Optimism with electric cars grows in Brazil and the sector raises sales projections

Faced with the race to produce electric cars, the automobile industry in Brazil has been showing more optimism with the scenario for the coming years, according to studies carried out by consultancies that monitor the segment. The information is from the Folha de S. Paulo website.

Jato Dynamics, which operates in countries such as the United States, Brazil and Germany, has just raised its projection for the share of electrified vehicles (electric and hybrids) in sales in the national market in 2030. Jato’s business development director, Milad Kalume , said that expectations rose from 12.5% ​​at the beginning of the year to just over 25% – this new result will be announced this week.

The slice projected by Jato does not consider light hybrid vehicles, which use electricity to help reduce fuel burning when starting, as electrified.

Last year, the consultancy had overturned the projection after the government announced the return of the import tax on electric vehicles. Kalume says that the more optimistic scenario now reflects factors such as the creation of programs such as Mover (Green Mobility and Innovation Program) and the advancement of the global industry towards the electrification of engines.

According to data from Jato, in January and February, the share of electrified vehicles (considering sedans, hatchbacks, station wagons, SUVs, convertibles, among others, and excluding light commercial vehicles) in Brazilian sales was 9.34%.

Project to boost the sector

In March, the federal government sent the bill to Congress that establishes Mover, which creates a special line of credit for companies in the mobility sector. In return, companies will have to invest in research into sustainable technologies.

The government of President Luiz Inácio Lula da Silva (PT) signed an ordinance that requires an investment of at least 1.8% of the revenues of light car manufacturers that join the research and development program, starting in 2029.

Bright Consulting expects that electrified vehicles (excluding light hybrids) will represent almost 26% of sales of cars and light commercial vehicles in the national market in 2030. Bright’s projection was revised in mid-2023 after experiencing a slight increase.

KPMG consultancy asked Brazilian executives if they were confident with the growth of the automobile sector over the next five years. Around 42% of them said they were extremely confident — this share jumped more than ten percentage points compared to the previous year’s survey.

The Brazilian result goes against what was observed in other countries, such as the United States, where the indicator fell five percentage points, and in Western Europe, which saw the projection plummet from 31% to 24% in one year.

The KPMG study heard, at the end of last year, just over 1,000 executives around the world linked to companies such as automakers, truck manufacturers, dealership networks and technology services companies linked to the automotive sector.

According to the consultancy, in general, respondents are now more realistic and are faced with the difficulty of managing the energy transition and preserving or increasing profits.

“Companies have made big bets on electric propulsion and are increasingly concerned about short-term headwinds that could delay profitability. Although a flood of new electric vehicle models is hitting the market, demand has weakened and some companies may face extreme pressure as competition intensifies,”

writes KPMG in the study.

According to Ricardo Roa, leading partner of the automotive sector at KPMG in Brazil, China benefits from a cheaper production cost, while European and American companies are forced to reduce their margins to deal with new competitors.

“Last year, many automakers had to reduce prices because the Chinese arrived with competitive prices. This automatically reduces profit,” he says.

Optimism

In Brazil, says Roa, optimism reflects a feeling of recovery in the automotive industry in the coming years with announcements of programs to promote the sector.

In recent months, several automakers located in the country have announced a series of contributions, which already exceed R$70 billion, for the production of electrified vehicles and expansion of factories, among other measures.

Stellantis, for example, promised R$30 billion in investment between 2025 and 2030 with a focus on developing flex hybrid models — capable of running on electricity, ethanol and gasoline.

Previously, an investment announcement of R$11 billion from Toyota caused a dispute between the federal government and the Tarcísio de Freitas (Republican) administration. As the Panel column showed, the Lula government tried to politically benefit from the Japanese automaker’s investment, which displeased the governor of São Paulo.

In addition to Stellantis and Toyota, new investments include Hyundai, Volkswagen and General Motors.

Read more:

The price of a ride with an app car could increase with regulation, warns lawyer

Companies will produce new paper money collector and dispenser at PIM