Your next car could be an EREV

Through the first quarter of 2024 global plug-in hybrid electric vehicle (PHEV) registrations surged by 55% year-on-year to 1.2m units while full battery electric vehicle (BEV) and conventional hybrid electric vehicle (HEV) sales increased just 13% and 17%, respectively.

That represents a much more sedate expansion for BEVs so far in 2024. For comparison, in calendar 2023, BEV sales jumped by 29% year-over-year and a whopping 59% growth the year before 2022, marking the last year that BEV sales growth outpaced that of PHEVs.

The rising popularity of PHEVs over BEVs is not good news for cell and battery metal suppliers to the industry. In Q1 2024, PHEVs on average sported battery packs with a capacity 40 kWh smaller than the average BEV according to the Adamas EV Intelligence Platform.

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Like most trends in the global EV market, Chinese buyers are driving the dramatic swing towards PHEVs with sales of these best-of-both-worlds EVs up by 78% in the country in Q1 2024 compared to just 17% growth for BEVs and under 8% for HEVs.

From 29% of the overall market in Q1 last year, PHEVs now make up a full 38% of China’s sales mix. In fact, the combined battery capacity of all PHEVs sold in China during the first quarter this year reached 20.5 GWh, 25% of the domestic market, compared to a 16% contribution last year.

This came on the back not just of rising PHEV sales volumes but also an accompanying bump in average PHEV battery capacity, which increased by 20% year-over-year from an average of 21.8 kWh in Q1 2023 to 26.2 kWh this year.

REVing up sales 

A subset of PHEVs is behind much of the rapid adoption of plug-in hybrids in China and the rise in average pack capacity – the ‘extended range electric vehicle’ or EREV. In an EREV, the combustion engine operates solely as a generator for the battery and not for directly driving the vehicle as with a conventional PHEV.

Four out of the top 10 PHEVs sold globally during Q1 2024 were made–in-China EREVs, led by the AITO M7 manufactured by the fast-growing partnership between telecoms giant Huawei and the Seres Group. Like many in its class, the AITO M7 sports a range that can extend to over 1,000 km (620 miles) without the need to refuel or recharge.

EREVs now make up 43% of the PHEV market in China, up from 34% in Q1 2023 on a GWh installed basis.

The combined battery capacity of the EREVs sold in China during the first three months of the year climbed by 168% year-on-year and, at 8.8 GWh, represented 11% of the overall market inside the country.

Bigger than BEV 

In Q1 2024, the sales weighted average battery size of Chinese EREVs came in at a remarkable 37.6 kWh despite a 6% drop year-on-year.

That’s not only substantially larger than the average PHEV, but also more than the average battery powering a full electric mini car (i.e. A-Segment), as exemplified by the best-selling Hongguang MINI Macaron which is fitted with a 13.8 kWh power plant.

In fact, Adamas data shows that battery packs in B-Segment vehicles – small cars like the Bingo 333 manufactured by SGMW – also averaged below EREVs in China in Q1 of this year.

Li Auto led  

Li Auto, which until recently, only produced EREVs, can take much of the credit for the rise in the popularity of this type of plug-in.

Li Auto, which in 2020 raised $1.1 billion when it listed on the Nasdaq, was the fastest growing major marque globally last year.

New drivers of its upmarket vehicles rolled a combined 16.3 GWh onto roads during the year, an increase of 189% over 2022, placing it at no 7 worldwide on a GWh basis, just ahead of Hyundai.

BYD, the world’s no 1 EV maker by volume, has also embraced the trend.

The company’s new luxury sub-brand, Yangwang, launched last year with an EREV as its flagship – the tank-like U8.