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The End of the Internal Combustion Engine? Not So Fast.

Published on: 17:25PM Dec 21, 2017

 

Henry Ford, founder of the Ford Motor Company, sold the first mass-produced automobile in the United States in 1908, the Model T car, for $825.  The Model T stayed in production for another 19 years, with cumulative output of 15 million vehicles.  The Model T held the record for production of a single car model until it was surpassed by the Volkswagen Beetle in 1972.

 

As of 2015, there were an estimated 1.2 billion vehicles in use around the world, split between about 947 million passenger vehicles and 335 million commercial vehicles (ie.,semis, smaller work trucks, commercial vans, and buses).  These figures do not include two -wheeled motor vehicles, such as scooters, motorcycles, and those slow-moving three-wheeled’ rural vehicles’ which originated in China.  These vehicles are manufactured in China to carry farm goods, construction material, and people economically, and as of 2002, they were making three times as many rural vehicles (6 million) as they were conventional automobiles (2 million) in the country.

 

Car ownership levels are very high in most developed countries, but less so in much of the developing world.  According to a 2015 Pew survey conducted in 44 countries across the per capita income spectrum, the highest levels of car ownership were found in Italy, at 89 percent, the United States, at 88 percent, and Germany, at 85 percent.  Among advanced developing economies, the rates were significantly lower, with Brazil at 47 percent, China at 17 percent, and India, at 6 percent.  The lowest rates were seen in Vietnam and Bangladesh, both at 2 percent, Uganda at 3 percent, and both Tanzania and Kenya at 5 percent.  The survey asked whether the individual owned a functioning car, not how much he or she used that vehicle.

 

On average across all 44 countries surveyed, bicycles were more commonly owned (at 42 percent) than automobiles (at 35 percent).  Motorcycles and scooters were most commonly owned in South and Southeast Asian countries, with levels greater than 80 percent in Thailand, Vietnam, Indonesia, and Malaysia.

 

The bottom line is that while car ownership levels may be at saturation points in many developed countries, there is far more room to grow in developing countries.

 

Will most of those cars continue to use internal combustion engines, run on gasoline, gasoline/ethanol blends, and diesel fuel, or will those type of vehicles eventually follow the path of videotapes and eight-track tapes and become obsolete, to be replaced by electric vehicles?

 

While it is true that demand for gasoline has reached a plateau or even started to decline in several developed countries, such as the United States and Russia, the emergence of electric vehicles as replacements for cars that utilize gasoline has played on a small role so far.  Other factors driving this change in demand include:

 

  • Improved fuel economy for newer vehicles.  In fact, the U.S. Energy Information Administration projects that in the United States, improvements in fuel economy will more than offset increases in vehicle miles driven by 2040.

 

  • Changes in driving behavior, especially among the younger generation.  A 2010 analysis of data from the National Highway Traffic Safety Administration (NHTSA) found that Americans in every age cohort were driving fewer miles per year in 2009 than in 2001, but the difference was most striking among people under the age of 40.  For example, the 35-39 cohort average miles per year dropped by about 20 percent, from 13,300 miles to 10,500 miles.

 

  • The emergence of alternative car engines, first the hybrid gas/electric cars such as the Toyota Prius, and then more recently plug-in electric vehicles, such as the Nissan Leaf or the various models of Tesla.  Between its introduction in 2000, and April 2016, 1.64 million Prius automobiles were sold in the United States.

 

As part of the effort to reduce the emissions of greenhouse gases which cause climate change, some car companies, such as Volvo and Jaguar, are phasing out production and sales of gasoline- and diesel-powered cars, within the next five years.  In addition, a number of countries have announced plans to ban sales of such cars over the next 10-25 years, including Norway, the United Kingdom, France, and the Netherlands.

 

Even though there are now only about 2 million electric vehicles in use today around the world, some studies project that such cars could significantly replace gasoline- and diesel-powered cars in the United States over the next several decades.  Researchers at Georgetown University project that in a ‘fast adoption’ scenario, 93 percent of all vehicles in the United States could be electric vehicles by the early 2040’s.

 

While these projections seem to relegate the internal combustion engine to history in relatively short order, it does not take into account the likely much slower pace of adoption of electric vehicles that would prevail in the developing world.  According to a 2015 IHS automotive study, the average age of cars in Africa listed for sale was nearly 13 years, so the rate of turnover of the car fleet across the continent is quite low.  In addition, reliable access to electricity is still elusive in many African countries, which would make buying an electric vehicle a risky proposition.  In fact, in recent years, a significant share of the sales of gasoline and diesel in Africa has been used for back-up generators for businesses and homes rather than powering vehicles.