SPG_MO_EM_July2025_EN_Final-Digital Book-V5E

The Mobility Paper

E-Mobility

July 2025

China’s PHEV/REEV

bandwagon- an

opportunity or a pitfall?

E - M O B I L I T Y

The Mobility Paper: China’s PHEV/REEV bandwagon–an opportunity or a pitfall?

Executive Summary

In mainland China, battery electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs),

and range-extended electric vehicles (REEVs) have all seen remarkable growth in recent

years, with differing technological highlights and value propositions for customers. Under

intensified market competition, OEMs are further developing their powertrain strategies based

on a mix of factors: regulation evolvement, technical feasibility, and market demand.

What is the current landscape of the Chinese powertrain market? As policy frameworks

continue to evolve, how should companies weigh technology pathways, consumer demand,

cost pressures, and regulatory risk? Where are PHEV and REEV technologies headed next?

And as overseas markets shift, what new opportunities and potential pitfalls lie ahead for

Chinese brands? This report explores these critical questions from multiple angles.

This Mobility Paper will cover:

– Mainland China leads as PHEVs and REEVs become scarce in overseas markets

– Mapping the local PHEV and REEV battleground

– Decoding the technology breakout of PHEVs and REEVs at the Auto Shanghai Show

– Powertrain transformation driven by regulatory direction

– Strategic powertrain choices under mounting dual-credit pressure

– Dual breakthrough with PHEV price disruption and REEV premium positioning

– Expanding into Europe’s transitioning market and new global opportunities

– PHEVs and REEVs gradually eroding the final stronghold of internal combustion engines

The Mobility Paper: China’s PHEV/REEV bandwagon–an opportunity or a pitfall?

E - M O B I L I T Y

Mainland China leads as

PHEVs and REEVs become

scarce in overseas markets

Mainland China has solidified its position as a

global powerhouse in the automotive industry,

underpinned by unmatched market scale. In

2024, sales of new energy vehicles topped

ten million units for the first time, marking a

decade of global leadership in volume.

Mainland China’s approach to light vehicle electrification stands in sharp

contrast to other major markets such as the United States, Germany, and

Japan. In 2024, battery electric vehicles claimed a larger share of sales in

China than in those peer markets. Plug-in hybrids have surged in popularity,

while range-extended electric vehicles built on battery electric platforms

have also gained meaningful traction. These patterns highlight Mainland

China’s distinct path in powertrain adoption compared to global norms.

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The Mobility Paper: China’s PHEV/REEV bandwagon–an opportunity or a pitfall?

2024 Light Vehicle Sales by PSD - selected country

Source: S&P Global Mobility

@2025 S&P Global

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Mainland China

USA

Germany

Brazil

ICE

MHEV

HEV

PHEV

REEV

BEV

FCEV

Unspecified

Compliments from China Automotive Solutions Webinar Series entitled

“China’s Diversified Powertrain Strategy” Calendar

Connect with analyst

Boni Sa discussing about diversified

powertrain strategies in China.

Boni Sa profile

The Mobility Paper: China’s PHEV/REEV bandwagon–an opportunity or a pitfall?

E - M O B I L I T Y

In Mainland China’s segmented vehicle market, PHEVs and

REEVs have each carved out distinct positions.

PHEVs dominate the sedan segment, particularly in the lower and mid-range tiers, supported by early entry and strong

economies of scale. The BYD Qin PLUS DM-i illustrates the success of PHEVs in this space. Measuring between 4.7 and

4.85 meters in length, it uses a 1.5-liter plug-in hybrid system that delivers effective cost control and broad market appeal.

Its strong value proposition has allowed it to capture the majority share of demand among budget-conscious buyers.

Mapping the PHEV and REEV

battleground in Mainland China

China PHEV / REEV Length & Price Positioning (20241, Car)

Note: 1) Venicle price data is based on 2024 January-December volume & price

2) Length is weighted average for each brand

Destroyer 05

Han

Qin L

Qin Plus

Seal

Seal 06

Seal 07

A05

UNI-V

Fulwin A8

Z9 GT

LYNK&CO 07

Roewe D7

Zhuiguang

Xingguang

Emgrand L

A07

L07

SL03

ePai 007

Leap C01

EZ-6

Neta S

50000

100000

150000

200000

250000

300000

350000

4700

4750

4800

4850

4900

4950

5000

5050

5100

5150

5200

Model Entry Price1 (Dec 2024, CNY)

Length (mm)

77k

REEV

1446k

PHEV

PHEV/REEV Split

E - M O B I L I T Y

The Mobility Paper: China’s PHEV/REEV bandwagon–an opportunity or a pitfall?

REEVs have gained competitive ground in the large sedan segment.

Although fully electric models account for a sizable portion of this

market, a handful of REEV sedans such as the Leapmotor C01 and

Dongfeng eπ 007 have stood out for their cost advantages. By

delivering impressive performance and sufficient range without

relying on large battery packs, these models find their sweet spots

balancing electrification driving experience and cost control.

A similar pattern appears in the SUV segment. In the 4.7-to-4.85-meter

range, plug-in hybrid SUVs benefit from clear cost advantages and

scale efficiencies, while REEVs in the same space struggle with

trade-offs between range and cost. Models like the Changan UNI-V

iDD and BYD Song Pro DM-I have performed particularly well in this

lower-tier SUV category.

China PHEV / REEV Length & Price Positioning (20241, SUV)

Note: 1) Venicle price data is based on 2024 January-December volume & price

2) Length is weighted average for each brand

Song Plus

Song Pro

Song L

Tang

Q05

Bao 5

Menglong

LYNK & CO 08

Tank 400

Tank 500

Blue Mountain

Aito M5

Aito M7

Aito M9

S05

S07

Sterra ET

C10

C11

C16

Li L6

Li L7

Li L8

Li L9

Free

50000

100000

150000

200000

250000

300000

350000

400000

450000

500000

4500

4550

4600

4650

4700

4750

4800

4850

4900

4950

5000

5050

5100

5150

5200

5250

Model Entry Price1 (Dec 2024, CNY)

Length (mm)

1076k

REEV

1637k

PHEV

PHEV/REEV Split

The Mobility Paper: China’s PHEV/REEV bandwagon–an opportunity or a pitfall?

E - M O B I L I T Y

In the mid to large SUV segment above five meters, REEVs have delivered robust

performance. Representative models such as the Aito M9 and Li Auto L9,

positioned as intelligent and premium range-extended offerings, have achieved

solid market results since 2024.

S&P Global Mobility believes that the D and E segments will become the key

battleground for PHEVs and REEVs across both sedans and SUVs. PHEVs

entered these segments earlier and currently benefit from scale advantages.

However, as REEV production expands and cost-reduction strategies take effect,

product competitiveness in this space is expected to improve. upper E-segment

in China (MSRP higher than RMB300,000), REEVs are positioned better to

combine electric driving experience and advanced features as compared with

the PHEVs in the same price range for time being. At the same time, PHEVs

continue to demonstrate leading characteristics in handling, sport dynamics

and off-road capability, giving them viable entry points into this segment.

As a key platform for the automotive industry, the

2025 Shanghai International Auto Show highlighted

the latest progress in PHEV and REEV development.

Thirty-five new models made their debut,

becoming a central highlight of the exhibition.

In terms of powertrain type, PHEVs accounted for around two thirds of the new models,

reflecting their mainstream position and strong market appeal. From a development

perspective, PHEV offerings are becoming more diverse. Brands such as BYD and

Wuling have targeted the mass market with affordable pricing, good fuel economy and

everyday practicality, building a wide user base in the lower and mid-level segments.

At the same time, automakers such as Geely and Chery have begun to introduce PHEV

models in the mid to large SUV category, signaling an upward expansion of the segment.

Decoding the technology

breakout of PHEVs and

REEVs at 2025 Shanghai

International Auto Show

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The Mobility Paper: China’s PHEV/REEV bandwagon–an opportunity or a pitfall?

REEV development focuses on the premium SUV segment, especially among flagship models.

Automakers have launched a range of high-end series — often numbered, such as the 8 Series and 11

Series — to anchor this space at the top of their lineups. At the same time, there are manufacturers

who have started developing REEV sedans, mostly focused on full-size flagship models.

Joint venture brands also drew attention at the 2025 Shanghai International Auto Show as most are

now collaborating more closely with Chinese partners to target high-end and large-format segments,

aiming to align more precisely with local consumer preferences.

In the large off-road SUV category, PHEVs and REEVs are increasingly the default choice. Their adoption

reflects the performance demands of off-road driving, where power, range, and reliability are

non-negotiable.

The powertrain strategies revealed at the 2025 show followed a clear direction. Automakers are

sharpening their focus while broadening their approach across technologies and vehicle classes.

2025 Shaghai Auto Show Scan - 35 New PHEV and REEV offerings

PHEV

SOP 2025

SOP 2026/2027

REEV

Concept

• Changan: Deepal S09

• Chery: Chery T11

• GAC: Hyprtec: HL

• Dongfeng: Mengshi 817

• BYD: Yangwang U8L

• Mazda EZ-60

• Huawei: Aito M8

• Huawei: Stelato S9

• Huawei: Maextro S800

• BYD: Seal 06 wagon

• BYD: Sealion 06

• BYD: Sealion 07

• BYD: Tang L

• BYD: Han L

• Wuling: Baojun Xiangjin

• Geely: Zeeker 9X

• Geely: Lynk&Co 900

• Geely: Xingyao 8

• FAW: Hongqi H5

• FAW: Hongqi HS9

• Changan: Qiyuan Q07

• Chery: Chery A9L

• Chery: Jetour G700

• GAC: Xiangwang S9

• GAC: Xiangwang M8

• Nissan: Frontier Pro

• VW ID. EAR

• Chery: Jetour G900

• Chery: Exeed Tianji

• FAW: Hongqi Offroad

• Chery: Jetour F700

• Chery: Tiggo 9L

• Geely: Galaxy Cruiser

• BYD: Denza Z

• BYD: Dynasty D

The Mobility Paper: China’s PHEV/REEV bandwagon–an opportunity or a pitfall?

E - M O B I L I T Y

As Mainland China’s new energy vehicle market continues to

scale, automakers are actively reducing their dependence on

traditional internal combustion engines. In 2024, there are

automakers who initiated broad reductions in engine variety.

Consolidating engine lineups helps streamline manufacturing,

lower costs, and improve production efficiency at scale.

Chery has introduced a new generation of compact range-

extender engines, including a two-cylinder naturally aspirated

1.2-liter, a horizontally opposed two-cylinder 1.0-liter, and a

turbocharged three-cylinder 1.0T. These engines are built

and designed specifically for range-extended applications.

While compact REEVs remain limited in the current

market, such launches reflect early-stage investment in

platform readiness and long-term product planning.

As Chinese brands move into higher segments, larger

displacement engines are becoming essential. A growing number

of companies are deploying 2.0T engines for PHEVs, aiming

to meet demand for stronger performance. In parallel, there

are manufacturers who introduce 2.0T-based range extenders

to strengthen REEV offerings in the premium SUV space.

We expect powertrain strategies to become more modular. Original

Equipment Manufacturers (OEM) now offer a single model with

multiple engine options, paired with different electric motor and

battery configurations. This approach improves product coverage

while keeping core architectures flexible and cost-effective.

2025 Shaghai Auto Show Scan - Highlights of the Powertrain Showcase

PHEV

1.0/1.2L

1.5L

2.0L

Chery 1.2NA

Horse powertrain

1.0NA/1.0T

VW 1.5T

Mazda 1.5NA

Leapmotor 1.5NA

GM 1.5T

GAC 1.5T

Chery 1.5NA/1.5T

BYD 1.5NA/1.5T

Great Wall

1.5NA/1.5T

Chery 1.5NA/1.5T

Changan

1.5NA/1.5T

Lixiang 1.5T

Geely 1.5NA/1.5T

FAW 1.5T

SAIC 1.5NA/1.5T

Huawei

1.5T

Dongfeng

1.5T

Horse powertrain

1.5T

Chery 2.0T

BYD 2.0T

Great Wall 2.0T

Horse powertrain

2.0T(H2)

FAW 2.0T

Geely 2.0T

Great Wall 3.0T

Great Wall 4.0T

Chery 2.0T

BYD 2.0T

Changan 2.0T

Huawei

2.0T

FAW 2.0T

Horse powertrain

2.0T

3.0/4.0L

REEV

2025 Shanghai Autoshow

new

new generation

E - M O B I L I T Y

The Mobility Paper: China’s PHEV/REEV bandwagon–an opportunity or a pitfall?

Powertrain

transformation driven

by regulatory direction

Mainland China’s incentive programs continue to shape both the pace and

rhythm of its new energy vehicle market. Policies aimed at scrappaging

and replacement have already delivered measurable impact. As of mid-

May 2025, just over a year since the program launched in April 2024, the

Ministry of Commerce reported a total of ten million applications. The

incentive programs particularly benefit the small and micro vehicle segments,

where subsidies have directly translated into spiking sales volume.

Tax policies are also shifting consumer behavior. A planned 50 percent reduction

in purchase tax for 2026, compared to the current 100 percent reduction, is

expected to stimulate market demand, pulling it forward to late 2025. The

phase-out of tax exemptions in 2028 could create a similar demand spike at

the end of 2027. These incentives influence more than just total volume, they

also impact when consumers buy and what they choose, driving short-term

swings in demand and reshaping the sales cadence across the market.

The Mobility Paper: China’s PHEV/REEV bandwagon–an opportunity or a pitfall?

E - M O B I L I T Y

On the regulatory front, policy is setting a clear direction for how

Mainland China’s powertrain landscape is evolving. The dual-

credit system, emissions regulations, and fuel consumption

standards each play a distinct role in driving the shift toward

greener, more efficient, and more sustainable technologies.

The dual-credit policy remains one of the most influential

levers. It favors both new energy vehicles and low fuel

consumption internal combustion models, creating explicit

regulatory incentives. Its two-track compliance structure,

covering both NEV and fuel economy performance, has pushed

automakers to increase investment in electrification and

energy-efficient platforms to an unprecedented new level.

Emissions standards, which primarily target combustion-powered

vehicles, are also reinventing powertrain strategies. Notably,

the current framework has raised the cost of diesel models,

with significant impact on the commercial vehicle segment.

To meet stricter targets, commercial vehicle manufacturers

must invest heavily in upgrading engine technologies and

emissions control systems. For passenger vehicles, the

impact is more moderate in the near term. However, the

transition from China 6 to China 7 will still require technical

refinements to ensure compliance with upcoming standards.

China Regulations/Incentive Impacts on Powertrain Solutions

Impact period

Positive impact

Negative impact

Impact on

Regulation/Incentive

Scarp/replacement

incentive

Purchase tax exemption

CAFC regulation

NEV credit regulation

Emission regulation

short-term

middle-term

long-term

All

PHEV/REEV/BEV/FCEV

Low fuel consumption

model

BEV/FCEV

Non-NEV

PHEV/REEV/

Non-NEV

Consumers

OEMs

E - M O B I L I T Y

The Mobility Paper: China’s PHEV/REEV bandwagon–an opportunity or a pitfall?

As regulatory pressures intensify, automotive manufacturers

are reassessing their R&D priorities. A key decision lies in

whether to continue investing heavily in a broad range of engine

platforms or to streamline product lines and focus resources

on technologies with greater long-term return. In this shift,

there are automotive players who have started to reduce their

development efforts on conventional internal combustion engines

and redirecting investments toward new energy powertrains or

low-consumption combustion systems that are more aligned

with evolving regulations and more sustainable market trends.

Upgraded fuel consumption standards are also having a

significant impact on powertrain strategy. The most notable

change in Phase VI compared with Phase V is the requirement

to convert battery electric energy consumption into equivalent

fuel consumption. This revision has had a direct effect on the

policy timeline for different electrification technologies.

Based on current test-cycle data, BEVs typically register between

1.5 and 2.0 liters per one hundred kilometers in converted fuel

consumption. This is well below the 2030 regulatory threshold and

reinforces the regulatory advantage of BEVs, supporting further

market expansion. Range-extended electric vehicles average

between 2.5 and 3.5 liters and remain within compliance limits,

sustaining policy support for continued adoption. Plug-in hybrids

vary more widely, from 2.5 to 4.0 liters, with around 20 percent of

PHEV models projected to fall short of 2030 compliance targets.

Phase 6 CAFC Target

600

1100

1600

2100

2600

3100

• Scope: China PV market

• Effective from: Jan 2026

• Phase VI CAFC target : 3.3L/100km with base

mass of 1580kg

• Test cycle: WLTC/CLTC

• CAFC phase in plan: CY2026 130%; CY2027 124%;

CY2028 117%; CY2029 109%; CY2030 100%

• Remove NEV coefficient

• Calculate NEV electricity consumption and

convert into fuel consumption value in CAFC

result

• Introduce non-NEV CAFC concept

Fuel consumption

(L/100km)

4.6L/100km @1415kg in

CY2025

3.3L/100km @1580kg in

CY2030

Phase 5 CAFC (2025 Target)

Phase 6 CAFC (2030 Target)

BEV with EC coverts to FC

Phase 6

Phase 5

PHEV with comb.FC and EC coverts to FC

REEV with comb.FC and EC coverts to FC

Performance of Different NEW Solutions under China’s Phase 6 CAFC Target

The Mobility Paper: China’s PHEV/REEV bandwagon–an opportunity or a pitfall?

E - M O B I L I T Y

An Example of the impact of the Electricity Consumption

Calculations Method Requested in Phase 6 CAFC

Sources: S&P Global Mobility;

While official targets for Phase VII fuel consumption standards have not been released, the direction is clear.

If future limits are tightened to around 2.0 liters per 100 kilometers (about 62.14 mi), compliance will become

significantly more difficult for both REEVs and PHEVs. This possibility is already pushing automakers to act.

Leading companies are expanding R&D, accelerating work on advanced powertrain systems, and making

early strategic adjustments to prepare for more aggressive regulatory requirements beyond 2030.

E - M O B I L I T Y

The Mobility Paper: China’s PHEV/REEV bandwagon–an opportunity or a pitfall?

As seen, mainland China’s dual-credit framework has become a central

constraint shaping powertrain decisions. Automakers have been exploring

multiple compliance pathways, each with distinct trade-offs in cost,

operational complexity, and alignment with long-term product strategy.

1. Credit acquisition

For smaller-scale or high-margin players, purchasing credits offers a shortcut to compliance. Brands with limited domestic

sales volume, particularly import-focused Original Equipment Manufacturers (OEM), often find it more cost-effective

to buy NEV credits than to reengineer their powertrain portfolios. For large-volume manufacturers, however, it cannot

be a long-term compliance strategy. The cost of compliance through credit purchases at scale is rarely viable.

2. Product portfolio adjustment

There are industry players who shift their model mix by phasing out high-consumption ICE variants to improve fleet averages, without

materially increasing BEV volume. While effective in regulatory terms, this approach can erode both revenue and profit. For most joint-

venture brands, combustion models remain critical to earnings and reducing them may compromise competitiveness in core segments.

Strategic powertrain choices under

mounting dual-credit pressure

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The Mobility Paper: China’s PHEV/REEV bandwagon–an opportunity or a pitfall?

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Diversified Powertrain Stratergies in China May Also Impact thr Global Landscape

3. Hybrid optimization

Japanese OEMs tend to maintain a minimal BEV footprint while leveraging Hybrid Electric Vehicle (HEV) platforms to reduce average fuel

consumption across ICE fleets. European and North American brands are increasingly turning to PHEV and REEV technologies, often

developed in partnership with local Chinese automakers to meet local regulatory compliance and enhance consumer experience.

4. Full electrification

Part of automakers are considering a complete shift to BEV-only portfolios. While this aligns with long-term

policy direction, execution risk remains high. Infrastructure gaps, battery cost volatility, and persistent consumer

concerns around range continue to limit BEV adoption in various car segments. A rapid transition may expose

manufacturers to supply chain stress, margin pressure, and slower-than-expected market acceptance.

Automakers are pursuing an in-China-for-China strategy, developing products that align with local demand

and industry trends while ensuring global compatibility. This shift and momentum are slowly but surely

establishing China as a core driver of powertrain innovation and the evolution of global market structure.

Notes: ICE* include ICE: stop start Sources: S&P Global Mobility;

E - M O B I L I T Y

The Mobility Paper: China’s PHEV/REEV bandwagon–an opportunity or a pitfall?

PHEVs and REEVs are emerging as both opportunities and challenges in the context of global

expansion, prompting a strategic shift in how automakers define and pursue market growth.

Dual breakthrough with PHEV price

disruption and REEV premium positioning

China’s PHEV Stratergy Started with Price Parity Offerings

1st Wave

• China PHEV market leaded by BYD with focus on volume segments

• PHEVs with “price parity” image

2nd Wave

• More traditional Chinese OEMs use well-positioned PHEVs

to replace ICEs, and both powertrain types are on based on

ICE platforms.

• Supported by dedicated hybrid engine (DHE) and dedicated

hybrid transmission (DHT), the new generation of PHEVs are

marketed with a “low fuel consumption” image.

3rd Wave

• Volume JVs plan to upgrade their PHEV offerings for China market.

• No action from premium JVs for new PHEVs (go for REEV instead?)

4th Wave?

• PHEVs as a new driver for export market?

• ICE market to phase out quickly than current expectation?

Before

Now

Price competitiveness had in the past

determined PHEV market growth. Moving

forward, automakers must enhance their PHEV

offerings by upgrading ICE-based platforms

and developing hybrid-dedicated powertrains

designed to deliver stronger fuel economy.

The upward movement of brand positioning

is also opening new opportunities for PHEVs.

Previously concentrated in the sub-150,000 RMB

segment and below the D-class range. PHEVs are

now expanding into mid and full-size sedans and

Sport Utility Vehicles (SUV) as the technology

matures, and consumer expectations

increase with time.

Platform integration is emerging as another

lever for PHEV development. With volumes

continuing to increase, manufacturers are

shifting toward PHEV-first architectures that

enable tighter integration of the engine, battery,

and motor. These platforms support advanced

intelligent features, system-level optimization,

and overall performance improvements.

Export markets are also becoming a key area

of growth for PHEVs. For example, Chery’s

E - M O B I L I T Y

Super Hybrid Platform was showcased at the “Hybrid Night and Open-Source

Initiative” event in Wuhu, Anhui province, on April 10, 2025. During the event,

the Chinese automaker unveiled plans to launch 39 hybrid models in 2025, as

part of a broader strategy to expand its global hybrid technology offerings.

REEVs today enjoy a new premium identity in the high-end segment, especially

for their large sedans and SUVs. Built primarily on BEV platforms, these

models offer extended range, 800V fast charging, and advanced electronic and

electrical architecture. As a result, more automakers are evolving from BEV-only

strategies toward combined BEV plus REEV portfolios, leveraging shared

platform assets to diversify product offerings.

Compliments from China Automotive Solutions Webinar Series entitled

“China’s Diversified Powertrain Strategy” Calendar

JiaJia Wang discussing about China’s PHEV

Stratergy Started with Price Parity Offerings.

Jia Jia Wang profile

E - M O B I L I T Y

The Mobility Paper: China’s PHEV/REEV bandwagon–an opportunity or a pitfall?

China’s REEV Stratergy Initiated with “New Premium” Image

1st Wave

• China REEV market leaded by Lixiang Auto and Aito with focus on larger segment

• REEVs with “new premium” image

2nd Wave

• More NEV startups and Chinese new brands leverage resource on dedicated BEV platforms

and change from BEV only strategy to BEV+REEV

• REEVs with “high-tech” image with attractive features like long-range capabilities, 800v

system, advanced E/E architecture

3rd Wave

• JVs plan to leverage resource from Chinese

partners to launch REEVs in China market

• REEVs with “regional specific” image

4th Wave?

• REEV as a global solution?

FREELANDER

Before

Now

The REEV segment is attracting increased interest from joint ventures and international

brands who wish to partner with Chinese automakers to co-develop localized products.

Companies such as BMW and Volkswagen are collaborating with domestic partners

to introduce REEV models tailored to the high-end NEV segment in China.

Looking ahead, if REEVs can address key constraints in small and compact-class vehicles,

particularly around cost efficiency and space utilization, they have the potential to evolve

into viable solutions globally.

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The Mobility Paper: China’s PHEV/REEV bandwagon–an opportunity or a pitfall?

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PHEVs and REEVs are creating new momentum for Chinese automakers in global expansion.

In Europe, legacy manufacturers are under pressure. The shift to full electrification

has brought prohibitive costs in R&D and factory retooling, while public charging

infrastructure remains uneven and underbuilt. Consumer acceptance has

been held back by range anxiety and long charging times. These structural

issues have slowed BEV adoption, falling short of industry expectations.

At the same time, the regulatory outlook is shifting. The EU’s 2035 carbon

reduction target is subject to midterm review in 2026, with a real possibility of

policy revision. This opens a window for transition technologies that can meet

interim emissions goals at lower cost and with faster market readiness.

Chinese automakers are well-poised to lead in this space. PHEV and REEV platforms

are mature, cost-efficient, and increasingly competitive in performance. One path

forward is to partner with European brands and use their established channels

to accelerate adoption. Another is to enter directly, using product supremacy

and speed-to-market to build a share in a constrained but still-open market.

That opportunity comes with undefined risks. European policymakers

may adopt more protectionist measures, including tariff increases

or targeted restrictions aimed at imported technologies.

In less regulated markets such as Thailand and Brazil, the challenge is

different. PHEVs are not yet widely recognized, and local consumers are still

more familiar with traditional ICE and HEV offerings. Here, typically, Japanese

brands dominate with a solid record of reliability and efficiency, while European

brands retain strength through premium positioning and brand equity.

Success in these markets requires precision. Chinese manufacturers will need

to localize product design, match usage conditions, and align with consumer

expectations while leveraging their core technology advantages.

Expanding into Europe’s transitioning

market and new global opportunities

E - M O B I L I T Y

The Mobility Paper: China’s PHEV/REEV bandwagon–an opportunity or a pitfall?

Mainland China’s 2024 vehicle pricing landscape reveals distinct adoption

patterns for PHEVs and REEVs across market segments.

In the sedan category, the 150,000 to 250,000

RMB range is emerging as a key zone for future

growth. Currently, plug-in hybrid sedans—led by

BYD—are mostly in the sub-150,000 RMB segment.

In the 150,000 to 250,000 range, there is still no

clear market leader, while traditional ICE models

continue to account for 50 to 55 percent of sales. As

powertrain technology advances and cost barriers

fall, PHEVs and REEVs will move upward into this

space. Their advantages in energy efficiency and

regulatory compliance make them strong candidates

to displace ICE share and establish a firm presence

in what may be combustion’s last stronghold.

The SUV segment is highly competitive, yet it

continues to offer meaningful headroom for PHEVs

and REEVs. In the 200,000 to 300,000 RMB range,

new energy models such as Tesla and Li Auto

have already gained strong footing, with ICE share

falling to 35 to 40 percent. For PHEVs and REEVs,

success in this space depends on narrowing the

gap in intelligent features, performance, and price.

In the premium market above 400,000 RMB, ICE

vehicles still hold 60 to 65 percent share. While

extended-range models from players like Li Auto

and Aito have made progress, PHEVs remain

underrepresented. Products that combine advanced

digital systems with off-road capability may have the

potential to break new frontiers in this segment.

PHEVs and REEVs gradually eroding the final

stronghold of internal combustion engines

PHEV & REEV expansion: opportunity or challenge

PSD Pricing Structure Comparison per Segment (20241)

MPV

Full-Size SUV

Mid-Size SUV

Compact SUV

Full-Size Car2

Mid-Size Car2

Compact Car2

Subcompact

BEV

REEV

PHEV

HEV

ICE

BEV

REEV

PHEV

HEV

ICE

BEV

REEV

PHEV

HEV

ICE

BEV

REEV

PHEV

HEV

ICE

BEV

REEV

PHEV

HEV

ICE

BEV

REEV

PHEV

HEV

ICE

BEV

REEV

PHEV

HEV

ICE

BEV

REEV

PHEV

HEV

ICE

PSD

128

215

258

307

224

905

229

537

1260

167

1306

152

2638

871

195

2565

665

232

1413

1007

1213

117

2571

218

116

1162

638

241

Volume1 (k units)

14%

24%

28%

34%

11%

46%

12%

27%

23%

24%

48%

23%

69%

27%

10%

58%

20%

24%

52%

15%

78%

71%

27%

Share %

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

List Price (CNY)

HEV

REEV

BEV

ICE/MHEV

PHEV

Note: 1) Vehicle price data is based on 2024 January-December volume & price

2) Car mainly includes hatchback, sedan, wagon, as defined by S&P Global Mobility Regional Sub-segment