It turns out that hybrid is the meat and potatoes. Volkswagen recently made a decision to spend US$1.83 billion, equivalent to 13 billion yuan, in Brazil to develop new hybrid platforms and new models, just to achieve electrification in the country. But this plan is not limited to Brazil. Volkswagen wants to export new hybrid models to the US and European markets based on the Brazilian factory. Obviously, the drunkard’s intention is not to drink.
It’s already 2024, why are we still spending so much financial and material resources on hybrid models?
Data doesn't lie. With hybrid technology, Toyota's sales reached a record 11.2 million vehicles in 2023, ranking first in the world for four consecutive years.About a third of these models are hybrid vehicles.
Volkswagen, which has been betting heavily on pure electricity, has finally come to its senses?
01. Walking on two legs
Among the traditional car companies chasing Tesla, Volkswagen is the one at the forefront, not only in China, but also accelerating around the world.
In July last year, Volkswagen said it would invest 1 billion euros (approximately US$1.09 billion) in Brazil by 2026, with the goal of achieving 40% growth in Brazil by 2027. In the next few years, it will launch 15 new electric and hybrid models.
This additional investment is in addition to the 7 billion reais investment committed last year, which also means that Volkswagen’s total investment in Brazil from 2022 to 2028 will reach 16 billion reais (approximately US$3.2 billion).
According to the latest investment plan, the money will be mainly used to develop a new model platform specifically designed to launch gasoline-electric hybrid vehicles that can use gasoline and ethanol dual fuel, thereby helping it produce the first hybrid vehicle made in Brazil.
The new platform will cover Volkswagen’s four plants in Brazil.They are the Ancheta, San Carlos, Taubate and San José do Pinhas factories.
There are also more new model plans than originally planned. In the next four years, Volkswagen plans to bring 16 new models to the Brazilian market, including the country's first hybrid model, a new electric car and a pickup truck.
Volkswagen said that the newly planned pickup truck model will be produced in the state of Paraná, and the new hybrid model will be produced at the plant in São Carlos, São Paulo state.
It is worth mentioning that although Volkswagen will bring many pure electric models to Brazil, they will not be produced locally. Ciro Possobom, CEO of Volkswagen Brazil, said, "We will introduce some imported electric vehicles, but we do not currently plan to produce any electric vehicles (in Brazil)."
This also means that the new energy models produced by Volkswagen in Brazil are only hybrid.
It is said that Volkswagen should be busy with the electrification transformation, so why did it do the opposite and start a hybrid?
In fact, Volkswagen's development ideas were not lagging behind for a long time. During the tenure of the previous CEO Diess, the group's primary goal was to fully develop pure electric vehicles. Even now, Volkswagen's domestic pure electric strategy has not wavered.
But looking at it now, either it is overconfident in its own brand premium, or its decision-making efficiency is not high enough due to numerous complex organizations, resulting in the sales of its ID. series models in the global market being not ideal.
At last year's 2023 World New Energy Conference, Volkswagen Group CEO Obermaugh publicly stated in his speech that he would further promote the development of hybrid models. It was also a rare occasion for the entire Volkswagen Group to announce the development of hybrid routes as a public plan.
Not only overseas, not long ago, the CEO of Volkswagen China announced the "2030 Goal" strategy. Regarding product planning, in the future, models of the Volkswagen brand, Audi brand, and Volkswagen Anhui will be built based on the MEB/MEB+ platform, PPE platform, CMP Chinese market mainstream car platform, and SSP platform respectively.
Among them, the MQBEvo and MLBEvo platforms will become the basis for its fuel vehicles and plug-in hybrid models. By 2027, it will provide 30 locally produced fuel and hybrid models.
Right now, Brazil has become a breakthrough for the public to walk on two legs.
02. Let’s go to Brazil to “dance samba” together
Volkswagen has repeatedly invested in Brazil, largely due to the attitude of the Brazilian auto market towards hybrid models.
Judging from Brazil's national conditions, bioethanol has a large output. As a fuel, in addition to being cheap, pollution emissions are 90% lower than traditional gasoline. Brazil is making a nationwide effort to promote ethanol fuel and reduce tax rates, and has achieved considerable results.
Sales of light electric vehicles set a new record in 2023, according to the Brazilian Association of Electric Vehicles (ABVE).
Sales of hybrid and pure electric vehicles totaled 93,900 vehicles, an increase of 91% compared with 2022. In December alone, the last month before import duties were imposed on such vehicles, sales tripled in the same period.
Plug-in hybrid models dominate the Brazilian automobile market. This type of vehicle is a hybrid vehicle that can be charged by a generator driven by its internal combustion engine or plugged into an external power source to charge the battery. This category accounted for 56% of the total sales of electric vehicles in Brazil last year, surpassing traditional hybrid vehicles.
Not only Volkswagen, more and more car companies have begun to introduce new energy vehicles to Brazil and build their own new energy vehicle production bases.
General Motors also recently announced a new plan to invest 7 billion reais in Brazil, with the same period as Volkswagen’s investment plan, that is, investment between 2024 and 2028.
Some media broke the news that another giant, Stellantis Group, will announce its new investment plan in Brazil at the end of February.
Including Volkswagen's 9 billion reais this time, Brazil's total investment by car companies since 2021 has reached 41.4 billion reais, half of which was announced in the past three months.
besides,BYD also invested 4.5 billion yuan to build a factory in Brazil, a large-scale production base complex consisting of three factories will be established in Kamassari City, including a new energy passenger vehicle vehicle production plant, a production plant mainly engaged in electric buses and truck chassis, and a processing plant specializing in lithium iron phosphate battery materials.
The entire automobile production line is designed to have an annual production capacity of 150,000 vehicles, covering pure electric and plug-in hybrid models, and is planned to be put into production in the second half of 2024.
In addition, Great Wall Motors has already announced an investment of US$1.85 billion in Brazil to produce hybrid and electric vehicles. The first car was put into production in the second half of last year.
As for Toyota, which mainly focuses on hybrid power, it entered the Brazilian market early. The traditional hybrid model Toyota Corolla Cross made in Brazil (which can also use ethanol as its internal combustion engine fuel) has become the best-selling new energy vehicle in Brazil last year, with sales of a single model reaching 12,100 units.
Followed closely by the Chinese-made hybrid model Haval H6, with sales reaching 10,700 units.It is also known as the "Brazilian Tesla".
According to the electric vehicle brand sales list released by the Brazilian Electric Vehicle Association (ABVE), Toyota ranks first, followed by BYD, Chery Brazil (CaoaChery), Great Wall Motors, Volvo, BMW, Land Rover, Kia, Porsche and Audi.
Among them, the best-selling plug-in hybrid models of Volvo and Chery in Brazil.
It is not difficult to see from the rankings that most of the top car companies in the Brazilian automobile market will use hybrid technology in a targeted manner.
03. Mixing becomes popular
As we all know, Toyota Chairman Akio Toyoda has never been fond of electric vehicles, and even pessimistically criticized them for a time. We often hear a voice-"Toyota's pure electric vehicles are developing slowly and will be eliminated by competitors sooner or later."
But the actual situation is exactly the opposite. Toyota, which has always been criticized for its slow electrification transformation, is relying on fuel vehicles and hybrid vehicles to set new highs in sales and profits.
In 2023, the Toyota Group's global sales totaled 11.23 million vehicles. Not only did it rank first in the world in sales, but its total deliveries also reached a record high. In terms of finance, Toyota's net profit also set a record.
As the "most profitable car company", Toyota is still a treasure trove.
From the perspective of power type, Toyota's sales of fuel and gasoline-electric hybrid vehicles were 6.0276 million and 3.1036 million respectively. The two contributed 97.5% of Toyota's sales, while pure electric models only had a pitiful 100,000 vehicles, less than 1% of total sales.
Toyota's strong sales are due to demand for its fuel and hybrid products from North America, Europe and China.
Taking the U.S. market as an example, from January to November 2023, traditional hybrid vehicles (HEVs) such as Toyota Prius grew faster than pure electric vehicles, with sales in the United States of about 1.2 million units, accounting for 8.3% of U.S. car sales. Compared with the same period last year, this share increased by 2.8 percentage points.
According to GlobalData, a well-known overseas statistics agency, hybrid vehicles will account for 9% of the U.S. auto market in 2023, while pure electric vehicles will account for 8%.
Especially since 2020, hybrid vehicle sales in the U.S. market have more than doubled, and sales are expected to increase by 35% this year.
Jeff Schuster, executive vice president of GlobalData's automotive business, said that the automotive industry cannot change the way everything works at once, and hybrid vehicles are "a way for the mass market to gradually shift to electric vehicles."
Although the current market share of hybrid models is not high, the growth rate of pure electric models has begun to slow down.
Although in terms of total volume, the United States is expected to set a new record of annual sales of 1.2 million electric vehicles in 2023, in terms of growth rate, the year-on-year increase in the first 11 months was only 1.7%.
Cox Automotive predicts that the growth of electric vehicles in the United States will continue to slow down, and "in the next year, quarterly sales may even decline for the first time in more than three years."
The growth rate is lower than expected, and the company's own profitability is challenged, which has caused many mainstream European and American car companies to postpone the expansion of electric vehicles and focus on the present.
Just like Ford Motor Company directly released a piece of news that shocked the industry, directly announcing that it planned to shut down all electric car production.
It said competition in the tram market is too fierce and the company needs to focus on areas where it has advantages. Ford said it will focus resources on internal combustion engine vehicles and hybrid vehicles to keep the company competitive.
It is true that Ford is more willing to support its own gasoline-electric hybrid technology than pure electric vehicles, because there are not many pure electric Ford models in overseas markets.
It is not difficult to see from the fact that Changan Ford introduced the Mondeo hybrid version and Edge L hybrid version last year. For Ford, gasoline-electric hybrid vehicles can not only continue Ford's position in the field of fuel vehicles, but also respond to the call for energy conservation and emission reduction, breaking the high fuel consumption label left by American cars to users.
In order to attract more customers, Ford plans to double the production of the hybrid version of the F-150 pickup truck that has been on the market for three years and lower the price by US$1,900, making it similar to the price of the fuel version and nearly 10% cheaper than the pure electric model launched in 2022.
Ford also plans to triple hybrid vehicle sales over the next five years and apply hybrid technology to all product lines. "To be honest, we've been surprised by the popularity of hybrids," Ford CEO Jim Farley said on an earnings call in July.
04. Let the bullets fly for a while
Pure electric cars are not popular. In the final analysis? It is still because of the price and supporting facilities.
According to Edmunds data, the average price of a pure electric vehicle in the United States in 2023 will be about $59,400, while a traditional internal combustion engine vehicle will cost $44,800. The price of a traditional hybrid vehicle will be even lower, with an average selling price of only $42,381.
Not only in the United States, AutoTrader, the largest automotive digital market in the United Kingdom and Ireland, said that currently, the average selling price of electric vehicles in the British market is 33% higher than that of traditional fuel vehicles.
In response to the weak demand for electric cars, the price war has spread from China to overseas. At the beginning of this year, a price war began in Europe. Many car companies such as Volkswagen, General Motors, and Tesla have lowered the prices of their electric models in Europe.
But unfortunately, even regular price cutters like Tesla are still helpless in the face of the relatively high prices of overseas pure electric vehicles, coupled with the common problem of lack of charging infrastructure, and consumers do not buy it.
Especially in Germany, Europe's largest auto market, the German Automobile Industry Association has predicted that due to subsidy cuts and slowing market demand, German pure electric vehicle sales will fall this year, or fall by 14% year-on-year. This means that the share of electric vehicles in the German market will fall from 18% in 2023 to about 16%.
According to previous reports by Bloomberg, due to the slowdown in demand for electric vehicles, sales in the European car market fell for the first time in nearly 17 months in December 2023.
One of the most obvious signs is that Hertz, a well-known overseas car rental agency, has switched back to gasoline-fueled vehicles and plans to sell 20,000 electric vehicles. This large-scale sale of electric vehicles means that Hertz's several-year transformation to new energy vehicles is beginning to waver.
The decline in demand for electric vehicles has made companies such as Toyota, which focus on hybrid models, extremely happy.
Last October,When talking about the current situation of the electric vehicle market, Toyoda Akio said, "People finally see the reality."
However, it is still too early to talk about the success of hybrid models. The transformation of the century-old automobile industry is irreversible, so it is better to let the bullets fly for a while.