The car manufacturers creating the next generation of internal combustion engines

By Ruth Callaghan

After years of bad news for the internal combustion engine, including plans to phase them out in some countries and reduce their sale in others, last year the leaders of Mazda, Subaru, and Toyota announced they would work together on what they called next-generation Internal Combustion Engines (ICE).

The proposed collaboration would take an unusual form, with each carmaker planning to roll out a signature engine that aligned with each brand.

Toyota would pursue new-generation inline four-cylinder engines. Subaru would return to boxer engines. Mazda would develop a new rotary engine.

The news was heralded as a reprieve for the ICE, which has been singled out as a threat to the world’s ability to restrain greenhouse gas emissions. But it also signalled a challenge to the carmakers to make engines that are even cleaner and more efficient.

The problem with ICEs

ICEs remain by far the most popular engine on the market and are offered by 47 of the 49 brands that sold new light vehicles in Australia in 2023. The exclusively electric brands are Polestar and Tesla. But when it comes to tackling the greenhouse gases that lead to climate change, our preference for fossil fuel engines remains a persistent problem.

The International Energy Agency estimates that in 2023, private cars and vans were responsible for more than a quarter of global oil use and around 10 per cent of global energy-related CO2 emissions.

And while new ICEs continue to become more fuel efficient, the overall impact of emissions from ICEs remains stubbornly high — both due to the slow turnover of the vehicle fleet and the trend of drivers opting to purchase SUVs that have higher emissions than a smaller car of the equivalent age.

In Australia, where light vehicles account for around 11 per cent of greenhouse gas emissions, SUVs made up 59 per cent of new car sales in 2023.

All that extra weight adds up, and whereas light passenger vehicles produce around 140g of carbon dioxide per kilometre driven, the heaviest SUVs can produce nearly twice that amount — offsetting fuel efficiency gains from improved vehicle design.

Lower emissions vehicles will play an important role in efforts by Australia and the world to meet global emissions targets. This means something has to give.

Either people will need to purchase more ‘zero-emissions’ electric vehicles, or they will need to purchase ICE vehicles with much lower emissions than current Australian vehicle sales. This will require new fuel and vehicle technology that drives ICE cars to become drastically more efficient.

Zero-emissions vehicle mandates hit a speed bump

To encourage the move to battery electric vehicles (EV), many countries have clamped down on ICEs, with deadlines designed to set a horizon on their sale.

The European Union’s phase- out date for ICEs is set for 2035, but there is growing concern by local automakers — and some governments — that this might not be achievable.

In the UK, a 2030 phase-out date for purely petrol and diesel cars was briefly pushed to 2035, but with a change in government, an earlier deadline is back on the agenda.

While one in four cars sold in late 2024 in the UK was an EV, current laws require 28 per cent of new cars sold this year to be EVs or manufacturers potentially face a £15,000 penalty for every ICE vehicle sold above the target.

Australia has not introduced a zero-emissions vehicle man- date, with the government opting to rely on its New Vehicle Efficiency Standard to incentivise vehicle manufacturers to bring their most fuel-efficient ICEs and more electric vehicle models to Australia.

RAC manager of Vehicles and Fuels Alex Forrest says the challenge of mandates lies in diverging interests between governments, manufacturers, and buyers.

“The mandates that governments are putting in at the regulation level don’t necessarily align to the objectives of the car manufacturers,” he says.

“Their objective is to be a profitable business and look after their shareholders. That’s their main priority. They might produce some sustainable vehicles, but they have to look at their sales.

“For buyers, not everyone wants an EV — it’s not really the direction of the market at the moment and people are voting with their wallets.

“We have seen a huge spike in plug-in hybrid electric vehicle and hybrid electric vehicle sales, but this tech is only just starting to be available in big dual-cab utes, with the majority still running diesel engines.”

Is ICE innovation the answer?

Hybrid vehicles combine a combustion engine with an electric motor and battery that can be recharged using the combustion engine and regenerative braking. Plug-in hybrid electric vehicles (PHEV) can also be charged using a wall outlet or EV charger and have larger batteries that help them drive for short distances on electricity only.

The demand for hybrid vehicles over pure EVs has continued to defy expectations, says Motor Trades Association of WA chief executive officer Stephen Moir, with more than three times as many hybrids (PHEVs and HEVs) sold in February this year compared to EVs.

Surging up the sales charts in recent months has been the BYD Shark Ute, a PHEV that is one of only a few vehicles in the ute category offering alternatives to fossil fuel-only engines. Last year, Toyota stopped selling petrol-only variants for all of its models where an HEV variant is available.

But the willingness of buyers to switch from liquid fuel-only ICE vehicles to vehicles with a battery plus an internal combustion engine is an argument to continue to rework the traditional engine.

“Manufacturers are now changing their stance,” Stephen Moir says.

He said that while Toyota has one EV option with others to come, they’ve also got eight hybrid models, and those are continuing to sell very well. Stephen Moir said innovation in ICEs had not yet peaked.

“Hybrids are around 700 to 800km on a tank. These new combustion engines will do a lot more.”

The role of synthetic petrol

A second driver of this development is advances in fuel technology to reduce carbon intensity, Moir says. Petrol can now be made synthetically by extracting hydrogen from water and carbon dioxide from the air and then combining them to make methanol. If this process uses renewable energy, it can be almost carbon neutral.

Porsche has two biofuel plants, one in Tasmania and one in Patagonia, and they are extracting carbon from the atmosphere and then somehow turning that into a very clean fuel,” he says.

Synthetic petrol therefore offers promise, although it remains to be seen if it can be commercially produced in sufficient quantities and at a low enough cost to replace fossil fuel sources. And, unlike for electric vehicles, burning synthetic petrol still releases air pollutants such as nitrogen oxides.

Collaboration not competition

For Toyota, Subaru and Mazda, the opportunity to rework the ICE is clear.

All three brands have (or had, in Mazda’s case) EV and hybrid options in the market, but they equally have a strong history of ICE research and development.

The goal, they say, will be to develop decarbonised ICEs that can be integrated with electric drive trains, and eventually become compatible with carbon-neutral fuels, including hydrogen or biofuels.

The three brands have a pre-existing relationship, RAC’s Alex Forrest says (Toyota has shares in both Subaru and Mazda), and the latest collab- oration follows past ventures where they have worked together on common goals.

“It’s not really a first collaboration between those three, and it’s nowhere near new for manufacturers as a whole to work with each other to get a vehicle or a particular technology over the line,” he says.

“These kinds of projects can bring vehicles and technologies to market that we wouldn’t otherwise get if those manufacturers were operating in their own silos.”

Forrest says Mazda’s arm of the project is particularly interesting, given it plans to revisit the rotary engine, first launched in a Mazda in the 1967 Cosmo Sport and then used in a series of successful road and race vehicles.

While the engine was celebrated as being light, durable, and smooth to drive, it was a gas guzzler.

“It’s a fantastic engine, but it has been, historically, hard to make them more economical when compared to a conventional piston engine or a reciprocating engine,” he says.

“It’s arguably the most interesting of the three approaches, but it will also be interesting to see what the other two manufacturers can offer in helping with the development of the rotary engine.”

In the meantime, Mazda has also announced its Skyactiv-Z engine, expected in 2028, describing it as “the ideal internal combustion engine.”

While not a rotary engine design, it will be a petrol-electric hybrid utilising a 2.5-litre inline four-cylinder engine.

As the three brands progress their plans, other carmakers are taking note.

Audi has indicated it will review plans to be fully electric by 2032 and “take a look at the life of combustion engines,” while Aston Martin launched a V12 late last year, claiming there would always be demand for ICEs.

RAC’s Alex Forrest says reluctance by some manufacturers to move away from ICEs should not reflect poorly on those who want to make combustion engines more sustainable and compatible with hybrid drivetrains.

“Aston Martin knows the majority of people buying their cars are enthusiasts who want the sound and feel — the power delivery of an internal combustion engine, because that’s what sells those cars,” Forrest says.

“It’s a different explanation for those manufacturers looking to sell big volumes, like Toyota, Mazda and Subaru.

“If those three manufacturers can produce a hybrid vehicle that is fuel efficient and is affordable, then that will move more consumers towards electrification who otherwise might not have done that.

“That’s got to be a good thing.”