Deepika Agrawal 
Chinese automakers are betting big on hybrid vehicles that cost less than pure EVs and gasoline-powered models while providing a good electric range for short commutes. Thanks to heavy investment in supply chains, the low-cost Chinese models are already doing well in the domestic markets and the companies are now looking overseas, posing a fresh threat to foreign automakers. This comes at a time when the electric vehicles (EVs) markets in the US and Europe are losing momentum, partly due to high auto financing costs.
Threat to foreign automakers
Most hybrid powertrains in the US sell at a premium of USD 1,500 to 2,000 when compared to combustion models. Meanwhile, some Chinese hybrid models are being offered at a slight discount to gasoline models and can be as much as 23% cheaper than pure EVs. Chinese consumers are flocking to buy these hybrid models due to the price advantage while foreign brands are facing a growing competition.
Hope for Toyota and Honda
The growing trend brings in some hope for global automakers such as Toyota and Honda who are working on different electrification strategies including hybridization of models. One-third of Toyota’s total sales globally contain hybrids and the company reported a 34% surge in hybrid sales in the six months to end-September, outpacing 9% growth in overall revenue. “People are increasingly accepting that a car can be equipped with both an electric motor and a gasoline engine, as they are highly complementary,” Xu Min, a professor at Shanghai Jiao Tong University’s Institute of Intelligent Vehicle, told Reuters.
Surge of hybrid sales
There are two types of hybrid models that are enjoying a strong demand – plug-in hybrid (PHEV) and extended-range hybrid (EREV). Both their combined shipments in China have soared 85% while outpacing a 14% growth in pure electric car sales this year, as per industry data quoted by Reuters. As per data from China Association of Automobile Manufacturers (CAAM), the hybrids have created their own space in the market, creating a segment which is now half as big as the pure EV market. These now account for 12% of total passenger vehicle sales in the country.
