The Internal Combustion Engine Is Not Dead
A global slump in sales is prompting automakers to rethink the rush to EVs.
Reports of the death of the internal combustion engine have been greatly exaggerated. In the wake of stalled consumer demand and stubbornly high costs, automakers around the world are furiously backpedalling plans to go all-in on EVs within the next 10 years, as well as rethinking their approach to the internal combustion engine. Those who bet biggest on electric vehicles are now ruefully eyeing big hits to their bottom line. Or worse.
0:00 / 0:00
Ford, for example, has stopped work on a three-row electric-powered SUV, a decision that will reportedly cost the company $1.9 billion. “We could not put together a vehicle that met our requirements to be profitable in the first 12 months of launch,” Ford Motor Company chief financial officer John Lawler said. Ford’s EV division, Model e, reported a $2.5 billion loss for the first half of this year and is expected to lose between $5 billion and $5.5 billion by year’s end.
Meanwhile, Dodge execs are nervously eyeing data that shows, nine months after Dodge Charger and Challenger production ended to pave the way for the launch of their electric-powered successor, 78 percent of Charger owners and 64 percent of Challenger owners say they are simply not interested in buying an EV. This comes as Dodge parent company Stellantis reported a 40 percent slump in operating income for the first half of this year, with CEO Carlos Tavares warning: “We cannot afford to have brands that do not make money. If they don’t make money, we’ll shut them down.”
Barely 18 months ago Volkswagen Group boss Oliver Blume bullishly announced the company would be spending $193 billion on software, battery factories, and other investments as it pushed to make one in every five models it sold worldwide an EV. But those plans are in tatters today, with Blume recently announcing Volkswagen was considering shutting plants in Germany, where it employs 300,000 people, for the first time in the company’s history. Volkswagen’s financial situation is, the company says, “extremely tense.”
The problem is EVs have turned the auto industry’s math on its head, Ford boss Jim Farley says: “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; the larger the vehicle, the bigger the battery, and the more pressure on margin because customers will not pay a premium for those larger batteries.”
The costly rush to EVs has largely been driven by regulations designed to reduce the carbon footprint of the automobile. The internal combustion engine became demonized in the process; get rid of it, went the soundbite—a soundbite that glossed over the truth that EVs are not a carbon neutral alternative to conventional internal combustion engine vehicles when the carbon footprint of their manufacturing and electrical energy sources is considered—and the world would be on the road to a cleaner, healthier place. (It’s worth noting, though, that the carbon footprint of EVs is still significantly smaller than their ICE counterparts.)
Now a panicked auto industry is reaching for the e-brake. The internal combustion engine is firmly back on the agenda of product planners and corporate strategists as they plot a path beyond 2030.
Those who can are pivoting back to internal combustion engines, fast. Mercedes-Benz, which had planned for most of its vehicles to be EV or PHEV by 2030, has just announced a $15 billion investment in internal combustion engine research and development designed to ensure its gas and diesel engines can be produced well into the next decade. Mercedes now admits it expects pure internal combustion engine vehicles, gas and diesel, will still account for at least 50 percent of its global sales in 2030.
Dodge plans to hedge its bet on the electric Charger with the launch the so-called Charger Sixpacks, two- and four-door models with the same platforms and bodies as the electric versions but with gas engines under the hood. But they won’t be V-8s: The base engine will be the 3.0-liter twin-turbo Hurricane straight-six that produces 420 hp, with a 540-hp version of the same engine available on higher-performance models. Recently retired Dodge brand boss Tim Kuniskis has said there are no plans for a PHEV version, but with Carlos Tavares breathing down executives’ necks, don’t bet against it.
The Oakville Assembly Complex in Ontario, where Ford’s stillborn electric SUV was to have been built, will now become the third plant dedicated to building highly profitable F-Series Super Duty trucks powered by internal combustion engines. More significant, however, Jim Farley has said Ford will focus on bringing more hybrid models to market, a strategy that clearly extends the Blue Oval’s investment in the internal combustion engine well into the next decade. “We should stop talking about [hybrid] as transitional technology,” Farley says. A hybrid powertrain is already rumored to be under development for the Super Duty.
At Volkswagen, Blume insists the future is still electric, but the company is moving aggressively to hybrids in the interim. Volkswagen brand boss Thomas Shäfer believes hybrids will help consumers ultimately make the transition to EVs. In contrast to Farley, he does believe it to be a bridge technology. “While battery electric drive is plateauing,” he says, “we still need this transitional technology.” Either way, VW and Ford are on the same page regarding hybrids.
Hybrid technologies clearly help make the case for the internal combustion engine in a low-carbon world. So, too, does development of zero- or low-carbon fossil fuels. Andy Walz, president of Chevron Americas Products, claims the company can already produce what he calls “a renewable lower-carbon gasoline” that costs just 50 cents a gallon more than conventional gas. In the rush to reach the net-zero nirvana of the EV, investment in technologies such as these that can materially lower the overall carbon footprint of automotive transport have been bypassed. The pursuit of the perfect has been the enemy of the good.
EVs “are just going to take longer than the media would like us to believe,” Akio Toyoda said in October 2022 as Toyota took heat from analysts and activists alike for sticking with its strategy to focus on hybrids rather than EVs. The clamor around Toyota’s EV tardiness was a factor in his decision to step down as CEO shortly afterward, but nearly two years on, Akio looks like an oracle: Toyota’s hybrid vehicle sales jumped 46 percent in the final three months of 2023 against an overall sales increase of 10 percent, helping the company post record profits of almost $32 billion, double the previous year.
There’s an intellectual inevitability to the trajectory: EVs will ultimately become the mainstream automotive technology, particularly in heavily urbanized areas, as battery technology gets better, software gets smarter, charging gets easier, and upstream power generation gets cleaner and more efficient. But the internal combustion engine is not going away.
I can’t remember a time when I wasn’t fascinated by cars. My father was a mechanic, and some of my earliest memories are of handing him wrenches as he worked to turn a succession of down-at-heel secondhand cars into reliable family transportation. Later, when I was about 12, I’d be allowed to back the Valiant station wagon out onto the street and drive it around to the front of the house to wash it. We had the cleanest Valiant in the world.
I got my driver’s license exactly three months after my 16th birthday in a Series II Land Rover, ex-Australian Army with no synchro on first or second and about a million miles on the clock. “Pass your test in that,” said Dad, “and you’ll be able to drive anything.” He was right. Nearly four decades later I’ve driven everything from a Bugatti Veyron to a Volvo 18-wheeler, on roads and tracks all over the world. Very few people get the opportunity to parlay their passion into a career. I’m one of those fortunate few.
I started editing my local car club magazine, partly because no-one else would do it, and partly because I’d sold my rally car to get the deposit for my first house, and wanted to stay involved in the sport. Then one day someone handed me a free local sports paper and said they might want car stuff in it. I rang the editor and to my surprise she said yes. There was no pay, but I did get press passes, which meant I got into the races for free. And meet real automotive journalists in the pressroom. And watch and learn.
It’s been a helluva ride ever since. I’ve written about everything from Formula 1 to Sprint Car racing; from new cars and trucks to wild street machines and multi-million dollar classics; from global industry trends to secondhand car dealers. I’ve done automotive TV shows and radio shows, and helped create automotive websites, iMags and mobile apps. I’ve been the editor-in-chief of leading automotive media brands in Australia, Great Britain, and the United States. And I’ve enjoyed every minute of it. The longer I’m in this business the more astonished I am these fiendishly complicated devices we call automobiles get made at all, and how accomplished they have become at doing what they’re designed to do. I believe all new cars should be great, and I’m disappointed when they’re not. Over the years I’ve come to realize cars are the result of a complex interaction of people, politics and process, which is why they’re all different. And why they continue to fascinate me.Read More
