The Sailing Ship Effect: Why Combustion Engines Could Weather the Electric Storm

In the 19th century, the steam propulsion revolution was supposed to spell the end of sailing ships. Yet something surprising happened: instead of disappearing immediately, sailing ships underwent a sudden technological acceleration. To remain competitive, they were optimized with lighter masts, more aerodynamic hulls, and higher-performance sails, extending their life well beyond expectations. This phenomenon, known as the sailing ship effect, is now at the heart of a paradox affecting the automotive sector: environmental policies, instead of accelerating the transition to electric vehicles (EVs), could paradoxically rejuvenate internal combustion engines (ICEs), making them more efficient and competitive. The issue has returned to the forefront in light of the European debate on the possible introduction of greater flexibility in the ban on gasoline and diesel cars scheduled for 2035. The credibility and rigor of the rules directly affect the direction of innovation: if the objectives appear uncertain or renegotiable, industrial strategies may also adapt.

This dynamic is investigated in the study The unintended sailing ship effect: why environmental policy stringency might sustain internal combustion engine technology in the age of electric vehicles, by Nicoletta Corrocher (Bocconi), Marco Guerzoni (Bicocca), Anna Novaresio (CNR), and Tommaso Pierangeli (World Economic Forum). Analyzing a large international dataset covering the period 2005-2021, the authors describe a counterintuitive effect: developing environmental policies is not enough to initiate a paradigm shift. If these policies are too focused on reducing emissions from combustion engines, rather than promoting electric vehicles, they may end up reinforcing the very technology that they are intended to replace.

Green innovation or disguised stagnation?

The environmental policy stringency is often considered a driver of sustainable innovation. Yet the study's findings show that this relationship is far from linear. If regulation is moderate, car manufacturers respond with incremental improvements in internal combustion engines, developing more efficient systems, less polluting fuels, and technologies that reduce emissions. This may seem like progress, but in effect it reinforces traditional technologies, making their replacement less urgent.

Only when environmental regulations reach very high levels, and only if accompanied by a favorable demand and technology environment, does a qualitative leap occur that drives the radical innovation necessary for a massive shift to electric vehicles. But this threshold is not easy to reach: if the transition is not well calibrated, there is a risk of creating a lock-in effect, in which car manufacturers continue to invest in traditional technologies instead of accelerating on the new trajectory.

“Environmental policies must be carefully calibrated,” emphasizes Nicoletta Corrocher, a researcher at ICRIOS, Bocconi's Invernizzi Center for Research on Innovation, Organization, Strategy, and Entrepreneurship. “If they are too weak, they will not trigger change; if they are too biased in favor of combustion engines, they may strengthen the traditional industry without letting new technologies emerge.”

The decisive factor: demand and technology

While regulation is a key tool, it is not enough on its own to determine the success of the electric transition. Two equally crucial forces are needed: the role of demand and technological progress.

The growth of the electric vehicle market depends on consumer interest, their confidence in the technology, and economic incentives that make this choice more affordable than traditional alternatives. At the same time, technology must advance rapidly to reduce costs, improve performance, and develop charging infrastructure. The current picture is complex. In Italy, sales of electric vehicles are growing, but remain below the European average and heavily dependent on government incentives. In the absence of a clear and stable regulatory framework, demand risks slowing down, making it more convenient for companies to continue investing in existing technologies.

According to Nicoletta Corrocher, the problem is that “imposing stricter emissions limits is not enough to change the market: targeted investments in technological innovation are needed to make electric vehicles not only a more sustainable choice, but also a more competitive one.” Without significant progress in batteries, charging systems, and reducing production costs, electric vehicles risk remaining confined to a niche market, while combustion engines—made more efficient by environmental regulations—will continue to play a central role.

The future of the transition: between uncertainties and new challenges

How can we prevent the sailing ship effect from slowing down the ecological transition of the automotive industry? The authors of the study emphasize that environmental policies cannot be limited to tightening standards for internal combustion engines: they must be part of a broader strategy that directly promotes the growth of the electric market.

The solution lies not only in stricter rules, but in a mix of tools: incentives for research and development, infrastructure investments, and industrial policies that make electric vehicles more accessible and affordable for consumers. “The transition to electric vehicles cannot happen through bans and restrictions alone,” explains Corrocher. “We need incentives, investments, and a long-term strategic vision.”

However, the international context remains uncertain. Relaxing environmental policies in large economies could influence manufacturers’ global strategies and affect the pace of transition. “In a globally integrated industry, regulatory choices in one area can have effects far beyond its borders,” warns Corrocher. “Car manufacturers could recalibrate their strategies, investing less in electric vehicles and focusing again on combustion engines, slowing down the road to decarbonization.”

The auto industry is at a crossroads. Should it continue to optimize a technology of the past or bet on an electric future? The answer will depend not only on the technological choices of companies, but also on the consistency and credibility of public policies in the coming years. If the wind of environmental policies were to lose intensity, there is a risk that traditional technologies would continue to dominate for a long time to come, just as sailing ships did in their last, surprising act of resistance.