There is now unanimous support for a sustainable future for transport, and it is rightly recognized that electric vehicles (EVs) will play a key role in enabling this transformation. However, we also need to remember that there is no single solution to sustainable transportation. While all parts of the world are moving in the same direction, they need to be able to use the solutions that best suit their markets.
For years, policymakers have been trying to use legislative power to effect a radical transformation of the internal combustion engine (ICE). These include the EU narrowing its ban on new ICE from 2035 and the Glasgow Declaration at COP26 committing to end global ICE sales by 2040.
Legislation can influence the direction of change, but ultimately it is consumer demand that drives the pace of change. The market shows persistent demand for internal combustion engines.
Hybrids are on the rise
Take the European new car market, for example, which is one of the markets with the strongest legislation to phase out ICE: nevertheless, registrations of ICE-powered hybrid cars increased by 12.6% in March, while registrations of pure electric cars fell by 11.3% in the same period . In some markets, such as South America, demand for internal combustion engines remains overwhelming: of the 3.1 million new passenger cars sold in the region in 2023, only 90,000 will be electric, or about 3%.
In addition to strong demand for internal combustion engines, they are also key to the large-scale deployment of key sustainable fuel technologies such as synthetic e-fuels or green hydrogen. The successful deployment of new fuels is a crucial priority for some regions, and auto industry leaders such as Luca de Meo, CEO of Groupe Renault and president of the European Automobile Manufacturers Association, believe that if Europe hopes to achieve hydrogen If it can lead, then it should become a major European project.
McKinsey estimates that investment in hydrogen alone will reach $320 billion by 2030, with annual investment in other sustainable fuel categories averaging $51 billion. For use in transportation and mobility, these zero- or low-emission fuels will require next-generation internal combustion engine powertrains. By using these fuels, hybrids and internal combustion engine vehicles can achieve nearly the same carbon footprint as electric vehicles from cradle to grave.
Internal combustion engines have a strong track record in leveraging sustainable alternative fuels. In fact, this is why the internal combustion engine continues to play a dominant role in some markets, including Brazil, where clean bioethanol-powered combustion engines account for more than 80% of new car sales in the country. Bioethanol, flex fuels and other sustainable fuels have become a fixture in many economies and their adoption will grow further as a key component of various national sustainability roadmaps. For example, India plans to introduce a new 20% bioethanol fuel standard next year.
Electric vehicle adoption peak
As a result, some industry leaders believe that internal combustion engine vehicles will dominate within decades, with Toyota Chairman Akio Toyoda predicting that global EV adoption will peak at just 30%. In my opinion, S&P provided a more accurate long-term estimate of EV adoption in 2019, when the company predicted that by 2040, 50% of all new passenger and light vehicles sold globally will be EVs .
Whatever its exact market share, the basic point is that the internal combustion engine – especially with the adoption of low-carbon technologies and alternative fuels – will remain an important part of the automotive market for a long time to come.
Awareness about the resilience of internal combustion engines is spreading throughout the automotive supply chain, with many in the industry quietly abandoning previous commitments to go all-electric within the next five to 10 years. Despite the significant regulatory and investment incentives introduced by the Glasgow Declaration, supply chains still need to respond to demand – and the reality is that demand for internal combustion engines is not falling as many predicted.
Electric vehicles are an excellent mobility option in densely populated urban environments such as the EU and China, which helps explain why 85% of new electric vehicles are sold in these markets. However, consumer demand for internal combustion engines remains strong in countries in the Southern Hemisphere. As regional demand continues to grow, major industries such as agriculture, heavy transportation and energy production still rely heavily on internal combustion engines.
work together
When considering the future importance of the internal combustion engine, we should also remember that mobility is about more than just passenger cars. It is estimated that there are more than 300 million trucks and buses in the world, the majority of which use internal combustion engines. These vehicles represent a large capital outlay for their owners and will last for decades. The large-scale introduction of flexible fuels into the existing vehicle mix and the retrofitting of internal combustion engines with alternative fuel systems will have a transformative impact on the world’s journey to sustainable mobility.
Investment and adoption of different mobility solutions will be driven in part by geography and geopolitics. For example, China may have an overwhelming raw material advantage in electric vehicle production, while other regions have other resources, such as gas and oil fields in the Middle East, or a larger car production network in Europe. In addition to different regions having their own unique needs, they also have their own unique advantages in the services they provide to the global automotive supply chain.
At the heart of the transition to sustainable mobility is continuous innovation driven by open and realistic thinking. We should not think of this shift as a race between different solutions, but rather as these solutions working together to create new paths to a more sustainable future and power tomorrow.
Patrice Haettel is CEO of HORSE, a global leader in innovative and low-emission powertrain solutions headquartered in Madrid, Spain.
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