Chinese plug-in hybrid glut threatens European automakers

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When the EU decided to impose tariffs on electric cars made in China two years ago, Technical Cleaning Contributor José Pontes pointed out that they only applied to battery electric cars. He predicted the policy would encourage Chinese manufacturers to prioritize plug-in hybrids. His powers of prognosis have proven to be eerily prophetic, as that is exactly what happened.

According BloombergThe latest report from Germany’s Dataforce shows that Chinese automakers set new records last month for sales in Europe, thanks in large part to sales of those plug-in hybrid models that don’t pay a substantial import tariff. In total, Chinese brands accounted for 12 percent of all new car sales in August.

This is quite significant, but digging into the data makes the situation even worse for domestic EU manufacturers.

As gasoline and diesel prices rise ever higher in Europe, new car customers are looking to reduce their transportation costs as much as possible. Demand for hybrid and battery cars increased 27 percent in August, driving an increase in total sales of 4.6 percent. Without all those new plug-in hybrids and battery electric cars, the European new car market would have seen a significant drop in total sales in August.

If José Pontes saw it coming, why didn’t the European Commission see it too? That’s a question that doesn’t have an easy answer. Germany Handelsblatt reports that the Commission is in the process of preparing a package of economic security measures that may include new tariffs on hybrids and plug-in hybrids later this year.

While Chinese cars make up only about 6.4 percent of the new car market in Germany, that country is the largest new car market in Europe, so while the percentage of Chinese cars is low, the total number is significant. “Although its market share is comparatively low compared to other markets, the large size of the German market makes this move very attractive,” explains Dataforce analyst Julian Litzinger.

Demand for electric vehicles surprises Volkswagen

Readers are already well aware of the turmoil that market changes are causing for the Volkswagen Group. This year its supervisory board has been debating how to deal with the fact that the company is making 100,000 more cars a year than its projected consumer market can support. According car weekThe company plans to produce fewer cars at its main factory in Wolfsburg, which only makes cars with internal combustion engines, and expand production of battery electric vehicles at its factories in Emden and Zwickau.

You may remember that Volkswagen recently suggested that the Zwickau factory was redundant and could be closed or converted to weapons manufacturing. But in the last month, sales of Volkswagen electric cars have skyrocketed, forcing the company to reconsider its plans.

We hate to second-guess CEO Oliver Blume and his compatriots, but changing long-term production plans based on short-term sales data doesn’t seem like a smart business plan.

“Demand for battery electric vehicles is increasing noticeably in Germany and other European countries,” says Martin Sander, member of the sales management board. car week. He added that this marks an important “turning point in the transformation of the automotive market,” which is being driven by high gasoline and diesel prices. It also means “lower demand for vehicles with internal combustion engines.”

Volkswagen is seeing more demand than expected for the facelifted ID.3 Neo and ID. Tiguan models, as well as its family of urban electric cars, which is made up of the ID based on MEB+. Polo, Cupra Raval, Škoda Epiq and ID. Cross. All of these cars are manufactured in factories in Spain. According car weekThere are currently over 100,000 pre-orders for these four cars, including over 40,000 for the ID. Pole.

These pre-orders suggest that Volkswagen currently sells more pure electric vehicles than internal combustion engine vehicles in Germany. Of course, the increase in sales is welcome, but battery cars have a lower gross margin than conventional cars, meaning that many manufacturers are still under significant financial pressure, even though demand is increasing. Unfortunately, the profit per electric vehicle is still lower than that of comparable internal combustion engine vehicles.

Stellantis said this week that it will stop production of the electric and hybrid Fiat 500 at its Mirafiori plant in Italy during the last two weeks of October. The production of that car could only reach 60,000 units this year, Corriere della Sera the newspaper reported Wednesday. The original production target was 100,000 examples of that model.

Balancing the interests of car manufacturers with the interests of factory workers and customers is a near-impossible task, but clearly the EU needs to do something about the flood of Chinese plug-in hybrids hitting the market. Hope that situation is addressed. coming soon.