(Bloomberg) -- Stellantis NV, the automotive group that owns brands like Fiat, Jeep, Peugeot, Citroen and Ram, plans to invest 30 billion reais ($6.1 billion) in Brazil to boost production of flex-hybrid models for domestic use and potential export to neighboring countries, making it the latest automaker to bet big on the South American nation this year.

The company will make the investments between 2025 and 2030, Stellantis CEO Carlos Tavares and South America head Emanuele Cappellano announced Wednesday in Brasilia, after they met with President Luiz Inacio Lula da Silva. Most of the funds will go toward flex-hybrid models, with the first launch taking place in the second half of 2024.

The Stellantis announcement follows similar plans unveiled by its competitors in the opening months of the year, after Lula’s administration in December published a new plan to accelerate its green energy transition. The government’s Green Mobility and Innovation program, dubbed “Mover,” includes fleet sustainability requirements and tax incentives for companies that invest in decarbonization and the production of new technologies. It seeks to promote the expansion of investments in energy efficiency, including minimum recycling requirements for vehicle manufacturing and lower taxes for those who pollute less. 

US giant General Motors Co. announced plans to invest 7 billion reais in January, while Volkswagen AG of Germany said in early February that it would put 9 billion reais into Brazil between 2026 and 2028. South Korea’s Hyundai Motor Co. has since said it would invest 5.5 billion reais in the coming years, and Japan’s Toyota Motor Corp. on Tuesday unveiled plans to pour 11 billion reais into its Brazilian operations by 2030.

Each of the companies say they are seeking to begin the electrification of their product lines in the Brazilian market, investing in flex-hybrid versions. 

“What interests us aren’t the numbers, but the alignment that these investments will allow between society’s expectations and what we are here to do,” Tavares told reporters, explaining that the company hopes to improve middle class access to clean cars. “The automotive industry must enter clean mobility through accessibility. If the middle classes cannot buy, there is no volume and there is no positive impact on the planet.”

The country’s most popular models are so-called flexible-fuel vehicles capable of running completely on biofuel produced from sugar cane, making them by most accounts cleaner than pure gasoline engines. Since their introduction 20 years ago, flex-fuel cars have become dominant in Brazil, making up a whopping 83.3% of all auto sales in 2023, according to the Brazilian Association of Automotive Vehicle Manufacturers, known as Anfavea. During that same period, electric cars comprised 0.4% of the market and hybrids 2.1%.  

In August 2023, Stellantis presented four prototypes of its Bio-Hybrid technology, which was developed by its South American team and combines flex thermal energy and electrification. Three are hybrids, while the fourth is a 100% electric option that will also be produced in the region in the future. The new investment plan foresees 40 launches, in addition to eight new powertrains and electrification applications, from 2025 to 2030. They will include modifications to existing models and completely new options.

“All this investment is aligned and coordinated with the Brazilian government’s Mover program, an extremely intelligent program that will take Brazil to a new stage of safe, clean and accessible mobility,” Tavares said. “Bio-Hybrid is an extremely efficient solution, which relies on the country’s natural resources and which could potentially be expanded to other countries in the region.”

Stellantis’ current investment cycle, which began in 2018 and runs until the end of this year, totals 16 billion reais and involves 43 launches among the eight brands it operates in South America. The majority of the resources, around 80%, is concentrated in Brazil, where Stellantis has three factories. The group also has two plants in Argentina that will receive another 2 billion reais in investments on top of the funds for Brazil, Cappellano said without giving details of the announcement date.

In 2023, Stellantis’ total sales in South America surpassed 878,000 vehicles, accounting for a market share of 23.5%, according to the company’s data. It led the Brazilian market, with more than 686,000 units sold and a 31.4% share of sales. Fiat was the leading brand in the region, with 14.5% market share, and in Brazil, where it reached 21.8%.

Multinationals have sped up decarbonization plans in Brazil after Chinese competitors like Great Wall Motor Co. and BYD Co. announced plans to produce electrified models in Brazil. 

Unlike other markets, Brazil has been using ethanol to reduce emissions for at least 40 years, and biofuel has emerged as a transitional alternative toward full electrification in the South American country. Instead of massive investments in battery plants for 100% electric cars, companies are seeking to develop hybrid models in which electric and flex combustion engines — fueled by gasoline or ethanol — will work together. Toyota, a pioneer in flex-hybrid solutions, has been selling models with that option in Brazil since 2020.

“Stellantis is very satisfied with what we are doing here in Brazil and in Latin America,” Tavares said, adding that the group currently considers the region stable. “What is obvious is that Brazil, which has already experienced several instabilities, is a country that has made many efforts to stabilize its functioning. And this stability is a fundamental condition for aligning our interests.”

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