Automakers rush to meet surging China demand for long-range hybrids
Unlike many other major markets, China treats EVs and hybrids as one "new energy vehicle" sector where brands are competing to give consumers an array of electrified options with longer driving ranges.
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At the Shanghai auto show this week, for instance, Geely (GEELY.UL) unit Zeekr unveiled the 9X - a large plug-in hybrid SUV that can travel on electric power alone for 400 km (249 miles) before its gasoline engine kicks in. That range is nearly as long as many fully electric vehicles and far longer than typical plug-in hybrids in the United States, Europe and other markets.
Chinese automakers have also developed a thriving business in so-called extended-range electric vehicles (EREVs), which have small petrol engines that serve only as a generator to extend the range of their large batteries.
Both EREVs and plug-in hybrids grew faster than pure EVs in the China market last year, pushing the whole electrified sector to about half of all new cars sold, according to data from the China Passenger Car Association.
EREV sales jumped 79% to 1.2 million vehicles and plug-in hybrids soared by 76% to 3.4 million, while EV sales grew 23% to 6.3 million units.
Fully electric models grew faster than both varieties of hybrids in the first quarter of this year and still lead China's new-energy sector. But the hybrid boom in China and globally has more traditional automakers adding gasoline-electric models to their lineups after previously focusing solely on expanding EV offerings.
Volkswagen plans a new vehicle platform for full EVs and EREVs as part of an effort to reverse its slowing sales in China, where all foreign automakers have struggled. VW board member Ralf Brandstaetter said drivetrain flexibility was critical to the German carmaker's effort to "find our edge."
Mercedes-Benz (MBGn.DE), opens new tab CEO Ola Kaellenius called hybrids "definitely a trend in China" as he addressed reporters at the Shanghai show, predicting they would "coexist with battery-electric vehicles for a longer period of time."
TRANSITIONAL TECHNOLOGY?
Some automakers - most notably Tesla (TSLA.O), opens new tab - have dismissed hybrids as a transitional technology that only hinders the rapid EV transition needed to slow climate change. Many U.S. and European environmentalists have endorsed that view.
Some pure-play Chinese EV makers are also sceptical that hybrids will endure, particularly in China where government and industry have built a massive EV-charging network.
"It just doesn't make sense," said William Li, CEO of EV maker Nio (9866.HK), opens new tab.
But many Chinese automakers are keen to give buyers whatever they want amid a consumer-price war that continues to challenge their profitability. Plug-in hybrids also provide a way for them to navigate around trade barriers in their prime expansion target of Europe, which has slapped tariffs on Chinese EVs and EREVs.
Geely unit Lynk & Co said in February that it will launch a plug-in hybrid SUV, the 08, in June with an electric-only range of 200 km, the longest available in Europe.
Felix Kuhnert, an automotive analyst at consultancy PwC Germany, called China's industry "technologically less dogmatic" than some global competitors, taking the approach that "if the customer wants more range in their electric car, then they should get it."
That fairly describes the position of Chinese EV maker Leapmotor (9863.HK), opens new tab, which has launched four EREV models even though its CEO Zhu Jiangming said typical EV driving ranges of about 500 kilometres allow consumers to "buy an electric car without a problem."
The company views EREVs as an option for consumers willing to pay more for even more range.
"We think it's just for luxury cars," a segment where consumers don't blink at paying an extra 20,000 yuan ($2,744) to alleviate range anxiety.
MORE HYBRIDS COMING
According to data from research firm JATO Dynamics, automakers in China launched 16 new EREVs and 37 new plug-in hybrids in 2024, compared to 32 new fully electric models.
Forecasts provided to Reuters by one major automaker anticipate EREVs and plug-in hybrids will together account for about 35% of sales in China, the world's largest auto market, compared to about 45% for EVs.
The sector has drawn investment from Chinese battery giant CATL (300750.SZ), opens new tab, which in October launched its first battery devoted to extended-range hybrids, with a range of 400 km. CATL said the battery is used by various Chinese EV brands, including Li Auto (2015.HK), opens new tab, and would be installed in nearly 30 models made by industry giants including Geely and Chery (CHERY.UL).
Bo Yu, a China-market expert for research firm Jato Dynamics, predicted automakers in the country would continue investing and innovating in the hybrid segment for the foreseeable future.
"We're going to see more of them," she said.
($1 = 7.2895 Chinese yuan renminbi)
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