The Internal Combustion Engine Is Not Dead: Here’s Why

The internal combustion engine (ICE) has been a workhorse of the automotive industry for over a century, but recent advancements in electric vehicles (EVs) have led many to declare their imminent demise. However, despite the push for a greener future, reports of the internal combustion engine’s death have been greatly exaggerated. In fact, the automotive industry is now pumping the brakes on its all-in EV strategy due to stalled consumer demand, high production costs, and uncertain profitability. As automakers reconsider their approach, it’s becoming clear that the internal combustion engine still has a role to play in the future of transportation.

Automakers Backpedaling on EVs

Many of the world’s largest automakers, once bullish on electric vehicles, are rethinking their EV strategies. Ford, one of the industry leaders in electric vehicle development, has recently paused its plans to build an electric-powered SUV, three-row type, a decision that is expected to cost Ford $1.9 billion. This comes after Ford’s EV division, Model E, reported a loss of $2.5 billion in the first half of 2023 and forecasted even more significant losses by the end of the year.

Dodge faces similar challenges as it transitions from its iconic gas-powered Charger and Challenger models to electric successors. Despite ending the Charger and Challenger production to make way for EVs, Dodge found that 78% of Charger owners and 64% of Challenger owners are uninterested in buying an electric vehicle. This hesitation from loyal customers is causing Dodge’s parent company, Stellantis, to rethink its strategy, mainly as it reported a 40% decline in operating income for the year’s first half.

Volkswagen, another automaker heavily invested in the EV revolution, is also feeling the financial strain. Initially, the company announced plans to spend $193 billion on battery factories and EV-related infrastructure, aiming to make one in five of its models an EV by 2025. However, Volkswagen has recently announced that it may need to shut down plants in Germany due to financial difficulties, with CEO Oliver Blume acknowledging that the company’s financial situation is “agitated.”

The EV Dilemma

One of the biggest challenges automakers face in their push toward electrification is the economics of EV production. Jim Farley, Ford’s CEO, highlighted the core problem: “In the business we’ve been in for 120 years, the bigger the vehicle, the higher the margin. But it’s exactly the opposite for EVs.” Larger vehicles require bigger batteries, which increases production costs, but consumers are not willing to pay a premium for those larger batteries. This dynamic has forced automakers to grapple with shrinking profit margins, making it difficult for them to justify the shift to electric vehicles in their current form.

While EVs promise reduced carbon emissions during use, the environmental impact of producing and disposing of their massive batteries has raised questions about how “green” they genuinely are. Producing EVs requires significant energy, and unless the electrical grid powering these vehicles is clean, EVs are not as carbon neutral as initially presented. EVs still have a smaller carbon footprint than traditional gas-powered vehicles over the long run.

The Resurgence of the Internal Combustion Engine

In light of these challenges, many automakers are reassessing their commitment to the internal combustion engine. Mercedes-Benz, which had initially planned for most of its lineup to be electric by 2030, has now announced a $15 billion investment in developing internal combustion engines. The company now expects gas and diesel vehicles to account for at least 50% of its global sales in 2030.

Dodge, too, is hedging its bets by launching gas-powered versions of the electric Charger platform. The Charger Sixpack will feature a 3.0-liter twin-turbo Hurricane straight-six engine, offering both 420-hp and 540-hp versions, proving that high-performance gas engines still have a market.

Ford, meanwhile, has pivoted toward hybrid powertrains, which offer a bridge between internal combustion engines and electric technology. The company’s CEO, Jim Farley, emphasized that hybrid technology is not just a temporary fix but a viable long-term solution. Ford’s Oakville Assembly Complex, initially slated to build an electric SUV, will now focus on producing the highly profitable F-Series Super Duty trucks powered by internal combustion engines. Additionally, Ford is rumored to develop a hybrid Super Duty truck, showing its commitment to hybrid technology as part of its future lineup.

Volkswagen is also doubling down on hybrid technology as it transitions toward EVs. VW brand boss Thomas Shäfer believes that hybrids will serve as a “transitional technology” until the broader market is ready for full electrification.

The Role of Hybrid Technology and New Fuels

Hybrid technology is now seen as crucial in transitioning to a lower-carbon future. By combining the benefits of internal combustion engines with electric motors, hybrids can reduce overall emissions while still offering the range and performance consumers expect. As a result, hybrids are expected to play a significant role in the auto industry well beyond 2030.

Moreover, developments in low-carbon fuels could extend the life of the internal combustion engine even further. Chevron, for example, is working on a renewable, lower-carbon gasoline that costs just 50 cents more per gallon than conventional fuel. These kinds of advancements could help reduce the environmental impact of traditional gas-powered vehicles, providing a feasible alternative to fully electric cars.