An in-depth review of Continental's logic and policy considerations behind its death sentence on internal combustion engines

The news that Continental, the world's second largest auto parts group, pronounced the internal combustion engine dead in Shanghai caused a stir. This was the first time that a German industrial giant fully embraced the trend of electrification after Germany's three largest auto giants fully electrified their vehicles.

Slightly different from the three major German automakers, Continental AG directly predicted that internal combustion engine technology will be eliminated in 2040.

That is, the electric mode will completely replace the internal combustion engine mode.

Dr. Elmar Degenhart (far left)

Given Continental's position and influence in the automotive industry, this judgment will have a far-reaching impact on the direction of the industry.

The news sparked widespread debate in the automotive industry.

At the press conference that day, Continental also announced that based on this judgment, the company is also adjusting its internal structure.

What is the truth? Is there any misunderstanding caused by the spread of information during this period?

In order to sort out Continental’s judgment, Zhijiajun will present Continental’s explanation and logic of this judgment to the outside world as comprehensively as possible.

At Continental’s media conference on April 17, Dr. Elmar Degenhart, Chairman of the Executive Board and CEO of Continental, said in his speech:

“Future development path of internal combustion engines: We believe that the last generation of internal combustion engines will be developed in 2025; this means that after 2030, the last generation of internal combustion vehicles will be produced; around 2040, internal combustion engine technology will be phased out; and in an ideal situation, there will be no CO2 pollution in cities and on roads by 2050.

“We will use some renewable energy sources such as wind, solar and even nuclear energy to convert into electricity to charge pure electric vehicles. So 2040 is a very important milestone. Basically, after 2040, there will be no more internal combustion engine vehicles sold.”

So after the internal combustion engine disappears, will the power of cars be completely replaced by pure electric vehicles ?

Dr. Elmar Degenhart envisioned three different scenarios for the use of powertrain technologies at the media conference:

The first scenario: driving for only one hour a day is the daily travel demand of many urban residents, and the vehicle's range is sufficient to meet 300 kilometers. This scenario is suitable for small or medium-sized cars, which mainly use battery technology;

The second scenario: If the vehicle is used for several hours a day, the range must reach 300 kilometers or even 500 kilometers. This is mainly for some large vehicles. For such vehicles, fuel cells are a more suitable technology because they can support a higher range.

The third scenario: For ships or airplanes, synthetic fuels produced in a green and sustainable way are more suitable.

For these three scenarios, Continental has provided three powertrain technologies: batteries, fuel cells (hydrogen, etc.), and hybrid fuels.

This judgment is basically similar to the results of my country's adjustments to its previous pure electrification route this year, and it is not a pure electrification route.

However, after Continental issued a death timetable for the internal combustion engine.

Dr. Elmar Degenhart, Chairman of the Executive Board of Continental AG, answered questions from Zhijia Jun at the press conference and said: "The specific timing of this development roadmap will vary in different markets. This process is not determined by consumers, but depends on environmental protection requirements and the impact of relevant laws and regulations."

The statement that the life and death of an internal combustion engine is not determined by consumers is quite interesting.

He said: "One of the main reasons is that the world is increasingly demanding in terms of emission regulations. For example, a few weeks ago, the EU has proposed that carbon emissions must be further reduced by 37.5% in 2030 compared to 2021. For us, this also means that you have to develop a completely new powertrain system within ten years. Therefore, we made a decision at the end of last year that we must make the powertrain flexible enough."

The reasons behind this are similar to those of Germany's Volkswagen's announcement of full electrification.

However, after this news caused widespread impact in the industry, Continental's internal employees confirmed with Dr. Elmar Degenhart after the press conference whether this was the judgment of the entire group. He said that the future path of the powertrain is actually the industry's general prediction for the development of internal combustion engines, and this timetable was not first proposed by Continental.

In a subsequent press release, Continental also emphasized: "In the next 20 years, Continental will continue to optimize its internal combustion engine technology to meet the different needs of customers, including hybrid systems, thermal management technology, sensors, direct injection systems and after-treatment systems. At the same time, Continental will continue to invest in pure electric technology."

This statement obviously aims to appease automakers who still hope to further use internal combustion engine technology.

Does this mean Continental isn't quite so sure about the timetable for the internal combustion engine's death?

Even if what happens 20 years from now is not entirely determined by consumers, the actual scenario may not be entirely determined by policies.

It can be said that Continental set off a big firecracker in Shanghai.

How does Continental view the future trends of the automotive industry? Dr. Elmar Degenhart explained, "We believe there are three major driving forces for the transformation of the automotive industry."

The first is new energy , or alternative drive systems, the second is autonomous driving technology, and the third is intelligent networking, which enables vehicles to connect to the cloud and achieve intelligent driving.

Dr. Elmar Degenhart emphasized that "alternative drive systems or new energy are of particular importance to China, because the Blue Sky Plan is a goal that the Chinese government has always adhered to and is also the expectation of consumers."

"The internal combustion engine will eventually be replaced by new energy vehicles or pure electric vehicles one day. This may be an inevitable development path, but I also think this is a gradual process. The realization of autonomous driving and intelligent networking is also gradual."

From this interpretation, we can draw a basic conclusion that Continental's judgment on the trend of internal combustion engines is more based on the policies of various countries rather than completely based on the technology itself.

But obviously, Continental itself is already making corresponding adjustments for this change.

Dr. Elmar Degenhart said: "Continental is well prepared to cope with the great changes that are about to happen in the future automotive and even transportation industries. A year and a half ago, we started adjusting our internal organizational structure to make us more flexible in responding to changes.

"In decision-making, we will reduce the number of decision-making levels and adopt a decentralized management model. The entire group will be divided into three major sub-groups in the future: rubber technology sub-group, automotive technology sub-group, and powertrain technology sub-group." Each sub-group will have sufficient autonomy.

"The current Powertrain Division has begun the transformation into an independent legal entity in early 2019 and plans a partial IPO, which will be completed in the second half of this year."

At the Shanghai International Auto Show, Continental clearly fully responded to the trends of the Chinese automotive industry in its technological display, showing a series of drive systems and innovative electronic devices that can be put into production immediately, expanding its products from the original 48-volt mild hybrid application solutions and plug-in hybrid or full hybrid solutions to high-voltage drive systems. Continental Powertrain is investing heavily in the construction of new Chinese production bases in Tianjin and Changzhou.

First of all, in terms of autonomous driving, Continental’s fifth-generation millimeter-wave radar has a modular design and can monitor a distance of 300 meters, with a deployment angle of ±60 degrees.

In terms of the Blue Sky Project, they brought the latest generation of integrated fully wire-controlled automatic system MK C1. It not only fully supports dynamic and safe driving, but also improves energy efficiency. Compared with traditional automatic systems, it can reduce the carbon dioxide emissions of hybrid vehicles by about 5 grams per kilometer.

In terms of the Internet of Everything, Continental demonstrated the V2X hybrid vehicle networking platform, which not only integrates 4G and 5G network access technologies, but also integrates dedicated cache access technology and China's network V2X technology.

Based on our review of the entire Continental Group’s press conference above, how should we interpret its judgment on the future of internal combustion engines?

Perhaps the Chinese market and policy orientation are two key words, and have nothing to do with the technology itself.

If these two key words are established and unchangeable facts, then the internal combustion engine seems to be really dead.

But is this really unchangeable?