Where Are Automakers’ Investment Dollars Going?

According to the new Global Automotive Executive Survey from tax, audit and advisory firm KPMG LLP, automakers' key investment priority over the next five years will be driving optimization of the internal combustion engine – not pursuing electric vehicles and related technologies.

KPMG's research does not suggest that OEMs are giving up on electric, hybrid electric or other alternative drivetrains. In fact, automakers and suppliers will ‘intensify investment in electric technology,’ says Gary Silberg, national automotive industry leader for KPMG.

However, because EVs and hybrids are still relatively new and untested, the traditional gasoline and diesel powertrains will continue to dominate.

‘Today's combustion engines can continue to offer consumers the fuel efficiency and performance they desire, and what's clear is that the internal combustion engine is not going anywhere anytime soon,’ Silberg says.

KPMG's survey of 200 executives in the global automotive industry found that 26% of respondents expect their companies to direct the highest level of investment over the next five years toward downsizing and optimizing internal combustion engines. Thirty-six percent said ‘most’ of their current R&D expenditures still go into combustion engines.

Moreover, 71% of these executives anticipate that optimized internal combustion engines will offer more efficiency and CO2 reduction potential than any EV technology for at least the next six to 10 years.

In the electrification space, hybrid technologies are currently the front-runners, according to KPMG's study. Twenty-six percent of executives said their companies will invest most in plug-in hybrid fuel systems, compared to only 8% who said pure battery EVs would get the lion's share of investment.

A huge majority (87%) of the survey respondents agree that battery electric vehicles will not be able to match the range of fuel-driven cars for at least another five years. In turn, 66% of executives do not expect electrified vehicles (all varieties of EVs) to represent more than 15% of global annual auto sales before 2025.

Notably, automakers also ‘continue to explore powertrain opportunities that would allow them to capitalize on the U.S. abundance of natural gas,’ according to KPMG.

More information about KPMG's work can be found HERE.

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