Because of this, leading automakers will be the first to stop producing internal combustion engines
The transition of the automotive industry to âzero-emission vehiclesâ is picking up speed. The impetus for this shift is provided by two seismic dislocations affecting all aspects of life; especially global warming and the economic impact of the COVID-19 pandemic.
By February 2021, 194 countries and the European Union had signed the Paris Climate Agreement, which effectively lays down the legal framework for the decarbonization of the global economy. Policies aimed at emissions from transport, which account for around a third of greenhouse gas (GHG) emissions in the EU and the US, are forcing the automotive industry to reassess the role of the internal combustion engine in the future of mobility.
In addition, with governments struggling with huge adjustments to their budget balances in the wake of the COVID-19 pandemic, there has been a greater focus on promoting low-carbon investment strategies, including accelerating the adoption of electrified vehicles.
Rather than buck this trend, the majority of OEMs are adopting it and many are planning to leave fully electric. Now that the debate about automakers switching to electric vehicles is over, the only question that remains is: âWhen will the leading car companies stop producing internal combustion enginesâ?
This is the time when leading automakers stop producing internal combustion engines
The pace of transition is so fast that a major transformation is now inevitable, with 2027 being the likely turning point for the adoption of electric vehicles, according to analysts at IHS Markit. with over one in four new cars sold by 2030, powered by an electric motor. By 2030, the number of BEV models sold will increase from 335 in 2020 to over 800.
The growth in EV sales is mainly driven by the ambitions of manufacturers such as Jaguar, Volvo, Mini and Ford Europe to become BEV brands by 2030. Although their planning isn’t quite as aggressive, other brands are also keen to bring the bulk of their model line up to BEV platforms. These include Land Rover (60% BEV), BMW (50% BEV) and Kia Europe (50% BEV).
However, there are two companies that stand out in electrification – the Volkswagen Group and General Motors.
Undoubtedly driven by the need for reforms following the âDieselgateâ emissions fiasco, VW is spending more than any other OEM on electrification – over $ 80 billion to bring more than 50 BEVs to market by the middle of the decade. But his plans vary by brand.
For Audi, the exact timing of the shutdown of the ICE depends on the reaction of customers and the legislation. At the recent conference of the Climate Neutrality Foundation in Berlin, CEO Markus Duesmann said that the automaker is expected to have 20 fully electric models in its global product range by 2025. And from 2026 every new model will be a plug-in, with ICE production at the end of around 2033.
To meet future emissions and fuel savings targets, Bentley announced last December that its entire product line would be plug-in models by 2026 and fully BEV by 2030.
Porsche, whose fate is closely linked to the sports car, is a little more cautious and plans to make 80% of its production on BEVs by 2030.
In America, the world’s fifth largest automaker by sales, GM, will increase its spending on electric and autonomous vehicles to $ 35 billion by 2025, a 30% increase over plans announced in 2020.
The company expects to have 30 BEVs in global showrooms by 2025, while a decade later, ICE power will be completely eliminated. Significantly, the flagship brand Cadillac will be the first to go 100% electric by 2030. While GM in China, together with its partners Wuling and SAIC, owns the best-selling BEV model in the world – the Hong Guang Mini EV.
For sustainable growth, however, the purchase price of the electric vehicle must be reduced to a level that can compete with a similar car with an internal combustion engine.
This is the time when electric vehicles from leading automakers will achieve cost parity with the internal combustion engine
If government incentives are taken into account, there is already price parity between comparable BEVs, combustion engines and hybrids. The Volkswagen ID.3 with incentive often reaches the sticker price of the Golf of 31,000 euros in important European markets.
With EV costs falling, even with no incentives, list price is likely to stay the same through 2030 in the EU and 2027 in mainland China. Based on total cost of ownership (TCO), it could reach parity even sooner. By 2025, a Volkswagen ID.3 could have a TCO advantage of 4,100 euros compared to an equivalent Golf model.
Beyond this data, the vehicle cost gap will increasingly favor BEVs. As the number of units increases, so do the economies of scale, while the declining production increasingly counteracts the combustion engine.
Even if OEMs with large sales markets in unregulated markets are still reluctant to switch to BEVs, it is only a matter of time before they follow the leading car manufacturers and stop producing internal combustion engines. Otherwise, they could be left behind in an insecure and stalled ICE world, especially if they fail to build a BEV supply chain on time.
The internal combustion engine is a groundbreaking invention in the history of the automotive industry and human history.
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