Hybrids Help Chinese Automakers Report Stellar Delivery Numbers in 2024

China is by far the biggest market for new energy vehicles (NEVs), a category that includes hybrids as well as battery electric vehicles (BEVs). Meanwhile, hybrid sales have been strong in China even as the brutal price war has been taking a toll on BEVs.

China is home to BYD which is the world’s largest seller of NEVs. The Berkshire Hathaway-backed company sold around 4.3 million cars in 2024 of which 58% were hybrids. In 2023, hybrids accounted for less than half of BYD’s total deliveries but the contribution has increased significantly over the last year. Hybrid cars helped Chinese automakers clock a strong 2024 even as automotive industries in many regions, particularly Europe sagged.

Musk Had Once Ridiculed BYD

In 2023, Tesla CEO Elon Musk praised BYD and termed it “highly competitive.” In 2011, the billionaire had laughed at the possibility of BYD as a competitor to Tesla. Musk has praised Chinese EV companies previously also. During Tesla’s Q4 2022 earnings call earlier this month, Musk said, “we have a lot of respect for the car companies in China. They are the most competitive in the world. That is our experience.”

He added, “They work the hardest and they work the smartest. And so, if I were to guess, probably some company out of China is the most likely to be second to Tesla.”

Last year, during Tesla’s Q4 2023 earnings call, Musk said, “Frankly, I think, if there are not trade barriers established, they will pretty much demolish most other companies in the world.”

The billionaire added, “The Chinese car companies are the most competitive car companies in the world. So, I think they will have significant success outside of China depending on what kind of tariffs or trade barriers are established.”

Notably, many countries have imposed tariffs on electric vehicle (EV) imports from China. While the US and Canada have increased the tariff to 100%, the EU too clamped down on EV imports from China which led to a deterioration in trade relations between them.

China’s Hybrid Car Exports Rise

Meanwhile, the EU’s tariffs cover BEVs and not hybrids. Unsurprisingly, China’s hybrid exports to the region increased sharply after the tariffs were imposed. China has a massive overcapacity in the automotive industry and its domestic companies have been looking to export markets to sell their excess production.

At the same time, China has been a particularly tough market for foreign automakers and they have been losing market share to domestic Chinese companies. General Motors’ China operations also posted a loss in Q3 2024 but the company is not giving up on that market yet. Last month, it restructured its China operations and incurred over $5 billion in charges.

Xpeng Motors Is Looking to Launch Hybrid Models

Meanwhile, hybrids are quite popular among Chinese consumers, and companies like Xpeng Motors are also looking to launch what’s popularly known as extended-range electric vehicle (EREV) in China.

Li Auto, which gets the bulk of its revenues by selling EREVs hit a new milestone as it delivered over 500,000 vehicles last year and its cumulative deliveries topped 1 million. It became the first emerging Chinese NEV company to hit the milestone.

Tesla’s China Deliveries Rose in 2024

Meanwhile, while Tesla’s global deliveries fell YoY last year, the US EV giant sold 657,000 cars in China last year, a YoY rise of 8.8%. China is an important market for Tesla and the country is not only the second-largest market for the Elon Musk-run company but is also home to its Shanghai Gigafactory that’s the company’s most efficient plant.

Last month, Tesla launched its “Actually Smart Summon” feature in China. The feature will be available in vehicles that have full self-driving (FSD) and enhanced autopilot features and will be rolled out through an over-the-air update. The feature allows the car to move from the parking lot to the place where it is “summoned.”

Tesla is Yet to Receive Approval to Launch FSD in China

While the feature was available in Tesla cars in the US the company hadn’t rolled out the feature in China where it is currently not offering FSD even as it lets car buyers purchase the subscription. Tesla expected regulatory approvals in China by the end of 2024 but so far we haven’t heard anything concrete about these approvals, The company was looking to start offering FSD in the country from Q1 2025 but lack of regulatory approvals might lead to a delay.

Meanwhile, while Musk is not a fan of hybrids and called them a “phase,” other automakers are also adding hybrids to their portfolios.

Ford Is Also Focusing on Hybrids

Notably, during the Q2 2023 earnings call, Ford said that it would also focus on hybrids. Its CEO Jim Farley said, “What the customer really likes is when we take a hybrid system that’s more efficient for certain duty cycles and then we add new capabilities because of the batteries.”

During the Q3 2024 earnings call, Farley said, “A lot of our companies shunned hybrids and now they’re scrambling, but it’s going to take them years to catch up.” He added that Ford holds an 80% market share in the hybrid pickup market and sales have more than doubled in two years.

“Most of our competitors don’t offer hybrid on an F-150 or a Maverick. And this has been a fantastic revenue opportunity for us. We frankly can’t keep up with the demand,” added Farley.

Ford’s hybrid sales rose 30% YoY in Q3 2024 and the company said that it was on track to hit a 9% global hybrid mix by the end of 2024.

Incidently, General Motors which became the first Detroit automaker to commit to an all-electric future by 2035 has also changed its strategy and will bring back hybrids. Toyota too offers a diverse set of products ranging from EVs, hybrids, and hydrogen cars.