I recently read an interesting post speculating on the end of engine design and discussing not when the last internal combustion engine (ICE) will be sold, but when it will last be designed. I have been thinking about the same situation for some time and I would argue that, if anything, the end of engine design is closer than the article suggests (which is 2025).
Many OEMs have already stopped designing new engine architectures, engine derivatives are being and will continue to be consolidated, and core engine technology feature upgrades that are already in their final development cycle. Engine technology upgrades are now primarily focused on lowering emissions levels and CO2 improvements are achieved by replacing mechanical units with electrified components.
Cost Burden of Maintaining a Global Powertrain Portfolio
The Oberon Insights article points to the cost burden of supporting internal combustion, hybrid and electric powertrains. And this is true.
Established OEMs with a global sales footprint are trying to simultaneously provide petrol and diesel engines (ICE), multiple hybrid solutions and battery electric powertrains. All ICE-based solutions require modified hardware and significant recalibration for all major markets.
Each of the markets is then subject to periodic updates to emissions legislation, making compliance more difficult. These changes will require further hardware and software development whilst adding little to the overall efficiency of the engine's operation.
The difficulty of this situation is demonstrated in the development of the European EU7 emissions standards. The legislation will bring in new emissions standards and monitoring requirements that drive new technology, it is likely that the standards will be implemented between 2025 and 2028. At this timing it is quite possible that an interim update EU6e will be mandated. This means every IC-based powertrain will require technical updates and re-certification twice in a 5-year timeframe.
In contrast, a single specification battery electric vehicle (BEV) is complaint in every market.
There remains significant efficiency opportunities in petrol engine design, by changing combustion cycles and developing advanced features such as pre-combustion ignition. However, the development effort and architectural investment in such features compares unfavorably with increasing the level of electrified features. More fuel economy can be gained with less investment by utilizing electrically powered pumps and bolt-on technology such as electrically powered turbochargers. When combined with hybrid technology (mild, full or plug-in) significant improvements in efficiency are achieved at modest investment levels.
Dedicated Hybrid Engines
It has been proposed that new, more simple engine designs will be developed to fully optimize hybrid propulsion systems and, whilst this is possible, it is questionable that OEMs will make a large scale move in this direction. All manufacturers have access to a range of engines, either within their own engine families or purchased from other manufacturers, and this includes smaller and lower-cost units. In an environment where investment is at a premium and the lifecycle of hybrid vehicles is uncertain, choosing the second-best alternative of a smaller existing engine is more likely to be an attractive solution.
Dedicated BEV Platforms
A third consideration is the move to dedicated BEV platforms. The technology advances in batteries, motor design and power electronics have shown that, at a functional level, BEV vehicles are already good enough and continue to improve rapidly. Governments, particularly in Europe and China, are incentivizing both the vehicles and the infrastructure to support them and societal opinion increasingly supports them. All of which builds to the tipping point that many OEMs have fully committed to an electric future.
Manufacturers are fully focused on developing affordable battery electric vehicles that cost the same or less than conventionally powered vehicles. A key element in this is moving to dedicated BEV platforms that fully utilize the opportunities that designing out IC engines brings.
It is widely assumed that cost parity will be achieved within the next ten years, first in Europe and China, later in lower-cost countries, and this implies widespread dedicated platform deployment. With no new platform applications there is no rational for any new engine designs.
Once cost parity is achieved, OEMs will look to exploit their BEV vehicles in as many markets as possible.
Supplier Opportunities
As noted in the Oberon Insights article, this opens the door for suppliers to take over some or all of the engine development and manufacturing process. Increasingly, OEMs will look for more efficient and lower investment routes to maintain engine competitiveness and compliance. The extent to which OEMs will go down this route will differ, ranging from outsourcing engineering through to selling off facilities and using suppliers or JV partners to engineer and manufacture engines.
This provides opportunities for engineering consultancies, tier 1 suppliers and manufacturing equipment suppliers to create new businesses that can fully service the OEMs demand.
