Flex hybrids: why technology is at the center of R$117 billion in investments by automakers

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Anfavea compiled the values ​​of the new round of investments in the Brazilian automotive market. The arrival of Chinese automakers made the competition move to grow a technology that combines electrification and flex engines. The car is produced at the Volkswagen factory. Disclosure/Volkswagen The country’s automotive market is going through a historic investment cycle, which reached an amount of R$117 billion announced by automakers operating here. The National Association of Motor Vehicle Manufacturers (Anfavea) compiled the numbers, after this week’s announcements from Toyota and Stellantis. These are active investments from 2021 onwards, which represent a record for the national automotive sector. In 2024 alone, R$66 billion were announced by automakers to expand production and develop technology in the country. Almost half of this year’s value corresponds to Stellantis, owner of brands such as Fiat and Jeep, which will invest R$30 billion in its factories in Brazil between 2025 and 2030. This is also the largest amount ever invested by a single company in the automotive industry Brazilian. Among the priorities are at least 40 new products and the development of vehicle decarbonization technologies, in particular the so-called bio-hybrid technology — a model that combines electrification with flex-fuel engines running on ethanol. The name “different” is nothing more than the flex hybrid, an innovation of Brazilian origin — first adopted by competitor Toyota — and a staple among the automakers’ recent announcements. In addition to Stellantis’ flex hybrid, there are the following plans on the radar: BYD, specializing in electric vehicles, announced a research center to develop a flex hybrid engine in Bahia. Toyota is also part of the investment round with R$11 billion, and intends to consolidate flex hybrid technology as a way of “maintaining its leading role and leadership in the country in electrification and exports”. Volkswagen talks about using part of the R$16 billion in a new engine for hybrid vehicles (without specifying whether it will be flex), 100% electric and full flex — in addition to an “innovative, technological, flexible and sustainable” platform. GM says that part of its R$7 billion will be used for a complete reformulation of the portfolio, stating that the models will be “in tune with the country’s predominantly clean energy matrix”. g1 has already shown that, in addition to higher prices and technological complexity, the migration to 100% electric cars is still not treated as a priority in the country. Hybrid cars end up being more advantageous in Brazil because they have more competitive prices, and those that use ethanol enjoy fuel that emits less carbon dioxide and is abundant in the country. “The important thing is to mention that — considering all the CO2 produced by a car during its production, use and disposal — a hybrid vehicle, when operating with ethanol in Brazil, is probably the cleanest mass-produced vehicle on the planet,” said the professor Renato Romio, manager of the Engines and Vehicles Division at the Mauá Institute of Technology (IMT). See, at the end of this report, more details about the companies’ contributions. See the list of the best-selling new vehicles in Brazil in 2023 But what justifies the investments — and the focus on hybrids? For the business development director at JATO do Brasil, Milad Kalume Neto, this optimistic wave — combined with the race to develop flex hybrids — has a few main reasons: the country is in the process of economic stability; Chinese automakers put pressure on the Brazilian market; and new federal government programs have boosted the sector. The expert explains that companies are seeing the country with more confidence in the face of a strengthening economic environment and a “much better outlook for the second half of the year”. The fact that the sector is, on a global level, focused on the development of hybrid, flex and electric vehicles has also contributed to the scenario, explains Milad. With the Brazilian industry lagging behind in this type of investment, Chinese automakers — already developed in this direction — therefore began to put strong pressure on the domestic market, collaborating with this new race within the sector. “Suddenly, the industry had the need to assemble products to compete not only in the domestic market — which now has technology brought by the Chinese at a competitive price — but also in other markets”, observes Milad. He also highlights the role of the Nova Indústria Brasil program, which will provide R$300 billion in financing for the industry until 2026, and the Green Mobility and Innovation program (Mover), aimed at sustainable vehicles and the production of new technologies, both from federal government. In this sense, Anfavea also stated that “measures announced by public authorities” have provided “predictability to companies”, which contributes to the “record values” of investments in the automotive sector. “[Há ainda] the drop in interest rates, which we expect to be consistent throughout the year. This picture of optimism in the sector will certainly lead, by the end of the year, to more investments”, said the executive director of Anfavea, Igor Calvet, in a press conference this Thursday. In the wake of the new investments, Milad, from JATO of Brazil, believes that “now, therefore, we will have money for the development of new technologies”, with factors “converging so that the country has a great potential for growth in the sector”. “So, this is the moment in which Brazil fits: the need of our industry, a global vision focused on hybrid or electric engines and the issue of the internal economy”, he concludes. How electric cars work What BYD companies say The Chinese BYD highlighted that, among the amounts invested by the company in Brazil , R$6 million is allocated to a new Research and Development (R&D) laboratory located in Campinas (SP), which opened in December 2023. The company also informed that it will invest in the creation of a Technological Research and Development Center in Bahia, to develop, among other projects, technology for a hybrid-flex engine, to combine ethanol with the electric engine. GM General Motors (GM) announced an investment of R$7 billion in Brazil until 2028. According to the automaker, investments will begin this year. The automaker highlighted that the investment focuses on sustainable mobility, covers the complete renewal of the vehicle portfolio and the development of technologies for the local market, in addition to the creation of new businesses. “The company continues with its vision of the future, of a world with zero accidents, zero emissions and zero congestion. This strategy encompasses advanced vehicle safety features and products that are increasingly efficient from an energy and environmental point of view”, says the company in a note. Stellantis The automaker informed that its three factories in Brazil (MG, PE and RJ) will benefit from the announced investments. There will be 40 new products, four global platforms associated with bio-hybrid technologies, 8 powertrains and new technologies linked to safety and electrification. In response to g1, Stellantis said it had set the objective of fully decarbonizing its operations by 2038, with emissions halved by 2030, with “45% of the reduction related to actions and technologies in the product”. In this sense, the company highlights the combination of ethanol with electrification (hybrid car) as a “competitive transition alternative for the dissemination of electrification at affordable prices”. Regarding the billion-dollar investments announced, Stellantis stated that it was “a response to the favorable business environment we found in the country” and that Brazil “will take a leading role in accelerating the decarbonization of mobility.” Toyota To g1, Toyota says it believes that the best technology in electrification is one that fits perfectly into the existing infrastructure in its different operating markets, without failing to consider the country’s energy matrix as a crucial point for the industry’s key turning point in search for effective decarbonization. “After consolidating the flex hybrid, the company argues that the inclusion of other technologies also contributes to the electrification process of its portfolio in Brazil and the region. And, in the Brazilian market, ethanol is a fundamental part for electrification to advance, in fact, with real gains in low CO2 emissions, considering that the infrastructure exists and without impacting consumers’ usage habits”, says the company. Regarding the stage of its flex hybrid vehicles, the company informs that, in September last year, it began internal tests using ethanol in conjunction with plug-in hybrid technology and that, in this first stage, the studies proved to be “promising”. Still in 2023, Toyota also announced its participation in the research and development project to evaluate the use of hydrogen from ethanol in passenger cars together with Shell, Raízen, Hytron, Senai and USP. Volkswagen Volkswagen informed that, in the first phase of its investments, it intends to develop and produce four new vehicles, one of which will be a pick-up. In addition to the vehicles, the automaker announced that it will develop, through investment, a new engine for hybrid vehicles and an “innovative, technological, flexible and sustainable” platform. In the same vein as other companies, Volks highlighted that the new models, new to its portfolio, will be “fundamental to further boost the brand’s decarbonization strategy in the South American region”. In an interview with g1, the automaker’s CEO, Ciro Possobom, even highlighted the start of production of hybrids by Volks as one of the main novelties of its new investment cycle in Brazil. “Volkswagen is currently the third largest electric car manufacturer in the world. So, we have a huge range of cars and we will choose the most suitable models for production in the country,” said the executive.

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