Hybrids Take the Lead: China's Surging Demand for Long-Range Electrified Vehicles

China’s automotive market is undergoing a quiet revolution. While fully electric vehicles (BEVs) dominate headlines, long-range hybrids—including plug-in hybrids (PHEVs) and extended-range electric vehicles (EREVs)—are quietly capturing a growing share of the market. In Q1 2025, sales of these models surged, driven by automakers’ aggressive product launches, technological advancements, and a consumer appetite for practicality over purity. For investors, this trend offers a compelling opportunity to capitalize on a segment that’s blending the best of both worlds: the convenience of electrification and the range confidence of internal combustion engines.

The Automaker Playbook: Bets on Hybrids
General Motors (GM) set the tone in early 2025, reporting a 53.2% year-on-year jump in new energy vehicle (NEV) sales, which include hybrids. The company’s strategy hinges on offering NEV variants for every new model launched in China by 2025, including EREVs. This pivot isn’t just about compliance with China’s NEV policies—it’s about meeting demand. Models like the upcoming Buick GL8 Lu Shang PHEV and the budget-friendly Wuling Hong Guang MINIEV (which sold 87,000 units in Q1) are already proving their appeal.

But GM isn’t alone. Chinese automakers like Geely and Chery are leading the charge with advanced hybrids. Geely’s Zeekr 9X, a plug-in hybrid SUV with a 400 km electric-only range, exemplifies the category’s potential. Meanwhile, CATL, the battery giant, has positioned itself as a key enabler, launching dedicated batteries for hybrids in 2024 that now power nearly 30 models, including those from Li Auto and Chery.

Why Hybrids Are Winning Over Buyers
The hybrid boom isn’t accidental. It’s a response to three critical factors:
1. Range Anxiety: Even in China’s dense EV charging network, hybrids offer peace of mind. The Zeekr 9X’s 400 km electric range, for instance, is paired with a gas engine for cross-country trips—a combo that resonates with both urbanites and suburban families.
2. Cost Efficiency: Hybrids avoid the trade barriers plaguing BEVs. European markets, for example, have imposed tariffs on EVs but treat hybrids more favorably. Geely’s Lynk & Co plans to exploit this with its 08 PHEV SUV, which will offer a 200 km electric range—the longest available in Europe.
3. Luxury Appeal: Leapmotor’s EREVs, priced thousands above comparable BEVs, are targeting affluent buyers who prioritize range and status. Analysts note that China’s market is “technologically less dogmatic,” seeing hybrids as a premium complement to BEVs, not a stepping stone.

The Numbers Tell the Story
- Market Share: Hybrids and BEVs are splitting the NEV market, with hybrids projected to account for 35% of China’s total auto sales by 2025, up from roughly 20% in 2023.
- Growth Rate: While global EV sales rose 29% in March 2025, China’s hybrid market grew 36% in Q1 2025, outpacing BEV growth for the first time in two years.
- Trade Dynamics: European automakers like Volkswagen and Mercedes are now rushing to launch hybrid models in China, with VW’s new EREV/PHEV platform aiming to revive its flagging sales.

Investment Takeaways
1. Battery Makers: CATL’s hybrid-specific batteries are a hidden gem. Its partnerships with 30 automakers by 2025 position it to profit handsomely.
2. Automotive Giants: GM’s NEV strategy, paired with its China-focused product pipeline, makes it a top play.
3. Luxury Plays: Leapmotor and Li Auto are leveraging hybrids to capture premium segments, offering higher margins than mass-market BEVs.

Conclusion: Hybrids Are Here to Stay
The data is clear: hybrids aren’t a fad—they’re a fundamental shift in consumer preferences. With 35% of China’s auto market projected to be hybrid by 2025, and automakers like Mercedes and VW doubling down on the segment, investors should treat this as a long-term trend, not a transition. The blend of practicality, cost efficiency, and luxury appeal means hybrids will coexist with BEVs for years to come. For investors, the winners will be those who control the technology (like CATL) and the models (like Geely’s Zeekr) that define this new era.

As China’s automotive landscape evolves, one thing is certain: hybrids are no longer just an option—they’re the new normal.