Plug in hybrids are here and carving a large chunk of the auto market

Five charts to start your day

I read this fantastic article from BloombergNEF over the weekend. I really love their work. And, unsurprisingly it was full of fantastic charts.

Source: BloombergNEF

So basically, plug-in hybrids are the fastest growing battery-electric type of vehicle currently being sold. We are going to call these PHEVs, so if I use this weird acronym, this is what I’m referring to.

Over the past five years, PHEVs have outpaced battery-electric vehicles, traditional hybrids and combustion engines. Companies like Li Auto and BYD are introducing more capable, longer-range PHEVs that are attracting new buyers in China, while traditional German and US auto manufactures are making similar inroads.

The average PHEV range has increased from 50 kilometers in 2019 to nearly 80 kilometers in 2023, with China driving much of this growth. Additionally, about a third of PHEV sales in China last year were extended-range electric vehicles, with an average range of 127 kilometres.

Source: BloombergNEF

So what’s the future. Well, this is very much a transition technology. PHEVs market share will eventually fall as declining battery prices and better battery technology, will eventually see all-electric vehicle take over the market. In fact in China, thanks to generous government support, the cost of battery electric vehicles have already fallen below the cost of traditional combustion engine vehicles.

Source: BloombergNEF

The point is that this is a really interesting market right now. Progress moves at different speeds, depending where in the world you look. It’s also fragmented, which makes the opportunity set for investors interesting. It’s worth look. Every auto market it different now.

Coming up:

• US inflation is mainly being driven by services

• Private clients shifted more into short-dated debt post-pandemic

• Over the long run, stock have got pricier

• Does the Fed model still say buy?

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