The combustion engine is dead, long live the combustion engine !?

The discussion about the end of the internal combustion engine has been part of every industry and climate debate for years. In 2025/2026, however, it has entered a new, contradictory phase: At the political level and in parts of the EU bureaucracy, there is a debate about postponements and adjustments to Euro 7/2035 rules; OEMs are responding with very different strategies in the product ranges; at the same time, suppliers and engineering service providers are pushing new combustion engine concepts,  Hydrogen-compatible engines and, above all, range extenders / REEV solutions. The result: the combustion engine is neither dead nor untouched — it changes its role sharply. European Parliament+1

The internal combustion engine is losing its role as a universal mainstream drive system in Europe — but at the same time it is making a tactical comeback as a transitional and niche solution (range extenders, CO₂-neutral fuels, heavy commercial vehicles, performance niches). This dual role creates political, technical, and market-based frictions that will shape the industry in 2025–2027. S&P Global

The end of a myth: The EU decision to ban internal combustion engines (2035)

After the EU institutions had repeatedly debated the future regulatory regime for drive technologies in Europe in recent years, the discussion took a decisive turn in the winter of 2025: the original stipulation of a complete ban on the sale of new vehicles with combustion engines from 2035 was effectively abandoned and replaced by a more flexible CO₂ target. According to the chairman of the EPP group in the European Parliament, Manfred Weber, the European Commission is now planning  to replace the 100% CO₂ reduction requirements for fleet targets from 2035 onwards  with a targeted 90% reduction target – and thus remove a complete ban on the technology of the internal combustion engine from the legislative process. This plan still has to be confirmed in parliament, but it would mark a profound change of course compared to previous EU decisions and would mean that new combustion engines with significantly reduced emissions could continue to be registered after 2035. FinanzNachrichten.de

This step follows an intensive phase of political disputes between the EU Commission, member states and stakeholders in the automotive value chain. The starting point was a CO₂ regulation originally agreed as part of the "Fit for 55" initiative, which  provided for zero-emission new cars from 2035, which would have effectively meant an end to new registrations of vehicles with classic combustion engines. Council of the European Union

The current departure from this line is not only a political signal, but also has far-reaching implications for investment decisions, development projects and strategic roadmaps of OEMs, suppliers and energy suppliers. It reflects the existing reality: the technology programmes are heterogeneous, the fleet requirements are diversified, and the political framework is increasingly formulated in a technology-neutral way.

Political decision of the EU and its consequences

What happened?

In the course of 2025, a political dynamic has developed in Brussels that fundamentally calls into question the previously agreed ban on the new registration of vehicles with combustion engines from 2035. According to recent statements from political circles, the EU Commission is now to propose a set of rules that:

• instead of a complete 100% CO₂ reduction for new car fleets from 2035 onwards, only a 90% target will be set in the future,

• and no longer contains a final 100% target in subsequent reviews (e.g. for 2040).  This would mean that internal combustion engine vehicles may also be newly registered after 2035, provided that the total emissions of the fleet targets are sufficiently reduced. FinanzNachrichten.de

This planned change of direction is openly communicated by leading voices of the European People's Party (EPP) and is considered the result of intensive lobbying by both industry-related players and individual member states. However, the proposal still needs to be formally confirmed by the European Parliament and the Council before it becomes legally binding. THE WORLD

Political and industrial reactions

The reactions to this turnaround are manifold:

• Industry representatives and parts of the automotive industry see the relaxation as a necessary adaptation of regulation to technological realities and competitive challenges. Many manufacturers had already warned that a rigid ban on incineration could lead to job losses, relocations and competitive disadvantages compared to other regions.

• Political actors within the EU argue that such a design of fleet targets enables a balance between climate protection and technological neutrality. At the same time, environmental associations and parts of civil society see this as a step backwards in the decarbonisation strategy of the transport sector.

• Member states such as Germany and Italy had previously taken positions seeking to soften stricter regulation, with calls in particular for exemptions for synthetic fuels ("e-fuels") to continue to allow technologies such as high-efficiency combustion engines. euronews

Consequences for OEMs, suppliers and the industry

The political decision or its possible correction has a direct impact on manufacturers' product strategies, investment plans and technology portfolios :

• Planning security and investment framework:

  The original stipulation of a ban on internal combustion engines from 2035 had led many OEMs to reprioritize resources in the direction of battery-electric systems. The prospect of a longer-lasting combustion engine technology can change this planning again and create uncertainties, as companies are now considering additional capacity for highly efficient combustion engines, hybrid and range extender concepts.

  
  

• Technology openness vs. standardization:

   A relaxation of regulation could favor the development of technology-open platforms in which different propulsion systems (BEV, REEV, PHEV, H₂-ICE) are held in parallel. At the same time, this makes it difficult to achieve clear standardization and industrial concentration on a dominant technology.

  
  

• Market strategies and product portfolio:

  Manufacturers with strong combustion engine competencies (e.g. in the luxury/performance segment) see an opportunity to further exploit their developments, while other OEMs that relied heavily on pure BEV strategies early on need to critically evaluate their positions.

  
  

• Supply chains and the labor market:

  The strategy adjustment can stabilize existing supply chains and jobs in the value creation of combustion engines. At the same time, the question remains as to how this decision will affect future demand for components and services in the combustion engine sector.

Regulatory background: Euro 7, 2035 and political refractions

The EU regulations around Euro-7 have been intensively negotiated over the last 24 months; Deadlines, test procedures and the concrete design (on-board monitoring, test cycles, particle measurement) have been adjusted several times, which creates uncertainty in development and investments. At the same time, the political debate about an effective "phase-out of internal combustion engines" (2035) is in flux: Parts of the industry are calling for exemptions for CO₂-neutral fuels, PHEV/REEV concepts and commercial vehicles. The EU institutions have published implementation files and procedural postponements — this creates space for product strategies that use combustion engines longer or reinterpret them. European Parliament+1

OEM strategies: No one-size-fits-all opinion

The major European OEMs are not pursuing a uniform line: Many have communicated strong electrification roadmaps in recent years and in some cases have named end dates for pure combustion engines in their roadmaps; at the same time, individual players (especially in the premium and performance niche) have recently begun to actively defend the combustion engine again.

Examples

• BMW: Positions itself in the direction of technology pluralism and has repeatedly emphasized that it will not write off the ICE prematurely — strategically, BMW wants to keep segments open (EV + ICE) and has retained development resources for combustion engines. BMW Group+1

• Porsche: Communicated a strategic update in 2025 that provides for the continuation and even addition of brand-defining combustion engine models (e.g. addition of SUV ranges with combustion engine/HEV variants). The company cites billions of euros in investments for this. Porsche AG+1

• Audi: Announced the introduction of a new V6 diesel with electric assistance (MHEV plus / electrically assisted compressor) for Q/A series at the end of 2025 — a clear signal that diesel technology is being relaunched in certain market segments. Audi MediaCenter

These divergent approaches create market and supplier uncertainty — but they are logical: premium brands can justify margins for iconic combustion engines and high-performance models; Volume manufacturers are more dependent on economies of scale for BEV platforms. Reuters

Technology trends: What's new in the combustion engine?

Since 2025, we have been experiencing several parallel technological developments:

1. Range Extenders / REEVs (serial hybrid / E-generators)

   Range extenders are experiencing a renaissance: Platforms with smaller batteries plus an efficient combustion generator are intended to address costs and range anxiety. S&P Global Mobility sees a growing market segment for REEV/range extender solutions in the next few years. IAV describes REEV concepts as a "quasi infinite perceived range" approach — the industry is investing in compact, optimized generators. S&P Global+1

   
   

2. "Hydrogen-ready" ICE & e-Fuels

   Engineering Service Providers (AVL, FEV) are driving the adaptation of combustion engines to hydrogen or e-fuel operation — with a focus on fleets/commercial vehicles and specific niches where battery electrics are heavy or inefficient. AVL describes active projects on hydrogen-capable combustion engines. AVL+1

   
   

3. Electrified combustion engine subsystemsInnovations such as electrically assisted turbochargers, integrated 48 V MHEV architectures or generators with high electrical power density increase efficiency and emission behavior — and make combustion engines cleaner in real operation than older model series. Audi's new V6 TDI combines several electrified components. Audi MediaCenter

   
   

4. Chinese OEMs and suppliers are showing aggressive REEV and range extender programs (e.g. IM Motors "Stellar"), sometimes in cooperation or with borrowings from German development expertise. IM Motors presented a "Super Range Extender" system (>1,500 km combined) in 2025, which has reignited debates about transition technologies. electrive.com+1

Efficiency matrix – comparison of different drive technologies

Economic and market-practical effects

• Investment paradox: Suppliers are faced with the task of investing in battery systems, software and combustion engine components in parallel. Engineering service providers (AVL, FEV, IAV) report strong demand for multi-powertrain expertise. AVL+1

• Supply chain & jobs: An abrupt end to ICE production would severely affect supply chains and employment — arguments that play a role in Brussels and national politics. This also explains the lobbying work of some manufacturers and industry associations. Reuters

• Market segments: Luxury, commercial vehicles, long-distance SUVs and niches (race/collector vehicles) remain more focused on combustion engines; the mass market is shifting towards BEVs as long as prices and charging infrastructure grow with it. PwC

  
  

Selection of relevant combustion/REEV powertrains announced/newly developed since 2025

Note: The table is selective — it lists validated, publicly communicated projects/new developments; a fully exhaustive list of all engine developments worldwide since 2025 would be much more extensive and requires dedicated, ongoing monitoring.

Overview of relevant Chinese internal combustion engines & hybrids / REEV systems

* SOP = Start of Production. Where no SOP year is specified, it is at least publicly announced/presented engines or developments — official series production may vary depending on the market/regulation.

🧭 Which trends stand out?

• Focus on efficiency in diesel and gasoline: The new diesel from Weichai with 53% thermal efficiency shows that the Chinese engine industry continues to invest heavily in the commercial vehicle and truck segment and is striving for global efficiency records. auto motor und sport+2»Automotive industry«+2

• High-compression gasoline engine: Chery demonstrates that conventional gasoline engines still offer modern efficiency potential through engineering — particularly relevant for SUVs / PHEVs, where pure e-mobility does not (yet) dominate. Auto Motor und Sport+1

• Hybrid / PHEV / REEV strategy: Manufacturers such as Geely and many OEMs in China see combinations of combustion engine + battery + intelligent control (e.g. AI-supported management) as a means of combining the advantages of both drive systems. CleanTechnica+1

• Range extender / REEV as a transition or market expansion strategy: Especially in regions with weak charging infrastructure or price sensitivity, REEV is seen as a pragmatic bridging technology. FR.de+1

• Hydrogen ICE (H₂ combustion engine): The first Chinese manufacturers/suppliers are working on hydrogen ICE — often in the context of consortia and research for alternative propulsion systems based on traditional ICE platforms. PR Newswire+1

⚠️ Limitations & Challenges in Data Collection

• Lack of transparency in SOP and series production: Many of the engines or technologies mentioned have been announced or presented — but public information about the start of production or series production is often missing. This applies in particular to new gasoline engines with high compression, PHEV/REEV powertrains or hydrogen ICE.

• Different documentation standards: Unlike large Western OEMs, data on combustion engines are less standardized, difficult to access, or only published domestically at some Chinese manufacturers — resulting in uncertain comparability.

• Regulatory and market uncertainty: Even if there are technical advances, there is a risk from emissions regulation, subsidy policies for BEVs, e-fuels or international standards — this can delay or change series production.

🎯 Why these developments are relevant — also internationally

• Competition & export pressure: Efficient combustion engines from China (especially high-efficiency diesel or modern PHEV/REEVs) increase competitive pressure — especially in markets with less stringent electrification or inadequate charging infrastructure.

• Technology pluralism instead of "either-or": The combination of BEV, PHEV, REEV, efficient ICE and possibly H₂-ICE shows that "drive technology of the future" is not defined monolithically in China and by globally active OEMs — relevant for suppliers, investors, politics and industry.

• Potential for efficient transition & global carbon footprint: Engines with high efficiency and modern hybrid/REEV concepts — combined with an efficient fuel or energy network — can contribute to CO₂ reduction, which can also play a role in markets with limited EV infrastructure worldwide.

Voices from the industry

• IAV (Dr. Alexander Fandakov): „We want to enable customers to have a BEV with 'quasi infinite perceived' range…“ — IAV beschreibt damit klar die Motivation hinter REEV-Konzepten. IAV

• S&P Global Mobility (analysis, Shanghai 2025): S&P predicts growth in REEV/range extender production in North America/EU by 2030 and emphasizes the role of these concepts in response to price and infrastructure barriers. S&P Global+1

• AVL / FEV (press statements): Both service providers are actively communicating projects on hydrogen-capable combustion engines and range extender technologies — a clear sign that development capacity and demand continue to exist. AVL+1

🧩 Result

No clear "death scenario" for the combustion engine: Political uncertainties (Euro 7 implementation issues, 2035 debates), technical developments (e-turbochargers, hydrogen ICE, REEV) and market segments with strong interest in combustion engines ensure that combustion technologies remain relevant — albeit in a changed, specialized role. European Parliament+1

The market is differentiating: BEV-first strategies dominate in many volume segments; at the same time, hybrid, REEV and CO₂-neutral fuel solutions are becoming more important where BEV economics, charging infrastructure or payload/range limit requirements. PwC

For suppliers and investors, the following applies: Diversification of technological competencies is mandatory — those who rely only on pure ICE construction risk surplus capacities; those who rely only on BEVs miss short-term market opportunities in the REEV/HEV segment. AVL+1

Yes — there are current and planned new combustion engines in China — and they are technically ambitious: diesel engines with > 53% thermal efficiency, gasoline engines with high compression, modern PHEV/REEV systems and initial approaches to hydrogen ICE. This means that the combustion engine remains relevant — at least in certain segments (commercial vehicles, hybrid/REEV, transition cycles).

For Europe and globally, this means that the focus on BEVs is right — but a complete move away from the combustion engine could be strategically too short-sighted as long as alternative fuel and drive technologies are not widely available and markets exist in which ICE / hybrids are economical.

Call-to-Action

How do you see that? Is the combustion engine a phase-out technology for you, a transitional solution — or will it remain permanently relevant in special segments? Share your perspective in the comments.

Sources

• EU/Euro-7 Implementing Acts, European Parliament/EU Documentation. European Parliament

• Reuters: „Explainer / European carmakers hope for reprieve on 2035...“ (Bericht zur Industrie-Position 2025). Reuters

• Porsche AG — Product Strategy / Investor Release (19.09.2025). Porsche AG

• Audi MediaCenter — Press release on the new V6 TDI (11/27/2025). Audi MediaCenter

• S&P Global Mobility — Analyses & blog post on REEV / Shanghai 2025 trends. S&P Global+1

• IM Motors / electrive / CarNewsChina — Vorstellung „Stellar“ Range-Extender (Aug 2025). electrive.com+1

• AVL, FEV, IAV — Presse/Technikseiten zu hydrogen-ready ICE, Range Extender, Engineering-Services. AVL+2FEV Group+2