The growing need for efficient vehicles has led many researchers to explore various ways to utilize waste heat from the Internal Combustion Engine (ICE) to improve vehicle fuel economy. Past efforts in Waste Heat Recovery (WHR) have focused primarily on recovering waste heat from Conventional Vehicles (CV), which dissipate more than two-thirds of the fuel energy as waste heat. In general, WHR has always been considered as a secondary component to the vehicle powertrain and as a result it has had little success, particularly in light-duty vehicles. This investigation explores WHR from a broader perspective to better understand the possibilities and limits of WHR from CVs to future highly hybridized vehicles. Fuel energy distribution in the ICE is used to evaluate the sources of waste heat and identify exhaust energy recovery as the most promising method for improving ICE thermal efficiency. Fundamental analysis of conventional and hybrid powertrain design is used to investigate how they impact the availability of exhaust energy from the ICE. Models and simulations of several engines and vehicles are used to validate the theory presented for effective WHR from light-duty vehicles. The analysis focuses on how available exhaust energy changes for different vehicles, how it varies with drive cycles, and how the induced back pressure from an exhaust energy recovery system affects ICE performance. The results indicate that effective WHR is difficult to achieve in light-duty conventional vehicles, but is viable in a highly hybridized vehicles, where ICE thermal efficiency can be increased by at least 15 percent over various drive cycles.