Brazil is bearing the shock of investments in hybrid cars

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A general view of part of the production line of the Volkswagen car factory in Sao Bernardo do Campo, Sao Paulo, Brazil.

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A general view of part of the production line of the Volkswagen car factory in Sao Bernardo do Campo, Sao Paulo, Brazil.

Brazil is preparing for a hybrid revolution as global automakers rush to pump billions of dollars into developing green vehicles in Latin America’s largest economy.

Globally, sales of hybrid cars are growing, giving consumers fuel savings, sustainability and the assurance that they won’t be stranded far from a public charging station in a fully electric vehicle.

Brazil, with its 200 million-plus population, is trying to boost local production of less-polluting vehicles, and auto giants are eager to do so.

This month, Stellantis – owner of several major car brands, with electrified Jeep, Peugeot and Fiat products – promised “the largest (investment) in the history of the Brazilian and South American automotive sector.”

The company said it would invest $6.1 billion in the region between 2025 and 2030, with Brazil being the biggest beneficiary.

Toyota, which has bet more on hybrids than fully electric cars, has announced it will pump $2.2 billion into Brazil by 2030.

Other big names such as Volkswagen, Renault, Nissan, General Motors, BYD and Hyundai have also announced plans to produce electric and hybrid vehicles in the country.

The National Association of Motor Vehicle Manufacturers (Anfavea) estimates that Brazil will receive approximately $23.4 billion in automotive investments in the coming years.

Anfavea president Marcio de Lima Leite said it was “zero coincidence” that investment was pouring in and would largely focus on hybrids – which combine a battery-powered electric motor with a combustion engine.


Brazilian President Luiz Inacio Lula da Silva (L) and his vice president, Geraldo Alckmin, greet employees during their visit to the Volkswagen car factory.

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Brazilian President Luiz Inacio Lula da Silva (L) and his vice president, Geraldo Alckmin, greet employees during their visit to the Volkswagen car factory.

The flurry of activity comes after the government announced it would “gradually increase import taxes on these new technologies” to boost domestic production of electric or hybrid vehicles.

President Luiz Inacio Lula da Silva also recently created a program that will award $3.8 billion in tax credits to automakers that commit to “investing in decarbonization.”

‘A transitional model’

“These investments mark a turning point, not only in terms of the amounts, but also in terms of all the changes they will bring to the sector,” Cassio Pagliarini of the Bright Consulting firm told AFP.

According to him, the hybrid is ‘a transitional model’. Brazil cannot yet afford to switch en masse to fully electric, “because the batteries are still too expensive.”

Furthermore, “the government does not have the resources to pay significant subsidies” to consumers, as European countries do.

There are also significant logistical challenges in installing public charging stations in the world’s fifth largest country.

Instead, Brazil prefers to boost the production of hybrid vehicles that run on electricity and the ethanol from sugar cane that is widely used in the country as fuel for cars.

Stellantis, Toyota, Volkswagen and BYD have all said they will invest in ethanol-powered hybrids.


Brazil, with its more than 200 million inhabitants, is trying to boost local production of less polluting vehicles, and auto giants are seizing the opportunity.

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Brazil, with its more than 200 million inhabitants, is trying to boost local production of less polluting vehicles, and auto giants are seizing the opportunity.

“Brazilian ethanol is a low-carbon fuel that can be produced in pre-existing areas without resorting to deforestation,” said David Tsai of the Institute for Energy and Environment, an NGO.

But, he believes, instead of granting tax breaks to car manufacturers, “it would be more interesting to invest massively in green public transport.”

Electrified cars are gaining ground

According to the last census from 2022, there were approximately 60 million cars on the streets in Brazil. According to data from Bright Consulting, less than 0.5 percent would be electrified by 2023.

However, according to figures from the Brazilian Electric Vehicle Association (ABVE), sales of electrified cars will double between 2022 and 2023.

Pagliarini predicts that electrified vehicles “could represent more than half of sales by 2029,” but that only “20 to 25 percent will be 100 percent electric.”

Carlos Tavares, CEO of Stellantis, said it was essential that these vehicles were “accessible to the middle class.”

“Otherwise there is no impact on the planet,” he told a news conference.

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