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Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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The Future May Not Be As Electric as We Think

  •  Renault, China’s Geely, and Saudi Aramco are investing in new internal combustion engine technology.
  • Renault and Geely are opting for an alternative way to achieve it, through fuel efficiency and other tech advancements in internal combustion.
  • Affordability is one of the factors that make drivers loyal to the ICE technology.
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Virtually every single forecast about the future of transport focuses on its electrification—on the idea that EVs will take over roads, displacing the internal combustion engine and making it history.

Not everyone agrees, however, and that includes Renault, China’s Geely and, as of last month, Saudi Aramco. The three are investing in a company that develops powertrain technology for internal combustion engine vehicles. The future may not be as electric as may expect.

Horse Powertrain came into existence at the end of May as a 50:50 joint venture between Renault and Geely. At the time, Renault’s chief executive said that the company would aim to become a leader in “ultra-low emission internal combustion engines and high economy hybrid technologies.”

Decarbonization, then, remains the top priority. Yet Renault and Geely are opting for an alternative way to achieve it, through fuel efficiency and other tech advancements in internal combustion rather than through total electrification.

It is no wonder Aramco is joining the party, especially in light of the recent performance of its EV darling, Lucid Motors. Lucid has seen its share price plummet from over $50 apiece to less than $9 in three years and has missed its own delivery target for the first half of this year even though it boasted record deliveries—of 2,394 cars.

The Saudi oil giant likes to spread its eggs across several baskets, and it looks like the ICE basket is still quite popular. People are still buying a lot more internal combustion engine cars than electric vehicles. A lot of EV drivers want to go back to their internal combustion engine car. Things are not looking good for the electrification of transport, with the normal glitches of new technology still being sorted out. However, they are looking as robust as ever for internal combustion.

“It will be incredibly expensive for the world to completely stamp out, or do without internal combustion engines,” Yasser Mufti, executive vice-president at Saudi Aramco who was in charge of the Horse Powertrain deal, told the Financial Times. “If you look at affordability and a lot of other factors, I do think they will be around for a very, very long time.”

Affordability is indeed one of the factors that make drivers loyal to the ICE technology. For all the efforts EV makers have been putting into lowering the price of their electric vehicles, and for all the government support of the technology, EVs remain costlier than comparable internal combustion engine vehicles. 

Of course, affordability is only part of the car equation. Another is fueling or charging time and on this, the ICE car once again beats the EV. For all the talk about how convenient it was to charge your EV overnight in the comfort of your own garage, it has been dawning on forecasting EV bulls that globally, only a minority of drivers have a garage to charge an EV in, while most would need to rely on public chargers. Also, only a minority of drivers would be willing to spend hours charging their car overnight or not.

Perhaps the best testimonial to the enduring power of the internal combustion engine were the latest car sales figures from China. The world’s biggest market, China has been breaking records in EV sales. This seems to have created a perception that half of all cars in China are electric. In fact, the reality is quite different. Related: Putin Threatens Complete Energy Cut Off To West If Price Caps Are Imposed

Xinhua reported earlier this week that the total number of cars on Chinese roads had reached 440 million at the end of June. Of these, the data showed, new energy vehicles had a share of 24.72 million. Of these, 18.13 million were plug-in electric vehicles—what we commonly call EVs, and the rest were hybrids. In percentage terms, then, EVs represent barely a 4.1% of the Chinese market. In other words, even in the world’s biggest EV market, with billions spent on charging infrastructure and making EVs dirt cheap, most drivers still prefer internal combustion vehicles.

“We believe that as far out as 2035, 2040 and even beyond 2040 we still see a significant number of ICE vehicles,” Matias Giannini, chief executive of Horse Powertrain, told the FT. “More than half for sure, and up to 60 per cent of the population will still have some sort of an engine, whether it is pure ICE, a full hybrid or a plug-in hybrid.”

The internal combustion engine has survived so long and remained the overwhelmingly dominant transportation technology for one simple reason: it has been superior to alternatives and its benefits have outweighed the costs consistently. It is at the cost-benefit analysis state that the EV revolution tripped and fell—because it seems that no one bothered to do that analysis. So the market made it for them, with the EV surge celebrated loudly last year slowing down before the year was even over. Horse Powertrain may yet acquire new shareholders.

By Irina Slav for Oilprice.com

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Leave a comment
  • Mamdouh Salameh on July 11 2024 said:
    EVs will never ever prevail over ICEs now or ever. The reason is simply that the ICE motor technology is advancing so fast to the extent that new models have less emissions than EVs if we take into account the emissions when making the lithium batteries, decommissioning them at the end of their shelf life and also lithium mining . Add to this the advantages of range, price, convenience and insurance and we have got a winner in ICEs.

    With new technology that further cuts even the current small emissions of ICEs, there will be no reason for EVs.

    EVs are a fad and fads by definition go out of fashion quickly along with flawed IEA predictions about peak oil demand and a glut in oil supplies by 2030.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert
  • O J on July 12 2024 said:
    Of the 18.1 million evs in the fleet in china 8.1 million were sold in 2023 so although coming from a low base they are growing fast. In May this year, plug-ins had 47% of the Chinese Market and are expected to get to over half the market this year. According to sinopec chinese gasoline consumption already peaked in 2023 with oil demand peaking in 2024. Ice is yesterdays technology is barely advancing, while ev technology is racing ahead on many metrics. The fad that is ending is ice cars, whose sales peaked in 2017. They will go the same way as the horse and cart, there will still be a few around but mostly for nostalgic reasons. Evs are just better technology and irrespective of vested interests attempts to spread fud the better technology will win.
    Fud like mining emmissions, production emissions, and battery recycling, which are much much lower for on a lifetime basis that ice vechiles.

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