Yet, Brazilian group will not give up on electrics, will continue to make internal combustion vehicles

06/17/2022

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Marcio Alfonso — Foto: Silvia Costanti/Valor

The automotive industry is divided. Some believe that, in Brazil, electrification will only advance with hybrid cars – which run on power or internal combustion and can already be produced in the country. Another part prefers to follow the trend of developed countries and go straight to fully electric cars, which are imported. CAOA Chery has decided to bet on both fronts. It will import and produce vehicles with both technologies and thus be prepared, whichever path is adopted by the country and more accepted by consumers. The automaker is, however, inclined to believe that ethanol hybrid cars will gain space.

This week, the company born five years ago from the union of the Brazilian group CAOA with the Chinese brand surprised the market by detailing the electrification plans it had been emphasizing in its advertisements. It presented five new models – four hybrids and one fully electric. Two of the hybrid cars have already started to be produced in the Anápolis (Goiás) plant, and the others will come from China. The fully electric one, also Chinese, called iCar in Brazil, will be the cheapest in its category. It will cost R$139,990.

The apparently sudden initiative is, in fact, the result of a process that began to mature six years ago in the CAOA group and four years ago in the Chery division, according to the group’s vice president of operations, Márcio Alfonso. “We have reached the point where you can no longer advance in the emission of pollutants with combustion-only engines,” said Mr. Alfonso, a mechanical engineer with a long stint in Ford before joining CAOA, seven years ago.

The arrival of the hybrid line in Anápolis is part of the R$1.5 billion investment program unveiled in December 2020. It is also the result of a dream cherished by the founder of CAOA, the businessman Carlos Alberto Oliveira Andrade, who died in August last year. CAOA thus becomes the second automaker to produce hybrid vehicles in Brazil, with models Tiggo 5X Pro and Tiggo 7 Pro. And, like the pioneer in this initiative, Toyota, the hybrids manufactured in Anápolis can be fueled with ethanol.

“The hybrid model is expected to dominate because ethanol is a strategic product for Brazil,” Mr. Alfonso says. The country would be, according to the executive, “an adequate place” for fully electric cars, since it holds renewable power source, with hydroelectric plants, besides the good perspectives regarding solar and wind power generation. “But the consumer’s purchasing power is low,” he says. “It is not clear, from what we see in Europe, what to do with the electric car after the warranty period.”

For Mr. Alfonso, there is no point in bringing cars that few can buy. According to him, the number of consumers who bought vehicles over R$180,000 in 2021 does not reach 150,000. The market for new cars totaled almost 2 million. Therefore, the company will make a composition between hybrids and fully electric cars and will continue to produce combustion models. “We need to have all the cards up our sleeve for when the government defines which technologies will receive incentives,” he said.

Chery’s hybrid models will cost between R$159,990 and R$269,990. The most expensive of them, the Tiggo 8 Pro Plug-In Hybrid, an imported car, will be of the plug-in type, a hybrid that allows charging in the socket in addition to the combustion engine. The advantage of the model is fuel economy and better control of emissions.

The hybrid technology used by CAOA Chery will use the “light” hybrid technology, with a 48v battery, which costs less than a conventional one. In this case, the electric motor is less involved. According to Mr. Alfonso, one advantage of the hybrid model is to allow, during the development of new generations of the same car, the electric part to gain more space. By this reasoning, a hybrid model can become increasingly “more electric.”

According to the executive, the hybrids will represent 30% of the production in Anápolis. The idea, he highlights, is to electrify the line more and more. For the time being, the production of fully electric vehicles is not foreseen. No company produces this type of vehicle in the country.

The Anápolis plant was already prepared to receive lines with the new technology. The same does not happen with the Jacareí unit, in São Paulo, where production was suspended at the beginning of May.

The São Paulo-based plant, which the CAOA group acquired when it joined Chery, has an older manufacturing system. According to Mr. Alfonso, it is necessary to adapt the plant with equipment that accepts the most modern platforms, of electrified vehicles. The expectation is to complete the process in two years.

With the end of production in Jacareí, almost all the almost 600 workers were dismissed. Mr. Alfonso says that the company’s management was reluctant to take this attitude “in an election year and with an unstable economy.” He added, “But there is no point in continuing to invest in an old platform.”

*By Marli Olmos — São Paulo

Source: Valor International

https://valorinternational.globo.com/