Powertrain Priorities

 

July 9, 2025

Five years ago, EVs were predicted to be the sole future of automotive manufacturing and consumption. Politicians, consultants, pundits, industry experts, and anyone with a stake in the manufacturing process lauded EVs as the surefire next step towards saving the environment and ushering in a cleaner future. At the time, this mindset was popular, if not the overall norm. Tesla’s stock price and market cap approached highs never achieved by any publicly traded corporation, let alone an OEM. Executives and experts fled legacy OEMs for new jobs at startups such as Rivian, Lucid, Vinfast, Rimac, and Fisker as a result of promises of early-Apple investor style success and opportunities to be a part of the cutting edge of electric technology. Moreover, the EV-friendly Biden administration was right around the corner, hawking pro-EV-manufacturing legislation as a method to pull the US economy out of the effects of the Covid-19 pandemic. For a few years, the EV prophecy appeared to come true; the Inflation Reduction Act passed, EV tax credits were plentiful, and both legacy OEMs and startups were announcing new electric cars constantly. An electric future was in-sight. The only questions remaining were how long and by who. However, in the last 18 months or so, the tide again started to change.

During Q1 and Q2 of 2024, multiple OEMs announced that they were reneging on fully converting their lineups to EVs by 2030, 2035, or 2040. Companies that announced these plans included Ford, GM, Mercedes-Benz, and VW Group, who instead began developing new ICE platforms and reinvested in hybrid technology. Even titans of the EV industry, namely Tesla, have felt the hurt, as their market share continues to contract through Q2 2025. Much of the discussions between late 2019 and mid 2023 surrounded the eventual death of internal combustion vehicles as new emissions standards and consumer preference made way for electric cars. As such, OEMs believed they saw the writing on the wall and killed off popular models like the Hemi-powered Dodge Challenger and Charger, the V8 in the Mercedes C63 AMG, and the supercharged Chevy Camaro SS. Other companies like Ford hinted that the upcoming generation of cars would be the end of the line for internal combustion engines, signaling that the Mustang S650 may be the swansong for the Ford V8. In a near-complete reversal, these OEMs de-committed from electrifying their lineups and announced all new ICE and hybrid models for the upcoming model years.

At first glance, this is a baffling maneuver. OEMs, suppliers, and governments around the world spent billions of dollars developing EV technology, infrastructure, and manufacturing, just to roll much of it back in a matter of a year. Why would OEMs go to such lengths just to do a 180? The answer is fairly simple: the transition to EVs has been more difficult, expensive, and politically challenging than most of the industry predicted. Buyers continue hesitating to purchase EVs, local governments balk at charging infrastructure investment, and globally impactful political shifts have rendered a full shift to EVs economically unfavorable. The second Trump administration recently announced the coming end of the IRA’s Federal EV tax credit, and a variety of subsidies set aside for domestic mining and battery manufacturing are under the microscope for reduction and/or elimination.

Consumer preferences are reflecting this swing in two ways. First, people interested in economical commuter cars are shopping for hybrids. Hybrids are a perfect compromise for those that aren’t particularly interested in performance and instead want something to cheaply and reliably take them from point a to point b. Second, people interested in performance and enthusiast cars are shopping for high-powered ICE vehicles paired with turbos or superchargers. Alternatively, buyers wanting to tow heavy or go offroad are looking at big diesels and torquey gas V8s. Essentially, these changes created an environment ripe for the continuity of ICE vehicles and hybrids at the expense of EVs.

The path forward for EVs is less linear than previously anticipated. Resurgence in support for gas and diesel vehicles among all facets of the market leaves some industry analysts scratching their heads wondering what went wrong. The main takeaway for manufacturers is to view this reaction as a step towards a coexistence between ICE and electric vehicles rather than an outright replacement. People are afraid of something they have had access to for their entire lives being taken away in favor of an unfamiliar and seemingly “hostile” product. Positioning EVs as an equal to combustion vehicles instead of as a superior will facilitate a smoother transition towards mass-acceptance and proliferation by the average new-car buyer. No transition to new technology is ever smooth, and it is up to the automotive industry to ensure that it reacts appropriately to market trends in order to produce the best possible ICE, hybrid, and electric vehicles in the near future and beyond.