Global hybrid vehicle market trends: Demand drives growth

Produced by Zhineng Technology

Since 2021, the Chinese hybrid vehicle market, especially plug-in hybrid electric vehicles (PHEV), has seen a significant increase in penetration.

According to reports, the market penetration of conventional hybrid vehicles (HEV) has remained stable, ranging between 1.6% and 4%, while plug-in hybrid electric vehicles have shown rapid growth, rising from 1.39% in January 2021 to 20.69% in August 2024.

The rise of plug-in hybrid models is not driven by policy but by market demand. This shift indicates a gradual increase in consumer acceptance of plug-in hybrid models.

Models such as BYD's DM-i series, Li Auto, and Aito's extended-range versions have become market leaders, demonstrating significant potential on the demand side. Behind this trend is consumers' growing emphasis on solutions for usage costs and range anxiety, as well as the long-term transition from traditional internal combustion engine vehicles to new energy vehicles.

Zhineng's View:

● Hybrid is a long-term strategy, whether it's 2kwh non-chargeable, 10kwh for short distances, or 40kwh and above for long distances. The types of hybrids are becoming more diverse.

● Hybrid is a practical strategy both domestically and globally, achieving results while maintaining acceptability for both supply and demand.

Hybrid Technology Paths and Configurations

The core of hybrid technology lies in adjusting the engine's working range through motor output, improving thermal efficiency and reducing fuel consumption. Plug-in hybrid solutions based on dual-motor configurations, such as BYD's DM-i, Li Auto, and Aito's extended-range solutions, have become mainstream in the market.

● Series Mode: The engine drives the generator to produce electricity, and the motor drives the vehicle. This mode is typically represented by Li Auto, which achieves efficient use of electricity by reducing the engine's involvement in driving.

● Parallel Mode: The engine and motor jointly drive the vehicle, with the motor providing acceleration power and improving energy efficiency through regenerative braking.

● Series-Parallel Mode: Combines the functions of both series and parallel modes, balancing economy and power. This is the current mainstream technology path adopted by models such as BYD's DM-i and Great Wall's Lemon DHT.

Different designs of power coupling devices determine different hybrid systems. For example, P0-P4 motor position designs each have unique advantages and application scenarios. Dual-motor solutions, due to their high control difficulty and cost, are primarily advanced by experienced domestic automakers.

Market Trend Analysis

With changing market demands and technological advancements, PHEV and REEV (Range-Extended Electric Vehicle) have become mainstream hybrid types. Both traditional automakers and new energy vehicle startups are driving this trend. In the coming years, the penetration rate of hybrid vehicles is expected to continue rising.

● PHEV Market Growth: As policy-driven incentives fade, the growth of the PHEV market is increasingly reliant on model positioning and market demand.

Domestic brands such as BYD, Geely, and Great Wall have rapidly captured the market by launching dual-motor series-parallel models. This technology path has matured, and future competition will focus on product positioning and cost-effectiveness.

● The Rise of the REEV Track: New energy vehicle startups are using range-extended hybrid technology to address the shortcomings of pure electric vehicles, particularly in long-distance range and range anxiety.

The success of models like Li Auto and Aito M5 has further propelled the development of the REEV market. More brands previously focused on pure electric vehicles may expand their product lines by developing REEV models.

● Impact of European and American Policies: Emission regulations in Europe and North America are becoming increasingly stringent, especially in Europe, where limits on fleet-average CO2 emissions have made PHEV models more attractive in these markets.

As traditional fuel vehicles are gradually phased out, hybrid models have become a key strategy for mainstream automakers to meet regulations while expanding their market presence. The success of BYD's Song Plus DM-i in the Brazilian market exemplifies the significant overseas potential of domestic PHEV models.

The future technological roadmap for the hybrid vehicle market is relatively clear, with dual-motor series-parallel configurations dominating mainstream PHEV models. Future market competition will increasingly focus on product positioning, cost control, and technological optimization.

● Reshaping the Competitive Landscape: The solidification of technology paths means competition will shift from technical aspects to brand positioning and market segmentation. Domestic brands have achieved initial success in domestic and international markets through technological advantages. As PHEV and REEV models become more widespread, competition among companies will intensify.

● Global Expansion: Domestic companies have begun expanding into overseas markets. Plug-in hybrid models from brands like BYD have already achieved success in markets such as Brazil, and more domestic brands are expected to enter European and American markets in the future. Strict emission regulations in Europe and America provide policy support for the further adoption of PHEVs.

The increase in hybrid vehicle penetration has shifted from policy-driven to market demand-driven, with products and demand becoming key driving factors. However, product risks still exist, primarily including:

● Rising Cost Risks: Price increases for key components such as batteries and motors may affect the market competitiveness of hybrid vehicles. Poor quality control could also lead to high maintenance costs.

● Rapid Development of Pure Electric Technology: Breakthroughs in solid-state batteries and ultra-fast charging technology may squeeze the market space for hybrid vehicles, although current constraints are still evident.

Summary

The continuous development of hybrid technology and the increase in market penetration indicate a shift from policy-driven to market demand-driven growth. The increasing maturity of technology has made PHEV and REEV models market leaders. With more models being introduced and the market expanding globally, hybrid vehicles will play a critical transitional role between fuel vehicles and pure electric vehicles.