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.

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

Key Takeaways

• PHEVs have secured early dominance in lower and mid-range segments through first-mover advantage and scale. REEVs show stronger potential in upper segments. D and E classes are emerging as the next core battlegrounds for both technologies.
• In the E segment and above, REEVs offer structural cost advantages, while PHEVs maintain an edge in driving dynamics, performance, and offroad capability, which provides a viable path into higher-end markets.
• In the large SUV off-road segment, OEMs favor PHEV and REEV solutions due to specific performance, range, and reliability requirements associated with off-road usage.
• Powertrain strategies are diversifying. Automakers are:
  - downsizing engines for efficiency,
  - deploying 2.0T platforms to meet premium product needs, and
  - offering multi-engine configurations within a single model line, paired with varied motor and battery systems to expand lineup coverage.
• Scrappage and replacement incentives boost short-term demand. Over the long term, the regulatory levers including dual-credit policy, emissions standards, and fuel consumption targets continue to shape the Mainland China's powertrain roadmap.
• Navigating compliance is now central to product and investment strategy. Automakers are adopting varied approaches: credit trading, ICE portfolio restructuring, hybrid adoption pathways, and full electrification options where feasible.
• Competition in the PHEV and REEV space is escalating. Incumbent OEMs are accelerating development cycles and expanding product offerings, while joint ventures are deepening local partnerships to meet rising domestic demand.
• Chinese automakers possess strong technical maturity and cost advantages in PHEV and REEV platforms. These capabilities enable both collaborative entry into European markets and direct expansion where consumer education and policy alignment are in place.
• The market outlook points to a sharp decline in ICE share, a deceleration in BEV growth, and continued share gains for PHEVs and REEVs as transition technologies gain traction.
  
  

Contributing Editors

• Boni Sa, Director, Automotive Planning Solutions, S&P Global Mobility.
• Jiajia Wang, Principal Analyst, China Light Vehicle Powertrain Forecast, S&P Global Mobility.
• Shengying Du, Principal Analyst, Automotive Planning Solutions, S&P Global Mobility.