Why Carmakers Are Falling Back in Love with Petrol: The Unexpected Revival of Internal Combustion

Just a few years ago, the narrative seemed clear: electric vehicles represented the future, and internal combustion engines were headed for extinction. Major automakers announced ambitious plans to go all-electric, with some pledging to phase out petrol engines entirely by 2030 or 2035. Governments set deadlines. Investors celebrated. The transition appeared inevitable.

Then something unexpected happened. Major carmakers in the US and Europe are cutting back on electric vehicle production due to softening demand and overcapacity, while hybrid sales are picking up. According to Handelsblatt, VW and Audi are considering further investments in petrol and hybrid models, delaying their full-electric transition. Even more surprisingly, carmakers are feeling the pain of the EV slowdown after governments shut down popular subsidies for the technology, making the already more expensive electrics even less attractive to buyers.

The electric revolution hasn’t been cancelled—but it’s been postponed, recalibrated, and complicated by economic realities that are forcing automakers back to technologies they thought they were leaving behind.

The Reality Check: When EVs Met the Market

The shift back toward petrol isn’t happening because electric vehicles don’t work—they do, and quite well. It’s happening because the gap between vision and reality proved larger than anyone anticipated.

Consumer adoption has plateaued far below projections. With the EU’s delay of the 2025 target, carmakers took their foot off the gas, leading to a shortfall of 2 million BEVs (over 2025-2027). This represents millions of vehicles that won’t be electric, requiring manufacturers to continue producing petrol-powered alternatives.

The slowdown stems from multiple factors converging simultaneously. Price remains the most obvious barrier—even with subsidies, EVs typically cost significantly more than comparable petrol vehicles. When governments withdrew or reduced those subsidies, as many have done recently, the price gap widened further, making EVs unaffordable for mass-market buyers.

But it’s not just about upfront cost. Gaping holes in charging infrastructure also continue to turn off potential customers. Range anxiety remains real for many buyers, particularly those without home charging options. For families taking road trips, apartment dwellers without dedicated parking, or anyone living in areas with sparse charging networks, EVs present practical challenges that petrol vehicles simply don’t.

The Hybrid Boom: The Goldilocks Solution

While pure EVs stumble, hybrid vehicles are experiencing a renaissance. Hybrids offer a compelling middle ground—better fuel economy than traditional petrol cars, but without the range limitations and charging hassles of pure electrics.

Toyota, which never fully abandoned internal combustion, now looks prescient rather than conservative. The company invested heavily in hybrid technology when competitors rushed toward pure EVs, and that strategy is paying dividends as consumer preferences shift.

The 2025 Toyota hybrid lineup demonstrates the technology’s maturity and versatility. From the fuel-sipping Corolla Hybrid achieving 42 mpg combined to the spacious Highlander Hybrid offering three-row seating without sacrificing efficiency, hybrids now cover virtually every vehicle segment.

Other manufacturers are scrambling to catch up. Mercedes is even reportedly considering using BMW-supplied engines for future petrol and hybrid models—an unprecedented move that highlights how urgently traditional automakers need combustion engine technology they thought they’d be phasing out.

New Engines for an Old Technology

Perhaps nothing better illustrates the petrol comeback than major manufacturers developing entirely new combustion engines in 2025. Toyota plans to use upcoming 1.5- and 2.0-liter engines in nearly every conceivable type of powertrain. These aren’t legacy engines being carried over—they’re clean-sheet designs optimized for modern fuel efficiency standards and hybrid applications.

This represents a massive engineering and financial commitment. Developing new engine families costs billions of dollars and takes years. Companies don’t make such investments for technologies they plan to abandon imminently. The fact that Toyota, Mercedes, and others are investing in new petrol engines signals a fundamental recalculation of the timeline for electrification.

These new engines incorporate decades of combustion research, advanced materials, and sophisticated electronics to extract maximum efficiency from every drop of fuel. They’re designed to work seamlessly with electric motors in hybrid configurations, combining the best attributes of both technologies.

The Regulatory Reality: Extended Deadlines and Delayed Transitions

Government policies that once accelerated the EV transition are now accommodating its slower pace. The extended European Union emission targets, granting carmakers two more years to comply, further support this diversified approach, potentially resulting in two million fewer EVs sold between 2025 and 2027 than previously anticipated.

This policy shift reflects political and economic realities. Forcing too-rapid electrification risks destroying automotive jobs, stranding investments, and alienating voters who can’t afford or don’t want EVs. Governments that once set aggressive deadlines for petrol phase-outs are quietly extending timelines or introducing loopholes.

This move contradicts previous commitments to phase out combustion engines in Europe by 2033. The contradiction reveals how aspirational targets collide with practical constraints. Politicians can set bold goals, but manufacturers must build products that customers actually want to buy at prices they can afford.

The regulatory environment now tacitly acknowledges what the market already showed: the transition to EVs will take longer than initially projected, and petrol engines will remain relevant far beyond the dates once targeted for their obsolescence.

The Economics of Production: Sunk Costs and Stranded Assets

Behind the strategic pivot lies cold economic calculation. Automakers have hundreds of billions of dollars invested in combustion engine manufacturing capacity, supply chains, and engineering expertise. Walking away from those assets before extracting their value would destroy shareholder wealth and potentially bankrupt companies.

Assembly lines that produce petrol engines can’t be instantly converted to EV battery production. The supply chains are entirely different—traditional engines require machined metal components from casting foundries and machine shops, while EVs need batteries from chemical processing facilities. The workforce skills don’t easily transfer either—combustion engine mechanics can’t necessarily diagnose battery pack electronics without extensive retraining.

The financial logic of continuing petrol production becomes overwhelming when demand remains strong. Why idle profitable factories to build EVs consumers aren’t buying in projected quantities? Why strand billions in assets when the market still wants what those assets produce?

The slow growth of BEVs in the 2022-2024 period is due to the CO₂ standards design and carmakers profit driven strategy. Profit-driven strategy isn’t cynicism—it’s survival. Companies that ignore economic reality in pursuit of idealistic goals tend to go bankrupt, helping no one.

Consumer Preferences: What Buyers Actually Want

Perhaps the most important factor in petrol’s comeback is simple: consumers still prefer it, at least at current EV price points and infrastructure availability.

Surveys consistently show that while many consumers express interest in EVs, actual purchase behavior tells a different story. When faced with paying $10,000-$20,000 more for an EV versus a comparable petrol vehicle, most buyers choose petrol. When considering a road trip to visit family, range anxiety tips the scale toward combustion engines.

This isn’t ignorance or stubbornness—it’s rational decision-making based on individual circumstances. For a two-car family with a garage where one vehicle could charge overnight, an EV might make perfect sense. For a single-car family in an apartment with street parking, an EV presents genuine practical challenges.

The preference for hybrids reflects this calculation. Buyers get meaningfully better fuel economy than conventional petrol cars, typically 30-50% improvement, without range limitations or charging hassles. They can fill up anywhere in five minutes and drive as far as a tank allows. For many consumers, that’s the optimal solution—at least until EV technology, pricing, and infrastructure mature further.

The Infrastructure Gap: Building Out Takes Time

Even if EVs became price-competitive with petrol vehicles tomorrow, the charging infrastructure gap would remain a massive barrier. Gaping holes in charging infrastructure also continue to turn off potential customers.

Building comprehensive charging networks comparable to existing petrol stations requires enormous capital investment and years of construction. It’s not just about the number of charging points—it’s about their location, reliability, charging speed, and payment systems. A petrol station can fuel dozens of vehicles per hour; fast-charging stations take 20-45 minutes per vehicle, requiring far more physical space and electrical capacity to serve similar throughput.

Urban areas present particular challenges. Where do apartment dwellers charge? Street parking doesn’t accommodate overnight charging. Parking garages would need massive electrical upgrades. The infrastructure requirements for electrifying transportation in dense cities are staggering—and largely unaddressed.

This infrastructure gap ensures petrol vehicles remain essential for millions of drivers regardless of EV vehicle pricing or technology improvements. Until charging becomes as convenient and ubiquitous as refueling, combustion engines will serve vital transportation needs.

The Manufacturing Reality: Complexity and Cost

The assumption that transitioning from combustion engines to EVs would be straightforward has proven false. EVs are simpler in some ways—fewer moving parts in the powertrain—but far more complex in others, particularly battery manufacturing.

Battery production requires entirely new supply chains, different raw materials, and specialized manufacturing techniques. The capital investment to build battery factories runs into tens of billions of dollars. The expertise required is fundamentally different from traditional automotive manufacturing.

Companies that spent a century perfecting combustion engine production can’t simply pivot to battery manufacturing without enormous disruption, cost, and risk. The learning curve is steep, quality control is challenging, and the technology is still rapidly evolving—meaning today’s battery factory might be obsolete in five years.

Continuing to manufacture and improve combustion engines leverages existing expertise, capital equipment, and supply relationships. It’s simply far easier and less risky than wholesale transformation to EV production—particularly when consumer demand for EVs remains uncertain.

The Political Dimension: Jobs and Industrial Policy

The shift toward petrol also reflects political pressure to preserve automotive industry jobs. Combustion engines require far more labor than EVs—more parts means more manufacturing jobs, more assembly complexity, and larger supply chains.

Governments concerned about employment in automotive regions have legitimate reasons to slow EV transitions. A factory producing engines, transmissions, and exhaust systems employs thousands; a battery pack assembly facility employs hundreds. The political consequences of rapid job losses concentrate in specific regions, making the issue particularly sensitive for elected officials.

This creates tension between climate goals and employment concerns. While the abstract benefits of electrification appeal to environmental advocates, the concrete costs of job losses motivate political resistance. The result is policy ambivalence—continued verbal commitment to electrification paired with regulatory flexibility that accommodates continued petrol production.

The Global Dimension: Not Everyone Is the Same

The discussion of EV transitions often focuses on wealthy countries in North America and Europe, but the global automotive market is far more diverse. Developing countries face different constraints—lower incomes, less reliable electricity grids, and minimal charging infrastructure.

For these markets, petrol vehicles will remain dominant for decades regardless of what happens in wealthy nations. This global demand ensures combustion engine production continues at scale, maintaining economies of scale that keep the technology viable and competitive.

China presents a special case—massive government support for EVs has driven rapid adoption there, but even Chinese consumers show increasing interest in hybrids as subsidy programs wind down. The world’s largest automotive market is demonstrating that even with strong policy support, pure EVs face adoption challenges.

What This Means for the Energy Transition

The petrol comeback doesn’t mean the energy transition is failing—but it does mean the transition will be slower, messier, and more complex than the optimistic scenarios suggested.

Hybrids will play a far larger role than initially envisioned, serving as a decades-long bridge technology rather than a brief transition. Pure EVs will continue growing but will likely remain a minority of new vehicle sales through 2030 and possibly beyond.

This has significant implications for oil demand, which will decline more slowly than aggressive electrification scenarios projected. It means combustion engine emissions will remain a climate concern for longer, requiring continued improvements in fuel efficiency and potentially carbon capture technologies.

It also suggests that other approaches to decarbonizing transportation—sustainable aviation fuels, hydrogen, improved public transit—may need greater emphasis since private vehicle electrification is proceeding more slowly than hoped.

The Bottom Line: Technology Meets Reality

The petrol comeback story isn’t about the triumph of old technology over new innovation. It’s about the collision between aspirational visions and practical constraints—economic, technological, and political.

Electric vehicles remain the long-term future for personal transportation. The physics and economics of electric motors versus combustion engines ultimately favor electricity. But “long-term” turns out to be longer than initially projected.

Major carmakers in the US and Europe are cutting back on electric vehicle production due to softening demand and overcapacity, while hybrid sales are picking up. This shift represents strategic adaptation to market realities rather than abandonment of electrification goals.

The automotive industry is learning that you can’t will a technology transition into existence through ambition alone. Success requires affordable products, adequate infrastructure, consumer acceptance, and economic sustainability. When those conditions aren’t met, even obsolescent technologies like combustion engines find new life.

For consumers, the petrol comeback means more choices. Hybrids offer meaningful efficiency improvements without EV compromises. New-generation combustion engines deliver better performance with lower emissions. The forced march toward pure EVs has paused, allowing more gradual evolution.

The lesson extends beyond automotive—in any major technology transition, expect reality to prove more stubborn than vision. The journey from old to new technology rarely follows a straight line. There are false starts, strategic retreats, and temporary reversals. The destination might be clear, but the path there winds through unexpected terrain.

Carmakers are falling back in love with petrol not because it’s superior technology, but because it’s what works today for most consumers in most circumstances. That calculation will eventually change—but “eventually” looks a lot further away than it did just a few years ago.