U.S. media observation: battery electric vehicles may not be the future of China's transportation in the end

Forbes reports by James Morris on April 29, 2024

Recently, China reached an important milestone: in the first half of April 2024, more than 50% of the cars sold in China were "new energy vehicles". This is indeed a commendable result and good news for China and global emissions, however, it is not. The huge leap in sales is not due to the bumper harvest of battery electric vehicles (BEVs), but plug-in hybrid electric vehicles (PHEVs). Will China's highly regarded BEV market shift to PHEVs, giving new life to internal combustion engines (ICEs)?

At the 2024 Beijing International Auto Show in Beijing, I posed this question to Ms. Wang Ruiping, CEO of Orobay, a subsidiary of Chinese car manufacturing giant Geely that produces internal combustion engine vehicles and one of the main suppliers in this field. "In the last few years, most of the media has focused on BEVs. However, the market has changed significantly recently. By the end of 2023, battery electric vehicles (BEVs) accounted for 23%, pure hybrid vehicles (HEVs) accounted for 4%, and plug-in hybrid electric vehicles (PHEVs) accounted for 11% in the Chinese market. But in April this year, BEVs fell to 21%, HEVs remained at 4%, and PHEVs have risen to 15%, meaning hybrids now account for 19% of the market. Ms. Wang expects that by the end of this year, the combined market for HEVs and PHEVs will surpass that of BEVs.

Why are Chinese drivers switching to PHEVs?

I asked her why this was happening. "About 80 percent of Chinese households own only one car," she said. "They need this car for any journey, including long trips. In the city, BEVs are perfect, but not so much on long journeys. China is a vast country, with a length of 5,000 kilometers from east to west and a width of 5,500 kilometers from north to south. It takes a few hours just to travel through big cities like Beijing and Shanghai. "Charging is not as popular as going to a gas station to refuel because it takes longer".

Ms. Wang believes that PHEVs have some advantages of BEVs, but do not have these disadvantages. "PHEVs can also perform better than non-hybrid combustion vehicles, such as BEVs," she said. "Motorists get a BEV-like experience." I drove several Geely PHEVs to test them on the track in Beijing, including the Lynk & Co07EM-P. The petrol engine of this car delivers 161 horsepower, while the electric engine delivers 375 horsepower. Although the 07EM-P weighs in at 1,915 kg, it feels very fast when driving in a straight line.

It also performs well on the track. It's only when the 18.97 kWh battery is still charging, though, that you can fully enjoy the benefits of all the power. Once the battery is depleted, the acceleration performance will be significantly reduced. The average Chinese PHEV buyer doesn't rant about their car, especially on Beijing's heavily trafficked public roads. But for them, another benefit of PHEVs is only available in the latest versions, which is why PHEVs are back in popularity.

Better PHEV electric range

The latest PHEVs currently entering the Chinese market are a sea change from the first-generation PHEV technology, which only promised a range of 32-48 km with a battery run (usually half the size of the first generation). This is often not even enough for a full commute. Today's models offer several times the range of this mileage. Geely's Lynk & Co brand has just launched an SUV called the 08, equipped with a battery of up to 40kWh and a pure battery range of up to 245 km. This generation of PHEVs also typically offers fast DC charging, so it's worth plugging in if you can find a convenient place to go on long trips. The previous generation model only offered AC charging, which took a few hours to charge the battery, meaning it was only worth charging at home or at work.

In Europe and the United States, PHEVs have come under fire for not living up to their theoretical economics. This is due in large part to the fact that, due to tax incentives, these cars are bought as corporate vehicles but are never actually plugged in to charge, which loses its meaning. This has happened in China before due to the limitations of the first PHEVs. But Ms. Wang believes that this is no longer the case with the new generation of PHEVs, and there will be some benefits even if they are not recharged.

"Even if you don't charge the latest PHEVs, fuel consumption will increase by 40 percent," she said. "But the cost benefits of charging are clear. In China, the running cost of a pure fossil fuel vehicle may be 0.7 yuan per mile, while the running cost of a PHEV using an electric motor is 0.2 yuan per kilometer. "With a car like the Lynk & Co 08, it only needs to be charged once a week, so in addition to cost savings, there is a lot of motivation to charge. Now there are chargers in the workplace as well."

Aurobay also supplies fossil fuel engines for the iconic black London taxis produced by LEVC, another Geely-owned company. Although the production of the car has been transferred to Proton in Malaysia in 2022. It is not a PHEV, but a range-extended electric vehicle (REEV). However, its usage concept is similar to that of a PHEV with a large battery. LEVC taxis are battery-powered for the majority of their mileage, but fossil fuel engines can be used as a backup when the battery runs out and there is no time to recharge, or when long journeys are required, such as long-distance airport operations.

Can PHEVs offer the benefits of BEVs at a lower cost?

Ms. Wang believes that in addition to the flexibility advantages of the new PHEV, cost is also an important factor in its renewed success. "Batteries are still expensive," she said. "If the battery capacity is only half or less than that of an equivalent BEV, the price of the whole vehicle will be even lower even if the cost of the gasoline engine is increased. Customers can spend less money and still be able to drive their cars like BEVs most of the time."

Hybrid vehicles are not the only technology vying for market share in China's new energy market. Orobe has not yet given up hydrogen or methanol and has produced hydrogen internal combustion engines and methanol engines. The latter is either dual-fuel (either conventional fossil fuels or methanol can be used) or pure methanol. Ms Wang said there are already 30,000 methanol-ready cars on Chinese roads, and Geely recently announced that Malaysia is the next target for the technology. Methanol can be produced green, although not always, at a cost per kilometer similar to that of BEVs.

Geely Emgrand M100 hybrid

Geely's Emgrand M100 hybrid is a PHEV that combines methanol combustion and an electric motor.

It's worth noting that Ms. Wang, who has worked in Geely's powertrain division almost since Geely in 2010 and became Orobey in 2021, clearly has a soft spot for internal combustion engines. BEV technology is also getting better and better, and Geely's brands such as Zeekr and Polestar are still sticking to pure batteries, so it's clear that the company won't abandon BEVs. Batteries are becoming cheaper and more energy dense, providing longer range at a lower cost. Solid-state batteries may also finally deliver on the revolution they have promised for years.

But for now, China seems to be reconsidering its eagerness to electrify pure batteries, and Europe and the US are likely to follow suit, as their BEV market growth is also slowing. Just when we thought the BEV was winning, the internal combustion engine made a comeback, although in the long run, it may only be temporary.