Correct. 85% Ethanol, 15% gasoline to help with cold-weather starting. (Ethanol has a lower vapor pressure than gasoline, and a higher heat of vaporization—meaning that it doesn’t mix as well with air when the engine is cold. That can increase emissions on engine startup.) States such as California already blend ethanol with gasoline, but in a smaller proportion (up to 10%) as an oxygenating additive. Ethanol, unlike gasoline, contains oxygen, and fuel with the oxygen-bearing ethanol burns more completely, reducing some emissions...which is why California and others use it.

No engine modifications are necessary when burning ethanol as an additive. Engines in Flexible Fuel Vehicles that burn E85 require some minor modifications such as redesigned oxygen sensors and different seals in the fuel system. Because a flex fuel vehicle can run either on conventional gasoline, E85 or any combination of the two, the fuel injection system needs to be able to figure out what it is burning, and adjust the injection and timing accordingly. Hence the sensors.

Ethanol contains about one-third less energy per gallon than gasoline, so you need to use more of it to produce comparable power from the engine as when the engine is using gasoline. (Which is one reason you need an injection system that adjusts.) Result: fewer miles per gallon. Hence, another modification manufacturers can make for an E85 vehicle is to put in a bigger fuel tank.