PHEVs, HEVs take front seat in H1 amid nickel and lithium supply glut

Amid a glut in lithium and nickel supplies worldwide, global demand for electric vehicle types has shifted to PHEVs (plug-in hybrid EVs) and HEVs from BEVs (battery EVs).

Over the first half of 2024, global sales of BEVs rose 11% year on year, slowing down from 35% in 2023 and 78% in 2022, all on a year-on-year basis, according to a report from the Macquarie Group.

By comparison, H1 sales of PHEVs shot up 44% from the year before, similar to growth rates of 45% in 2023 and 32% in 2022.

"The share of plug-in hybrids in total sales at 35% is the highest since 2017," Macquarie Group said, as PHEV sales head toward making up half of overall Chinese vehicle sales. H1 2024 PHEV sales accounted for 41% of all Chinese sales compared with 32% the year before.

"The move back towards PHEVs mainly reflects strong growth in Chinese "range extender" cars, where the internal combustion engine vehicle is used solely to recharge the battery and not drive the vehicle's wheels," it said.

Typically, HEVs combine a gasoline-powered motor with an electric hybrid battery excluding a charging socket. PHEVs are similar to HEVs but have bigger batteries, offering more distance on solely electric power.

EU, US embrace HEVs

In Europe, the emphasis centered on HEVs instead of PHEVs, data from the European Automobile Manufacturers' Association (ACEA) showed.

In H1 2024, new registrations of HEVs were up 22.3% from the corresponding six months of 2023 at 1.66 million units while those of PHEVs slipped 2.5% year on year to 392,284 units.

As such, HEVs were the leading choice among EV types in the EU over H1, followed by BEVs at 712,637 units and PHEVs at 392,284 units.

Similarly, over in the US, despite a slowdown in its own EV market, HEVs accounted for a leading share of electric-drive vehicle sales in H1 2024 at about 0.71 million units against BEVs of 0.55 million units, data from Argonne National Laboratory showed.

Compared with H1 2023, HEV sales in the corresponding period of 2024 were up 34% from 0.53 million units while BEV sales rose 1.9% from 0.54 million units.

S&P Global Mobility sales-based powertrain forecast expects HEVs to have a larger role in US light-vehicle sales, reaching about a 20% share in 2031.

HEVs play transitionary role

Japan's Toyota Motor Corp., a leader the HEV market sales, saw its H1 2024 sales of HEVs rise 19.8% to 1.92 million units while its PHEV sales shot up 35.2% to 72,668 units.

Of Toyota's HEV sales, 1.5 million units were sold outside of Japan, or about 78.4% of the overall sales. Toyota's overseas HEV sales alone were up 32.7% against H1 2023. In June 2024 alone, Toyota accounted for a 51.1% share of total HEV sales in the US.

Toyota is among several global automakers who have positioned HEVs as a transitional replacement for internal combustion engine (ICE) vehicles. In countries where the buildup of EV rapid-charging infrastructure is challenging, HEVs are a promising stopgap measure.

In Southeast Asia, Thailand temporarily lowered an excise tax rate for HEVs on July 26. The reduced rate will be effective 2028-2032 and will apply to HEVs of no more than 10 seats.

To qualify for the cut, automakers must make new investments in Thailand of not less than Baht 3 billion ($84.81 million) between 2024 and 2027, subject to approval by the Thailand Board of Investment.

EV battery costs have plunged amid slowing demand for EVs, a glut of battery metals and tariffs on Chinese EVs.

Already, the cost for battery components such as lithium plunged over 2023 till to date, resulting in cheaper batteries and lowering the overall cost of an EV. Typically, batteries can account for as much a third of an EV's cost.

At the start of 2023, lithium carbonate prices stood at $75,000/mt CIF North Asia, close to an all-time peak of $78,200/mt on Nov. 29, 2022, data from S&P Global Commodity Insights showed. Likewise, lithium hydroxide began 2023 at $81,300/mt CIF North Asia, down from an all-time high of 84,700/mt on Nov. 25, 2022.

On Aug. 8, lithium carbonate stood at $12,000/mt while lithium hydroxide was $11,500/mt, resulting in plunges of 84% and 85.9%, respectively, compared with the start of 2023.