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In the year 2025, the automotive industry is far from a one-size-fits-all approach when it comes to powertrain technology. A mixed landscape emerges, with several car brands prioritizing internal-combustion engines (ICE) while others are emphasizing electric vehicles (EV) or hybrid technologies.
Traditional Brands Embrace ICE
Some traditional and premium global carmakers like BMW, Audi, Volkswagen, Nissan, and Mercedes-Benz continue to invest in ICE development. For these brands, the ICE engine remains a critical foundation, providing a transitional strategy and ensuring cash flow, particularly in large markets like China where ICE vehicles maintain strong sales momentum.
BMW regards the internal combustion engine as a "foundation" and plans to continue developing ICE technology, recognizing its role in financing future business amid market volatility. Audi, originally planning to phase out ICE development by 2033, has reversed its decision due to fluctuating consumer demand and market uncertainty, thus continuing ICE development alongside EV plans.
Volkswagen (including FAW-Volkswagen in China) maintains strong sales in ICE models such as Lavida and Sagitar sedans, which see monthly sales over 20,000 units, reinforcing a stable ICE market. Nissan continues strong sales for ICE sedans like the Sylphy in China, while Mercedes-Benz ranks among premium brands still heavily investing in and scoring well for ICE models in consumer satisfaction studies.
The ICE market remains underpinned by traditional foreign joint ventures in China, with ICE models driving the bulk of sales volume and sustaining cash flow.
The Push Towards Hybrid and Electric Vehicles
On the other hand, the industry is witnessing a strong surge in hybrids and electric vehicles, particularly from domestic Chinese brands and manufacturers investing heavily in EV and New Energy Vehicle (NEV) technology.
Advances in battery efficiency (including sodium-ion batteries) and regenerative braking are facilitating this hybrid push. General Motors is doubling down on both EV and ICE production, showcasing a dual strategy to cover multiple market segments. Other manufacturers like Honda, Hyundai, and Stellantis are pursuing diversified tech paths that include electric and alternative powertrains.
Many large automakers adopt a hybrid approach — continuing ICE evolution while expanding electrified options — to adapt to region-specific regulations, consumer preferences, and technological advancements.
A Balancing Act
This mixed prioritization reflects how manufacturers balance legacy ICE assets with future-oriented EV investments against the backdrop of regulatory, market, and technological uncertainties. Early BEVs were less reliable than ICE vehicles, but rapid technological advances have enabled newer all-electric models to achieve comparable lifespans, even under more intensive use.
In the UK, Genesis will offer three battery-electric vehicles (BEVs) this year: the electrified G80, the electrified GV70, and the GV60. Future plans include enhancing the range with hybrid technology. A new study conducted by the London School of Economics confirmed the longevity of all-electric cars, stating that BEVs now match the lifespans of models powered by ICE.
SEAT signed the 'Casa SEAT Declaration' with governmental bodies, promoting electric mobility in Spain. Renault has prioritized focus on full hybrids (HEVs), with no plans to expand its plug-in hybrid (PHEV) range beyond the Rafale SUV. Tesla is suing the EU over import tariffs placed on BEVs built in China.
As the industry continues to evolve, it is clear that car manufacturers are taking a balanced approach, combining traditional ICE technology with the innovative potential of electric and hybrid vehicles. This approach allows them to cater to a wide range of consumer preferences and market conditions, ensuring a sustainable and adaptable future for the automotive industry.
- BMW, Audi, Volkswagen, Nissan, and Mercedes-Benz, along with other traditional car brands, are continuing to invest in internal combustion engine (ICE) development, viewing it as a critical foundation and a transitional strategy to maintain cash flow, particularly in large markets like China.
- Domestic Chinese brands and manufacturers, like General Motors, Honda, Hyundai, and Stellantis, are heavily investing in electric vehicle (EV) and New Energy Vehicle (NEV) technology, contributing to a strong surge in hybrids and electric vehicles in the industry.
