Carmakers thinking of pivoting back to plug-in hybrids should think again

Anna Krajinska — April 29, 2024

Just as official data confirms that PHEVs emit far more than claimed, the old technology risks undermining European OEMs’ efforts to compete with Chinese EV-makers.

€950 The average annual extra cost, more than advertised, of a PHEV like the BMW 3 series.

Now Europe’s carmakers are making the same mistake again. PHEVs are not a stepping stone to better BEVs later.

Some European carmakers are once again pivoting towards selling more plug-in hybrids. In Europe, Jaguar Land Rover is boosting PHEV output, Volvo is giving more “love and care” to PHEV models such as the XC60, and BMW said that it “can always mix in more plug-in hybrids” into its sales.

This is a surprising shift away from battery electric cars towards a declining technology. BEV sales grew rapidly from 12.1 % in the EU in 2022 to 14.6% in 2023. PHEV sales dwindled from a peak of 9.4% to just 7.7%, declining further this year. Given the low consumer appetite, U-turning back to PHEVs appears misguided, especially since more PHEVs is bad news for consumers, the climate and the long-term health of Europe’s automotive industry. So, why are carmakers doing it? The answer is short-term profits and a failure to deliver affordable BEV models.

Strikingly, this shift coincided with the publication of the first set of real-world emissions data by the European Commission. It shows that PHEVs consume, on average, 3.5 times the official fuel consumption, meaning a PHEV like the BMW 3 series will cost its owner €950 more a year on petrol than what is advertised. While PHEV proponents argue that this is due to drivers not charging, PHEVs’ limited electric range (around 60 km on average) combined with an inability to fast charge makes electric driving difficult on anything but short trips. It also means they emit an extra 100g of CO2 per kilometer, putting Europe’s climate targets at risk.

Delaying BEV investments to focus on PHEVs is a very risky strategy. At best, it might bolster short-term profits but more certainly it will jeopardise European carmakers’ future. Chinese carmakers are entering the European mass market with affordable, good quality and competitive BEVs. It is naive to think that expensive PHEVs can compete, leaving the European market wide open to Chinese competition. This year Chinese brands could reach 11% of European BEV sales and 20% in 2027.

Chinese BEVs already have better technology because European carmakers were betting on PHEVs and diesel in the 2010s while Chinese carmakers were developing fully electric models. Now Europe’s carmakers are making the same mistake again. PHEVs are not a stepping stone to better BEVs later. Cars which require an engine and are built on existing ICE or mixed platforms will not help carmakers develop, launch and improve the dedicated BEV platforms needed to sharply cut BEV costs and remain competitive. Chinese carmakers are already on their second-generation BEV platforms, learning as they go. BMW is not launching its dedicated platform until 2025.

Chinese carmakers have also managed to cut the timeline for BEV development to just two years compared to the 4+ years needed by most European carmakers. This means that they can rapidly develop cars based on the latest technology and market demand. Renault, which appears to be devoting more focus to BEVs, is down to three years for the R5 BEV and hoping for two with the electric Twingo.

For European carmakers to remain competitive, focus has to shift away from PHEVs and expensive, premium BEVs towards compact BEVs for the masses. Sales of small and medium cars account for 80% of European sales but the offer of small, affordable European BEVs is lacking. Renault and VW’s talk of developing a €20,000 BEV together is a step in the right direction, and other carmakers should follow suit. To give OEMs the certainty needed, keeping Europe’s CO2 standards unchanged is critical.

In the end, carmakers should ask themselves who in a few years time will want to buy outdated PHEV technology when they can buy a sleeker, less expensive BEV instead?

This article was first published by Automotive News Europe

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