. The HP cycle is designed similar to today's turbo-charged diesel engine but with an even higher boost pressure, resulting in high PCP. To cope with high PCP, the engine needs to be rigid. The usage of higher piston ring tension and larger bearings are examples of measures to cope with higher PCP. These measures will cost in terms of friction. Hence, mechanical efficiency is not as good as other engine concepts with lower PCP. The low-pressure cycle on the other hand, uses a design more similar to current naturally aspirated (NA) spark ignited (SI) engines, but designed for even lower PCP. Because of this, the engine does not need to be as rigidly designed and the overall friction levels will be much lower. By combining these two engine philosophies, a total engine concept with both high indicated and mechanical efficiencies can be achieved. Simulations show net indicated efficiency above 60% and a brake efficiency of 56%.