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Are hybrid commercial vehicles gaining momentum in China?

Commercial Vehicles

May 2024

Yvonne Zhang

Research Associate

Yvonne joined Interact Analysis as a Research Associate to assist the research team with organizing, interpreting findings, and enhancing product outputs. She has a master's degree in Finance and has research experience in the Industrial Automation sector after her studies in the United States.

Battery electric and fuel cell are continually under the spotlight when it comes to new energy commercial vehicles in China, while hybrid seems to have gradually faded from the public eye. Has “hybrid” lost its competitiveness in the market or is it quietly gaining momentum?

The boom of hybrid commercial vehicles

With the cancelation of the “national subsidy”, the new energy commercial vehicle market is gradually shifting towards market-driven forces, and maintained steady growth in 2023. Sales growth of battery electric and fuel cell commercial vehicles decelerated, but they still maintained growth levels of 28.2% and 50.1%, respectively.

In contrast, hybrid commercial vehicles performed remarkably well in 2023, with cumulative sales of over 7,000 units, a year-on-year increase of 116.2%, accounting for 2.2% of the sales volume in the new energy commercial vehicle market. In the first quarter of 2024, registrations of hybrid trucks and buses totalled nearly 3,000 units, a 104% increase compared with the same period last year, surpassing full-year sales in 2021, and increasing the proportion of the overall new energy commercial vehicle market to 2.9%.

Sales of hybrid commercial vehicles surged in China last year

Increasing number of OEMs entering the market

Booming sales of hybrid commercial vehicles are increasingly attracting manufacturers’ attention and deployment are growing. In 2023, nearly 40 OEMs had registrations of hybrid commercial vehicles, 11 more compared with 2022, and the combined sales of the top ten OEMs accounted for 92.4% of the total sales.

Guangxi Auto has emerged as a prominent player in the market, with cumulative sales exceeding 1,700 hybrid light-duty logistics vehicles in 2023, capturing a market share of 26.2% and surpassing Geely to claim the top spot in the market. The company previously focused primarily on battery electric vehicles and started to see registrations of hybrid commercial vehicles in 2023. Following closely behind was JAC, which had registrations of over 1,400 hybrid light-duty trucks in 2023 (only 15 units sold in 2022), accounting for 21% of the market share. Foton ranked third, offering a wide range of hybrid vehicle models, including large-sized buses, light-duty and heavy-duty trucks.

In the first quarter of 2024, Chang‘an Auto led the market with a 31.7% share, with the company starting to sell hybrid commercial vehicles in 2023. Chang’an Auto’s sales of hybrid light-duty trucks exceeded 800 units (compared with 52 units sold in the entire year of 2023). Geely ranked second with vehicle models such as small and medium-sized buses, and medium-heavy trucks. Guangxi Auto retreated to third place. Additionally, other top 10 OEMs including BYD, Feidie and Beiben Truck also performed well. These companies previously focused on battery electric vehicles, and have only just started to introduce hybrid models in the last two years, achieving rapid sales growth.

Light-duty trucks becoming the mainstream

In 2021, China’s hybrid commercial vehicles market was dominated by light-duty trucks and large-sized buses, together accounting for a 91.7% share. Sales of hybrid large-sized buses exceeded those of light-duty trucks in 2022, accounting for over 50.8% of the market. In 2023, due to stagnant demand for medium and large-sized buses, hybrid large-sized buses saw a sales decline. Meanwhile, sales of hybrid light-duty trucks surged by 267.3% year-on-year, surpassing 5,000 units and accounting for a staggering 76.3% of the market share. Among them, vans and refrigerated trucks were the main contributors. In the first quarter of 2024, the market share of hybrid light-duty trucks soared to 91.6%, dominating the entire hybrid commercial vehicle market. With increasing demands for cost-effective models, hybrid light-duty trucks are expected to maintain their growth momentum.

Light-duty trucks are expected to continue to dominate China’s hybrid commercial vehicles market

The ‘Announcement of On-Road Motor Vehicle Manufacturers and Products’, issued by the Chinese Ministry of Industry and Information Technology also reflects this market trend. In 2023, the number of new hybrid commercial vehicle models increased by 93.2% from 2022, with light-duty trucks becoming the mainstream hybrid model since 2022. In the first quarter of 2024, among the newly-launched hybrid commercial vehicle models in China, only one model was a large-sized bus, with light-duty commercial vehicle models accounting for over 85% of new models launched.

Why do hybrid commercial vehicles stand out?

Compared with passenger vehicles, commercial vehicles (mainly trucks) serve as production tools, requiring not only the ability to carry heavy loads and travel long distances quickly, but also reliability and cost-effectiveness.

Currently, battery electric commercial vehicles face challenges including operation mileage and fast charging. Although many local and global suppliers are actively researching and developing batteries with higher capacity density to improve the mileage of battery electric vehicles, the issue of long charging times persists. For commercial vehicles, charging times affect production efficiency, which explains why battery swapping for heavy-duty trucks is also favored by the market. Fuel cell technology could better meet the needs of commercial vehicles, but is currently hindered by inadequate infrastructure, high purchase price and operational costs, making it a sub-optimal choice.

Alternatively, hybrid vehicles are priced slightly higher than conventional ICE vehicles, but lower than battery electric and fuel cell models, making them competitive in the new energy market. In recent years, with the continuous expansion of the logistics market, the advantages of hybrid light-duty trucks have become increasingly prominent. They are well-suited for distribution needs in urban areas, especially in cities with restrictions on conventional ICE commercial vehicles. Hybrid light-duty trucks, free from range anxiety, will further expand their application fields.

Final thoughts

As the national subsidy policy is phased out, hybrid commercial vehicles, especially hybrid light-duty trucks, have played a crucial role in urban logistics. Sales of hybrid commercial vehicles will continue to grow, with their market share steadily increasing. However, in the long term, with improved technologies and infrastructure, zero-emission technologies will win market share. Battery electric will continue to dominate market sales, and fuel cell will remain a promising route, especially for heavy-duty commercial vehicles. Hybrid commercial vehicles, on the other hand, are likely to be adopted in specific niche markets, rather than being the mainstream choice in the market.

For more information on the new energy bus and truck market in China, contact our analysts Shirly Zhu or Yvonne Zhang.

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