Major automotive markets are witnessing a rapid adoption of electric vehicles (EVs). In Europe, battery EVs accounted for 9.1% of car registrations in 2021, and regulations are in place to allow only sales of zero-emission vehicles beginning in 2035. But that leaves more than a decade when automakers will still look for a significant chunk of their annual sales to come from internal combustion engine (ICE) vehicles. This includes more environmentally acceptable hybrid cars, which rely on ICE alongside EV batteries for power.

Car companies recognise this and have no plans to abandon internal combustion powertrain production soon. Yet, some want to cut off their investment in ICE and vehicle platform R&D and focus all their resources on EV advancement. This would represent a missed opportunity to improve the efficiency and reduce the environmental impact of those ICE vehicles still to be manufactured, sold, and driven for many years to come. These automotive sales—which at this point are more profitable to manufacturers than EVs—are the cash cows funding the industry’s transition into an electrified, software-dominated future. Automakers can’t afford for that revenue stream to decline.

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Srinath Rengarajan and Thomas Schiel also contributed to this article.