Hybrid vehicle sales surge in China, posing threat to foreign automakers – Times of India

As electric vehicle (EV) makers in China engage in a price war amid slowing demand, Chinese brands with robust hybrid offerings are gaining traction. This trend is potentially encouraging for global automakers such as Toyota and Honda, which are pursuing diverse electrification strategies. Toyota, the leading automaker globally, already sees one-third of its total vehicle sales as hybrids, reporting a 34% surge in hybrid sales in the first half of the fiscal year, outpacing overall revenue growth.

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Foreign brands now confront a growing threat from Chinese rivals that have established dominance in the domestic hybrid market and are eyeing global expansion.China’s position as the world’s lowest-cost EV producer, coupled with significant investment in supply chains, makes its automakers formidable competitors.
In the U.S., hybrids typically come at a premium compared to combustion models, but in China, some hybrids are priced slightly below gasoline models and up to 23% cheaper than pure EVs. This cost advantage is attracting Chinese consumers to hybrids, especially plug-in hybrid (PHEV) and extended-range hybrid (EREV) models.
PHEVs and EREVs are experiencing robust demand, with shipments increasing by 85%, surpassing the 14% growth in pure electric car sales this year. The popularity of these hybrids has made the segment nearly half the size of the pure EV market, comprising 12% of total passenger vehicle sales, according to the China Association of Automobile Manufacturers.
Chinese companies such as Li Auto and BYD dominate the extended-range hybrid and plug-in hybrid markets, respectively. Li Auto’s extended-range hybrids, addressing range anxiety concerns, enjoy strong demand, while BYD holds a significant market share in the PHEV segment.
The success of Chinese hybrids poses challenges for foreign automakers, impacting not only gasoline cars but also gasoline hybrid vehicles (HEV). Sales of HEVs in China, a segment Toyota pioneered with the Prius in the late 1990s, have declined by 15%, indicating the evolving preferences in the market.
Foreign automakers like General Motors and Toyota have faced challenges in penetrating the EREV market in China, ceding ground to local competitors. Chinese companies are now eyeing overseas markets for expansion, with BYD planning to sell PHEVs in Latin America, and Stellantis considering bringing Chinese partner Leapmotor’s EREV hybrids to Europe.
While skepticism persists about the longer-term future of conventional hybrids, the current shift in consumer preferences in China underscores the need for global automakers to adapt to local market dynamics and emerging trends in electrification.

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