Why Europe shouldn’t surrender its combustion engine advantage
Horse Powertrain’s Matias Giannini believes European manufacturers still have plenty offer the world with internal combustion engine expertise, including making hybrids more efficient.
Why Europe shouldn’t surrender its combustion engine advantage
Horse Powertrain’s Matias Giannini believes European manufacturers still have plenty offer the world with internal combustion engine expertise, including making hybrids more efficient.
The EU’s 2035 objective to reduce tailpipe emissions by 90% has presented the continent with a stark choice: achieve this goal by building on its hard-won historic leadership around combustion and hybrid powertrain technology, or turn away from engine-powered vehicles to fully pursue BEV adoption.
Which path should Europe choose?
When we consider Europe’s automotive strengths, there are three key areas where it stands out on the supply side: the sheer depth of expertise among its numerous engineering industries, its leadership in ultra-precise mechanical engineering and high-end metallurgy, and the diversity and heritage of its supplier ecosystem. This rich, interdisciplinary industry was created – and is an ideal supporting ground – for combustion and hybrid innovation.
When we look at the rise of China, by contrast, we can see that its strengths – China cost and China speed – are due to very different qualities. China’s automotive industry has been built on a strategy of aggressive vertical integration, supported by upstream capabilities such as rare-earth refining. These capabilities reduce the cost of critical systems, including batteries and electric motors. This is an ideal supporting ground for EV innovation.
So, Europe has a strategic advantage when it comes to combustion and hybrid technology – one that it likely can’t replicate when it comes to EV production.
In light of this, we need to remind ourselves that global demand for combustion and hybrid vehicles is set to persist for decades to come: ICEVs, HEVs and PHEVs will account for more than half of global vehicle sales by 2035. In the Indian market, for example, petrol and diesel still make up over 70% of automotive market share. And in the USA, combustion and hybrid vehicles still account for 89.8% of total sales.
Engine-powered vehicles thus can be a huge export market for European automakers. And, critically, by innovating in ICEVs, HEVs and PHEVs – and driving the fuel economy of these vehicles up – Europe can ensure that these exports significantly bring down global transport emissions.
European technology can reduce the lifecycle emissions of ICEVs, HEVs and PHEVs considerably: especially compared to the alternative in the absence of European innovation. In this scenario, much of the world would instead rely on decade-old engine platforms and poorly integrated hybrid powertrains.
Europe should build on its existing strengths: accelerating electrification where it makes sense while remaining the global leader in advanced combustion and hybrid technologies.
In 2026, the European auto industry has some of the highest emissions standards and strictest regulations in the world. Because of this, European automotive manufacturers have produced some of the most efficient and advanced engine technologies in the industry. Europe’s rejection of engine technology will leave a vacuum: one that will be filled by manufacturers without the depth of expertise, decades of experience, or the same stringent emissions standards that European OEMs uphold.
Europe should build on its existing strengths: accelerating electrification where it makes sense while remaining the global leader in advanced combustion and hybrid technologies. Electrification will and should remain a key pillar in Europe’s decarbonisation strategy, but combustion and hybrid leadership should be retained as a foundational capability.
A commitment to combustion and hybrid technology would be invaluable for European fleets. If Europe’s response to the 2035 tailpipe emissions target is a phase-out of combustion and hybrid production, then automakers will need to draw down their investment in the technology.
That means that fleets reliant on combustion and hybrid models will see the quality of their powertrains freeze in time: for decades, fleet operators will be saddled with reduced fuel economy and heightened emissions from lower-quality ICEV and HEV fleets. And, owing to the structural Chinese advantages in EV technology, far less of the investment and servicing costs of non-combustion portions of European fleets will be going into European industry: the result is a net loss for fleets in obtaining local operational support and the continent as a whole.
A ‘hybrid’ strategy that continues to nurture both EV adoption and combustion capability avoids many of these issues and ensures that Europe retains its existing industrial strengths while continuing to develop new ones. This approach will ensure the long-term health of the European automotive industry while still ensuring a smooth energy transition and delivering an effective move toward low-emission mobility.
