I’ve spent the last 30 years in the automotive industry, starting my journey on the shop floor and working my way through various roles—sales and marketing, operations, finance, and distribution. Now, as CEO of a leading automotive company and a market leader in the country, I’ve witnessed the evolution of this industry firsthand. But nothing compares to the shift we’re experiencing today. Technology, particularly AI and generative AI, is rewriting the rules of the game, challenging everything I’ve learned and practiced over the years.

Generative AI isn’t just a buzzword—it’s driving real transformations in autonomous vehicles, revolutionizing how we think about internal combustion engines (ICEs) and electric vehicles (EVs). As a company, we are taking bold steps to embrace this change, integrating AI into our operations and exploring new ways to remain competitive. The future of driving is evolving, and I’m committed to ensuring we stay at the forefront of this revolution. The question is, how will we adapt to a world where machines are not only helping us build but also decide how to drive?

The global market for autonomous vehicles is projected to grow at a compound annual growth rate (CAGR) of 22.7%, reaching $75.93 billion by 2030, according to Allied Market Research. This growth is partly driven by generative AI’s role in sensor fusion, where data from multiple sensors like cameras, LiDAR, and radar are combined to create a comprehensive understanding of the surroundings. This enables AVs to make informed decisions based on a holistic view of their environment, enhancing their safety and reliability.

Generative AI models, like those powering large language models (LLMs) and image generation tools, are being harnessed in various aspects of AV development. These AI systems can generate vast amounts of synthetic data, enabling AVs to learn from diverse scenarios without real-world exposure. This proves invaluable in training AVs to handle complex situations, such as navigating through adverse weather conditions or responding to unexpected obstacles.

Furthermore, generative AI models are being employed in sensor fusion, where data from multiple sensors like cameras, LiDAR, and radar are combined to create a comprehensive understanding of the surroundings. This enables AVs to make informed decisions based on a holistic view of their environment, enhancing their safety and reliability.

Potential Disruptions to IC Engines

1. Shift towards Electric Vehicles (EVs)

The rise of AVs is intrinsically linked to the adoption of EVs. This is due to several reasons. Firstly, the complex control systems required for AVs are inherently better suited for the precise and responsive nature of electric motors. Secondly, EVs offer lower maintenance requirements and reduced emissions, aligning with the sustainability goals associated with AVs. Consequently, as AVs become more prevalent, the demand for EVs is expected to surge. For instance, the International Energy Agency (IEA) projects that EV sales will reach 40 million units annually by 2030, up from 10 million in 2020. This surge could lead to a decline in the market for ICEs, which are currently responsible for 96% of all vehicles on the road.

• Optimized Driving Patterns

Generative AI-powered AVs are programmed to operate in a manner that prioritises efficiency and safety. This often translates to smoother acceleration, gentler braking, and consistent speeds. These optimized driving patterns differ significantly from the often erratic and inefficient driving behaviour exhibited by humans. As a result, AVs may place less strain on ICEs, potentially extending their lifespan but also reducing the need for frequent replacements. According to a study by the University of Michigan, AVs could reduce fuel consumption by up to 10% due to these optimized driving patterns. While this may extend the lifespan of ICEs, it also reduces the need for frequent replacements, potentially impacting the demand for new ICE vehicles.

• Shared Mobility and Ride-Hailing Services
  AVs are expected to revolutionize the transportation sector by enabling widespread shared mobility and ride-hailing services. A report by McKinsey estimates that shared autonomous vehicles could reduce the number of cars on the road by 75% in urban areas by 2050. In such a scenario, individual car ownership might decline as people opt for convenient and cost-effective on-demand transportation. This shift could significantly reduce the overall number of vehicles on the road, impacting the demand for both ICEs and EVs.
  

Challenges for IC Engines

1. Technological Advancements in EVs

The rapid advancements in EV technology, including improvements in battery range, charging infrastructure, and performance, are further intensifying the competition for ICEs. The average range of EVs has increased by about 20% annually over the past decade, with some models now offering over 650 kilometres on a single charge. While ICEs continue to evolve, they face an uphill battle in keeping pace with the accelerated development of EVs, fuelled by the synergistic relationship between AVs and electric propulsion.

2. Stringent Emission Regulations

Governments worldwide are imposing increasingly strict emission regulations to combat climate change. These regulations are placing significant pressure on ICE manufacturers to innovate and reduce their environmental impact. The European Union, for example, has set a target to reduce CO2 emissions from new cars by 37.5% by 2030, compared to 2021 levels. These regulations are placing significant pressure on ICE manufacturers to innovate and reduce their environmental impact. 

3. Public Perception and Adoption

Despite their potential benefits, AVs face hurdles in terms of public perception and adoption. Concerns regarding safety, liability, and job displacement persist. According to a survey by the American Automobile Association (AAA), only 12% of Americans would trust riding in a fully autonomous vehicle. Concerns regarding safety, liability, and job displacement persist. These concerns, coupled with the relatively high cost of AV technology (with some estimates suggesting it could add $10,000 to $20,000 to the price of a vehicle), could slow down the mass adoption of AVs, indirectly impacting the transition away from ICEs.

Opportunities for IC Engines

1. Hybrid Powertrains

Hybrid powertrains, combining ICEs with electric motors, offer a bridge between traditional ICE vehicles and fully electric ones. In 2022, hybrid vehicles accounted for about 8% of all vehicle sales globally, and this number is expected to grow as consumers seek a middle ground between ICEs and EVs. They provide improved fuel efficiency and reduced emissions while maintaining the familiarity and range associated with ICEs. As the transition to EVs unfolds, hybrid powertrains could play a crucial role in maintaining the relevance of ICEs, especially in regions with limited charging infrastructure.

2. Niche Applications

 ICEs are likely to retain their dominance in certain niche applications, such as heavy-duty vehicles, off-road vehicles, and emergency vehicles, where the power density and range of ICEs remain advantageous. The global market for heavy-duty vehicles is projected to grow to $206 billion by 2026, with ICEs expected to power the majority of these vehicles. These applications offer opportunities for ICE manufacturers to focus their innovation efforts and cater to specific market segments.

3. Technological Advancements in ICEs

The challenges posed by AVs and EVs are driving innovation in ICE technology. Advancements in areas such as fuel injection, combustion control, and after-treatment systems are leading to more efficient and cleaner ICEs. For example, recent developments in variable compression ratio engines can improve fuel efficiency by up to 30%. These improvements could help prolong the lifespan of ICEs and ensure their continued relevance in certain segments of the automotive market.

The Road Ahead for IC Engines

As I look ahead, the future of internal combustion engines (ICEs) in a world increasingly driven by generative AI-powered autonomous vehicles (AVs) is undeniably uncertain. Disruptions are inevitable. By 2030, it’s predicted that electric vehicles (EVs) will account for 58% of global new car sales, a massive leap from just 4% in 2020. This shift could reduce ICE vehicles’ market share from the current 96% to below 40%. On top of that, McKinsey estimates that AVs could make up 12% of global vehicle sales by the same year, further accelerating the decline of traditional ICEs. But even with this transition, ICEs are not going to disappear overnight. Hybrid powertrains, projected to grow from 8% to 20% of global vehicle sales by 2030, and niche applications like heavy-duty vehicles, where ICEs will likely power over 85% of the fleet, provide us with opportunities to stay relevant.

For us as ICE manufacturers, the path forward is clear—adaptation and relentless innovation. The global automotive industry invests over $120 billion annually in R&D, and a significant portion of that is still focused on improving ICE technologies. Breakthroughs like variable compression ratio engines that improve fuel efficiency by 30%, or after-treatment systems reducing NOx emissions by 90%, are just some of the advances that give ICEs a fighting chance to remain competitive. In regions or applications where full electrification isn’t feasible, these innovations will keep ICEs in the game.

As the automotive industry shifts, we must also commit to sustainability and responsible innovation. ICE vehicles are major contributors to CO2 emissions, accounting for approximately 15% globally. Achieving the industry’s net-zero emissions target by 2050 will require a phased transition away from ICE vehicles in many markets, but we must continue to innovate in the spaces where they are still necessary. With the global automotive market projected to hit $3.8 trillion by 2030, driven by the growth of AVs and EVs, staying agile, responsive, and ahead of market trends will be critical for ICE manufacturers to navigate the challenges and seize the opportunities ahead.

The writer is at a leadership position in a leading Automotive company.

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