S&P Global Offerings
Featured Topics
Featured Products
Events
S&P Global Offerings
Featured Topics
Featured Products
Events
Obtain the data you need to make the most informed decisions by accessing our extensive portfolio of information, analytics, and expertise. Sign in to the product or service center of your choice.
Customer LoginsS&P Global Offerings
Featured Topics
Featured Products
Events
S&P Global Offerings
Featured Topics
Featured Products
Events
Language
Forecasting & Planning
Sales Performance & Marketing
Vehicle In Use
Automotive
Forecasting & Planning
Sales Performance & Marketing
Vehicle In Use
Automotive
I certify that I have checked the post for the following items:
ICE remains relevant despite electrification. OEMs will innovate hybrid powertrain systems and legacy engine architectures to meet the demand for compliant and capable vehicles.
The internal combustion engine (ICE) has been the heart of America's auto industry for more than a century. Today, industry stakeholders are pushing to phase out ICE in favor of more environmentally friendly battery electric vehicles (BEVs).
However, North America's road to electrification is not monolithic. While BEVs are natural frontrunners, hybrids — full, mild, and plug-ins — all play an essential role in bridging the gap between conventional ICE and fully electric vehicles.
During this transition automakers in North America will explore powertrain technologies, engine platforms, transmission designs, and other opportunities. What strategies can OEMs adopt to balance investments across vehicle portfolios when navigating regulatory policies and incentives?
As we edge closer to 2030, BEVs and hybrids are likely to steer the future of transportation in North America. Despite more rapid electrification in other regions, North America's production trails slightly, at just between 9% and 10% for BEVs and fuel cell vehicles. However, projections suggest a significant leap, with 44% of vehicles forecasted to be BEVs or fuel cell models by the decade's end.
Tightening regulations demand automakers to achieve more significant reductions in carbon emissions. Fuel economy and CO2 emissions standards are driving low-emission vehicle production. In the US market, the National Highway Traffic Safety Administration targets 2% and 4% year-over-year improvements in fuel economy, and the EPA aims for a nearly 50% reduction in fleet-wide emissions by 2032. These regulations are powertrain-agnostic, allowing manufacturers to choose their path toward compliance, whether through BEVs, plug-ins, or other innovative technologies.
ICE vehicles with stop-start systems face increasing pressure but are not bowing out quietly. Adaptations and enhancements must take place to meet diverse consumer needs and regulatory demands. Hybridization allows engines to coexist with electric powertrains and provides OEMs with a balanced approach.
The US Inflation Reduction Act (IRA) is another critical policy influencing the BEV transition. The IRA set incentive eligibility rules across five key metrics: final vehicle assembly location, manufacturer's suggested retail price, buyer income, mineral sourcing and battery assembly location.
To stimulate local production and consumer adoption, the IRA offers vehicle buyers up to $7,500 in rebates if their electric vehicles are manufactured within North America. This incentive policy is part of a broader strategy to secure a domestic supply chain for critical components like batteries and essential minerals to ensure the region's competitiveness in the global EV market.
Across different body styles and market segments, traditional cars, particularly sedans, are expected to see notable growth in BEVs. The most significant increase, however, is projected to come from unibody light trucks and utility vehicles. Over 63% of production in this segment is expected to consist of BEVs or fuel cell vehicles by 2031.
Driven by increasing demand for capable vehicles, the transition to BEVs will require enhancements in architecture and efficiency, especially for full-size trucks, vans, and SUVs. Although diesel is declining in relevance across most segments, its performance characteristics remain highly valued, especially in high-torque applications such as body-on-frame trucks, vans, and pickups.
Adoption rates of BEVs currently vary significantly across the United States. California is leading among the Section 177 states due to the Advanced Clean Cars II regulations and its substantial market size. In a bold commitment, all new passenger cars, trucks, and SUVs sold in California must have zero emissions by 2035.
It's a different story for heavy-duty variants of pickups, vans, and SUVs (class 2B/3). They face electrification challenges, mainly due to the demanding performance and consumer expectations for these vehicles. Despite the hurdles, advancements in range-extension technologies and hybrid systems will pave the way for electric options to become more viable.
Outside the United States, Canada and Mexico are also witnessing shifts in their automotive sectors. Canada sees adaptations in plant operations and product offerings that align with electrification trends. Meanwhile, Mexico is experiencing a resurgence in post-pandemic vehicle production. Significant investments in BEV production and hybrid technologies mark a strong push toward electrification.
OEMs are currently at a crossroads as the industry undergoes a period of intense innovation and competition. The cadence for new engine program launches is slowing. Instead, manufacturers are innovating on existing platforms. The goal is to develop further current architecture to support multiple powertrain configurations, such as ICE, hybrid, and plug-in hybrid.
Implementing strategies like incremental improvements and hybridization helps extend the lifecycle of internal combustion engines. Furthermore, it updates these configurations and architectures to comply with the upcoming fuel economy and greenhouse gas regulations.
However, the industry is not devoid of emerging opportunities. The technological shift required to support a growing fleet of electric vehicles presents manufacturers with new market opportunities. There is an increasing need for advanced transmission systems, including dedicated hybrid transmissions (DHTs), reduction gear, and additional eAxle installations, which are crucial components for BEVs with electric motors.
BEVs may be the future, but the strategic use of hybrids and enhanced ICE vehicles will continue to play a crucial role in North America's automotive industry. As OEMs balance investments across existing engine architectures and powertrain types to produce more capable and energy-efficient vehicles, their continued innovation in ICE and hybrid models will anchor the sector during this transition.
This article is part of a series featuring highlights from S&P Global Mobility's 2024 Solutions Webinar Series. The North America-focused Powertrain webinar occurred on May 9, 2024.
Register for additional webinar sessions.
This article was published by S&P Global Mobility and not by S&P Global Ratings, which is a separately managed division of S&P Global.