Internal Combustion Engine Market - Global Forecast 2025-2030

The Internal Combustion Engine Market size was estimated at USD 71.31 billion in 2024 and expected to reach USD 75.67 billion in 2025, at a CAGR 5.83% to reach USD 100.23 billion by 2030.

The internal combustion engine remains a cornerstone of global mobility and power generation, even as the transportation and energy sectors experience profound shifts. Over the past decade, manufacturers have harnessed an array of technological advancements to optimize these engines for lower emissions, higher efficiency, and enhanced performance. From stop/start systems and turbocharging to dual-fuel configurations and variable valve timing, innovations have proliferated in response to increasingly stringent emissions regulations and customer demand for improved fuel economy. According to recent EPA analysis, advanced combustion technologies have been instrumental in meeting CO2 and NOx targets while preserving the durability and reliability that have defined internal combustion engines for over a century.

Simultaneously, regulatory bodies worldwide are implementing more rigorous standards for stationary and vehicular engines alike. The EPA’s multi-pollutant emissions rule, finalized in early 2023, extends stringent pollutant limits for light-duty and heavy-duty engines, pushing manufacturers to adopt cutting-edge after-treatment systems and electronic control strategies. In parallel, the heavy-duty engine standards set to take effect in model year 2027 demand reduction of particulate matter and NOx to unprecedented levels, reshaping the competitive landscape and accelerating the deployment of hybrid and low-carbon solutions.

Despite the ascendance of electric powertrains, regulatory shifts under the current U.S. administration have introduced greater flexibility, allowing automakers to meet emissions obligations through a technology-neutral approach that embraces hybrids, advanced biofuels, and digital reporting tools. The EPA’s rollout of mandatory electronic reporting for stationary spark ignition and compression ignition engines underscores a broader trend toward digitalization, improving transparency and compliance accuracy by streamlining data submission and error reduction. These combined forces position the internal combustion engine sector at a pivotal juncture, with legacy strengths converging with innovative pathways for continued relevance.

In recent years, the internal combustion engine arena has been reshaped by the rapid evolution of hybrid electrification and nascent hydrogen-fueled combustion. Leading truck OEMs are actively exploring hydrogen combustion powertrains as a midterm solution to bridge the gap between diesel dependence and full electrification. Industry titans such as Volvo and MAN have committed to extensive pilot programs, deploying hundreds of hydrogen-fueled trucks for field testing to validate performance and infrastructure readiness. Meanwhile, key component suppliers like Bosch, Westport, and Cummins are pioneering hydrogen injection systems and catalysis technologies, underscoring a collective push to decarbonize existing engine platforms with minimal disruption to manufacturing ecosystems.

At the same time, global automakers are investing heavily in engines compatible with carbon-neutral e-fuels and biofuels, mitigating lifecycle greenhouse gas footprints without forfeiting the density and refueling speed of hydrocarbon-based systems. Toyota’s strategy to develop compact, multi-fuel engines adaptable to e-fuels, hydrogen, and conventional gasoline integrates seamlessly into hybrid architectures, enabling broader deployment of low-carbon fuels in passenger and commercial vehicles.

Advanced materials and manufacturing processes further amplify this transformation. Additive manufacturing techniques are being applied to intricate engine components, reducing weight while enhancing thermal efficiency. Concurrently, government-backed R&D programs, such as the Department of Energy’s allocation of $10.5 million for hydrogen engine innovation, are catalyzing public–private collaborations that accelerate prototype development and durability testing.

Finally, digital integration and predictive maintenance capabilities are embedding intelligence into engine fleets. Real-time monitoring through telematics and electronic control modules supports proactive component servicing, extended service intervals, and optimized fuel injection strategies. This convergence of electrification, alternative fuels, advanced materials, and digitalization is setting the stage for a new era in which internal combustion engines remain viable and continuously improving power solutions.

Trade policy under the Section 232 framework has exerted significant, cumulative pressure on the internal combustion engine supply chain and production economics. In February 2025, the U.S. administration reinstated a uniform 25% tariff on steel and aluminum imports, restoring full coverage and closing previous exemptions for key trading partners including Canada and Mexico. This action immediately raised input costs for engine block castings, crankshafts, cylinder heads, and critical after-treatment hardware.

By June 4, 2025, the steel and aluminum tariffs were further doubled from 25% to 50% across most derivative articles, with the United Kingdom as the sole exception retained at 25% until finalization of a U.S.–UK economic prosperity agreement. These heightened levies have compounded cost pressures across the automotive value chain, prompting several OEMs to reassess sourcing strategies and explore near-shoring opportunities in North America and adjacent manufacturing hubs.

Efforts to absorb tariff impacts have varied by company. General Motors reported a $1.1 billion second-quarter earnings hit attributable to auto parts tariffs, compressing North American operating margins from nearly 10% to under 5%. S&P Global Mobility’s June 2025 forecast revisions indicate that while global light-vehicle production outlooks were modestly adjusted upward, input cost inflation stemming from the metals tariffs offsets much of the anticipated relief, introducing uncertainty into midterm sourcing and investment decisions.

The internal combustion engine market’s architecture can be dissected along multiple dimensions that illuminate distinct demand pockets. Application-wise, the automotive sector encompasses heavy commercial vehicles, light commercial vehicles, and the passenger car segment, the latter further differentiated into hatchbacks, sedans, and SUVs. In marine applications, the focus splits between commercial vessels requiring sustained high-load operations and recreational craft that prioritize compactness and reduced noise. Power generation engines are categorized into prime power units, designed for continuous operation in primary supply applications, and standby generators that deliver reliable backup support.

Fuel preferences introduce another layer of complexity. Engines designed for compressed natural gas offer lower combustion emissions and quieter operation, whereas diesel powerplants remain favored for high-torque, long-haul heavy equipment. Gasoline engines dominate light-duty passenger vehicles due to lower upfront costs and widespread fueling infrastructure, and LPG variants continue to find niche adoption in regions with targeted incentives.

Examining cylinder count reveals a balance between performance and efficiency, with the eight-cylinder platforms anchoring high-power applications, four-cylinder variants delivering cost-effective propulsion for compact vehicles, six-cylinder configurations offering a compromise between output and fuel economy, and three- and two-cylinder engines tailored for micro-mobility and portable power units.

Displacement categories further delineate market positions, as sub-one-liter engines optimize fuel efficiency in ultra-compact vehicles, one-to-two-liter and two-to-three-liter platforms serve mainstream automotive segments, and above-three-liter powerplants underpin heavy-duty and high-performance niches. Lastly, fuel delivery systems split between traditional carburetion and advanced injection, the latter delivering precise fuel metering, improved cold-start behavior, and adherence to stricter emission inventories.

Regional dynamics play a pivotal role in shaping internal combustion engine priorities and deployment pathways. In the Americas, robust demand for light-duty vehicles coexists with burgeoning power generation needs in remote and off-grid locales, prompting OEMs to develop modular genset platforms alongside passenger and commercial engine offerings. While emission standards remain influential, the U.S. approach has recently prioritized technology neutrality, facilitating hybrid and alternative-fuel powertrain solutions, especially in states advancing clean-air mandates.

The Europe, Middle East & Africa region faces some of the world’s most stringent emissions regulations, including the adoption of Euro VII standards for on-road engines and forthcoming IMO Tier III regulations for marine diesels. Policymakers and industry stakeholders here are proactively funding hydrogen and e-fuel infrastructure, fostering collaborations between engine manufacturers and energy providers to drive low-carbon fuel availability and retrofit pathways for existing fleets.

Asia-Pacific continues to exhibit strong internal combustion reliance, with China and India accounting for a substantial share of global ICE production and consumption. Governments in key markets are incentivizing cleaner diesel and CNG vehicles, while simultaneously piloting biodiesel blends and hybrid electrification projects. In regions where electricity accessibility remains uneven, reliable ICE power solutions continue to underpin economic activities from agriculture to small-scale manufacturing.

Key industry participants are pursuing diverse strategies to navigate the evolving internal combustion engine landscape. Cummins has intensified its investment in hydrogen combustion research, recently celebrating the completion of its Project Brunel consortium, which delivered a 6.7-liter hydrogen-compatible engine platform through joint efforts with Johnson Matthey, PHINIA, and Zircotec under UK Government sponsorship. The company has also introduced variable-geometry turbochargers tailored for hydrogen applications, reinforcing its Destination Zero decarbonization roadmap.

Volvo Penta, a leader in marine propulsion, has unveiled an integrated helm-to-propeller hybrid-electric package that seamlessly merges electric drive modes with combustion power, offering joystick docking, dynamic positioning, and real-time diagnostics via an electronic vessel control system. Deliveries of the D13 IPS hybrid system are slated for late 2025, marking a strategic pivot toward sustainable marine solutions.

Caterpillar continues to leverage its global distribution network to optimize aftermarket service for heavy-duty engines, focusing on fuel-efficient combustion tuning and remote monitoring via telematics. Meanwhile, Yanmar and Mitsubishi Heavy Industries are collaborating with local authorities in Asia to introduce low-emission engine packages that address off-road and small-scale power generation requirements. These collective endeavors underscore a market in which legacy engine providers and agile technology specialists converge to redefine performance and sustainability benchmarks.

Industry leaders should prioritize multi-fuel engine development programs that facilitate seamless transitions between conventional hydrocarbons, biofuels, and hydrogen, thereby mitigating the risks associated with single-technology dependencies. By scaling modular engine architectures, OEMs can optimize production costs while retaining the flexibility to address diverse fuel availability scenarios.

Strengthening supply chain resilience remains imperative in light of evolving tariff landscapes. Organizations should conduct end-to-end risk assessments, diversify sourcing geographies for critical cast metals, and explore strategic partnerships with regional foundries to minimize exposure to import levies. Integrating digital procurement platforms can further enhance transparency and responsiveness to trade policy fluctuations.

Accelerating digitalization in manufacturing and service operations will unlock new revenue streams. Embedding predictive maintenance algorithms, real-time performance analytics, and over-the-air calibration updates into engine platforms can reduce downtime, extend service intervals, and deliver enhanced proposition value to end customers.

Finally, collaboration with regulatory bodies and participation in standards-setting forums will ensure that emerging technologies, from hydrogen combustion to advanced after-treatment, achieve timely certification and gain market acceptance. Proactive engagement in multi-stakeholder consortia can influence policy frameworks, secure funding for infrastructure expansion, and foster public confidence in next-generation engine technologies.

This study synthesizes insights drawn from both primary and secondary research to deliver a comprehensive perspective on the internal combustion engine domain. Primary intelligence was garnered through structured interviews with OEM executives, powertrain engineers, regulatory agency representatives, and end-user fleet managers, offering qualitative depth and firsthand accounts of technology adoption challenges.

Secondary research encompassed an extensive review of government archives, including EPA rulemakings and transport ministry publications, alongside corporate disclosures such as annual reports, press releases, and patent filings. Proprietary trade databases provided granular visibility into shipment volumes, application splits, and component pricing trends.

Analytical rigor was ensured through triangulation of data sources, cross-referencing interview insights with historical production metrics and tariff schedules. Advanced statistical models were applied to identify correlations between policy enactments, input cost variations, and production adjustments, while scenario analyses explored potential outcomes under alternative regulatory trajectories.

Quality control protocols included iterative review cycles involving internal subject-matter experts and external advisory panels, ensuring that findings reflect both market realities and plausible near-term evolutions. This research methodology underpins the report’s strategic recommendations and reinforces its validity as a decision-support tool.

Throughout the detailed analysis, the enduring adaptability of internal combustion engines has been evident as they embrace novel fuels, digital controls, and emission-reduction technologies. While global momentum toward zero-tailpipe solutions accelerates, the ICE sector is charting a parallel course that leverages hydrogen combustion, e-fuel compatibility, and hybrid integration to maintain relevance and competitiveness.

Trade dynamics and policy interventions have re-shaped cost structures, prompting supply chain diversifications and near-shoring initiatives. Yet, these challenges have spurred innovation and deeper collaboration across the value chain, leading to resilient engineering practices and flexible manufacturing footprints.

Looking ahead, ICE platforms are poised to co-exist with battery electric powertrains, each catering to specific performance envelopes and infrastructure contexts. As regulatory frameworks evolve toward technology neutrality, the sector’s success will hinge on its capacity to rapidly validate emerging technologies through joint ventures, pilot deployments, and collaborative standardization efforts. This ecosystem approach ensures that internal combustion engines continue to serve critical transportation and power generation roles while aligning with global sustainability imperatives.

To unlock the full potential of the internal combustion engine market insights, reach out today to Ketan Rohom, Associate Director, Sales & Marketing, who is primed to guide you through the report’s depth and breadth. Engage directly with an industry expert to tailor the research findings to your strategic priorities, ensuring that your organization stays ahead of emerging trends and regulatory developments. This comprehensive report delivers actionable analysis across advanced technologies, tariff impacts, and regional dynamics, empowering decision-makers to seize opportunities in a rapidly evolving landscape. Contact Ketan Rohom to secure your copy and accelerate your path to competitive advantage.