Glut Of Chinese Plug-In Hybrids Threatens European Automakers

Chinese automakers hit record car sales in Europe last month, making up 12 percent of new car sales, largely by selling plug-in hybrids that avoid the EU's tariffs on Chinese-made electric cars. Those tariffs, put in place two years ago, only covered fully electric vehicles, so Chinese brands shifted toward hybrids instead. With gas and diesel prices climbing in Europe, buyers are moving toward electric and hybrid cars generally: sales of these rose 27 percent in August, and without them the overall new car market would have shrunk. European regulators are now reportedly drafting new tariffs that could target hybrids and plug-in hybrids too.

The shift is also scrambling plans at Volkswagen, which had been cutting production because it was making more cars than it expected to sell. Demand for its electric models has jumped unexpectedly, and the company is now shifting production toward its electric-vehicle plants and away from its gas-and-diesel-only factory in Wolfsburg. Several new electric models have drawn more than 100,000 pre-orders. Meanwhile Stellantis is pausing production of its electric and hybrid Fiat 500 for two weeks in October after falling short of its yearly production target.

None of this changes rebate programs or upgrade costs for a US homeowner directly, but it's a sign of how fast electric vehicle demand can shift when fuel prices rise, and how tariff rules aimed at one type of car (fully electric) can end up boosting sales of another (plug-in hybrid) instead.