In the evolving landscape of the automotive industry, the year 2024 marks a significant pivot towards extended-range electric vehicles (EREVs) led by notable manufacturers such as Xpeng Motors and AvitaAs more automakers including Zeekr, IM Motors, and Aion commit to launching EREV models by 2025, the number of companies solely focusing on pure electric vehicles (EVs) continues to dwindleUntil solid-state battery technology undergoes a breakthrough, the market seems increasingly inclined toward innovative energy solutions embodied in EREVs.
While the China Association of Automobile Manufacturers (CAAM) has yet to release definitive sales figures for 2024, forecasts suggest that surpassing previous records is inevitableThis trend is specifically robust among new energy vehicles (NEVs), which are projected to experience growth rates exceeding 30%, contrasting with the slight single-digit increase typical for overall vehicle sales.
NEVs have been categorized based on their power source into battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs), with EREVs falling under the latterEven though the total sales volume of EREVs currently lags behind that of BEVs, their growth trajectory is undeniably steeper, showcasing a clear shift in consumer preferences.
Among PHEVs, EREVs have attained the fastest sales growthInitially, Li Auto stood almost alone in championing this extended-range technologySoon, however, an influx of competitors emerged, including brands like Seres, backed by Huawei, and Leap Motor, often dubbed "half-price Li Auto" due to their aggressive pricing and appealing specificationsThis surge in competition is prompting more BEV manufacturers to transition towards the EREV model.
Consumer preferences for hybrid models, particularly those equipped with EREV capabilities, are driven in part by concerns over range and charging convenience
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This burgeoning interest has redirected market focus towards solid-state batteries as the next significant innovation for pure electric vehiclesNotably, solid-state batteries promise superior energy density and safety features, addressing critical issues affecting current EVs related to endurance and security.
The rise of EREVs signifies a transformative moment for the automotive sectorPrevious projections by CAAM suggest that 2024 could see sales in China reach between 31 million and 31.3 million vehicles, with an approximate growth rate of 4%. Following a record-breaking sales year surpassing 30 million units, this incline further cements China's standing in the global automotive arena.
Preliminary data indicates that in the eleven months leading up to 2024, production and sales of vehicles in China achieved 27.9 million units, showing year-on-year increases of 2.9% and 3.7% respectivelyWithin this number, the NEV segment has seen remarkable results, with cumulative production and sales reaching 11.34 million vehicles, reflecting year-on-year growth rates of 34.6% and 35.6%, with NEVs accounting for over 40% of total new car sales.
Looking ahead, CAAM anticipates total sales of NEVs to approach 13 million units, outstripping initial forecasts from earlier in the year, while vehicle export figures are expected to reach around 5.8 million unitsMore telling is the realization that, while total automobile sales have shown less than 4% growth, the surge in NEV sales exceeded 35%, indicating that new energy vehicles are the primary engine driving growth in the automotive sector.
By dissecting the hybrid segment further, we can differentiate between conventional hybrid vehicles and EREVsAccording to industry data, from January to November 2024, sales of EREVs have accelerated to approximately 1.04 million units, reporting a staggering year-on-year growth of over 90%. Following the pattern of prior years, December is anticipated to be a robust month for these companies, potentially wrapping up annual EREV sales at around 1.2 million vehicles.
Analysis from Ping An Securities suggests that by 2025, EREV sales could reach about 2.2 million units, marking an 80% rise compared to the previous year
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This continues to support predictions that by 2024, EREV sales will slightly surpass the 1.2 million mark, with a long-term outlook suggesting a market potential reaching 7.5 million units.
The turn of events has not gone unnoticed within the pure-electric segment, which is rapidly adapting to include EREV optionsAt a recent AI Technology Day, Xpeng Motors announced an ambitious new strategy highlighted by the launch of its Kunpeng super electric system, which formally integrates EREV offerings into its portfolio—a clear sign of the evolving industry landscape where traditional electric car makers blend in extended-range capabilities.
Among those who have successfully transitioned to embrace EREV technology, Li Auto stands out for its early and effective integrationThe company’s launch of the Li L11 EREV model in March 2023 catapulted the brand's annual sales to 144,000 units, representing a 29.7% increase.
As 2024 unfolds, the growth trajectory of Li Auto showcases an electrifying momentum with a projected delivery total reaching 294,000 vehicles—a stunning doubling of its previous year's sales figuresAmong the new automotive players, Li Auto embodies the firmest achievement of its annual sales targets.
Interestingly, as numerous new automakers pivot towards hybrid vehicles, the once steadfast commitment to pure electric solutions now finds itself challengedIn August 2024, a significant EREV technology launch was asserted by Avita, backed by Changan, indicating yet another major player joining the EREV bandwagon.
Moreover, notable traditional auto manufacturers such as IM Motors, Aion (owned by GAC Group), and Zeekr (under Geely) have also announced intentions to launch their EREV models by 2025, reshaping the landscape of manufacturers initially committed solely to pure electric solutions.
Currently, the only major names retaining a pure electric sales strategy are NIO and Xiaomi, with Xiaomi displaying interest in hybrid vehicles despite not publicly committing to any EREV models
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Recent job listings hint at a shift, suggesting that it is indeed just NIO, which remains firmly exclusive to pure electric offerings.
As the market progresses, it becomes increasingly clear that companies cannot ignore the development of EREV technologies if they are to maintain competitivenessAmong the few profitable NEV companies, BYD's mixed approach blending hybrid and electric strategies represents success, while Li Auto leads with a firm reliance on its EREV model which contributes to its financial viability.
Examining companies like Li Auto and Seres underscores how their focus on EREV models aligns with their mid-to-high-end brandingFor instance, the base model of the Li L6 retails around 250,000 yuan (approximately 35,000 USD), while Seres’ WMI M5 is similarly priced.
The higher-end markets see limited offerings from pure electric manufacturers, while EREV models continue to dominate the mid-market segment, showing resilience within segments priced above 200,000 yuanRecent industry statistics indicate that as much as 79% of EREV sales stem from this pricing bracket.
According to Ping An Securities, the expansion of EREV vehicles is a definitive trend within the automotive industryThe market is currently dominated by high-end models priced above 200,000 yuan, primarily led by subsidiaries such as Li Auto and WMI.
Underlying this trend is the evolution of EREV technology—set to advance significantly by 2025 with enhancements poised to deliver electric ranges exceeding 400 kilometers, alongside ultra-fast charging capabilities that provide a user experience increasingly comparable to pure electric vehicles.
Cost advantages are also evidentFor instance, the price discrepancy between EREV and pure electric versions of the same model typically hovers around 20,000 yuan, even when considering potential increases in the battery capacity necessary to achieve improved electric range
Ultimately, this positions EREVs more competitively against their pure electric counterparts.
From a long-term perspective, it appears that smaller battery capacities on entry-level models may favor pure electric vehicles in the lower-end marketHowever, in the high-end sector, particularly models priced above 300,000 yuan, EREVs will likely emerge as a key driving force due to their favorable user experience, affordability, and refueling convenience when stacked against pure electric alternatives.
As previously discussed, the leading players in the EREV sales category have geared up for an anticipated surge in the market, with ideal sales visible well ahead in the chartsFor 2024, sales data indicates that EREV sales surpassed one million units prior to the year's end, with Li Auto and Harmony Smart Mobility taking decisive leadership positions, followed closely by brands like Deep Blue and Leap Motor.
Li Auto has consistently maintained its status as a pioneer in the EREV segment, achieving the highest sales volume, as evidenced by a delivery notice for December 2024 indicating the delivery of over 58,000 vehicles in that month aloneAnnual delivery figures reached over 500,000 units, reflecting a growth surge of over 33%.
In March 2024, Li Auto also unveiled its MEGA solely electric model, which, however, did not meet sales expectationsThird-party analyses revealed that, out of the mentioned yearly sales, nearly all units were attributable to EREV sales.
Meanwhile, the collaboration between Huawei and the "Harmony" branded models encompasses prevalent EREV vehicles including Seres’ WMI and Chery’s Zhi-Jie, showcasing a substantial segment within the marketplaceOther firms like BAIC Blue Valley continue to focus solely on pure electric variants, whilst JAC Motors has not yet released its Zun-Jie model to market.
According to Harmony Smart Mobility's announcements, the firm achieved a cumulative delivery rate of nearly 445,000 vehicles, consistently maintaining its position as a valued member of the automotive industry
Although specific sales quotas for EREVs versus BEVs were not disclosed, evaluation suggests momentum holding strong—particularly for the anticipated EREV sales reaching between 370,000 to 400,000 units by the year's end.
Market observers have taken a keen interest in Leap Motor’s pricing strategy, often referring to it as “half-priced Li Auto,” following the firm’s distribution of affordable EREV models gaining traction among consumersIn its third-quarter report for 2024, Leap Motor documented revenues nearing 9.86 billion yuan, showcasing a dramatic increase of 74.3% from the previous year.
However, Leap also reported a net loss attributable to shareholders of about 690 million yuan, a marked improvement from the 990 million yuan loss in 2023's third quarterThis represents a significant reduction compared to losses experienced in the first half of 2024, boosting investor confidence.
As Leap Motor has publicly traded, it garners more scrutiny and attention regarding its progressA less visible player in the EREV surge is Deep Blue Automotive, a company that has shown a remarkable commitment to EREVs, achieving even greater sales figures compared to Leap.
Emerging from Changan Automotive’s previous subsidiary structure, Deep Blue redefined its branding focus in early 2023 under a technological innovation umbrella boasting a digital-first electric visionDuring its inaugural sales year, 2023 proved challenging with around 20,000 unit sales but remarkably landed Deep Blue in the top three for EREV sales.
According to data compiled, by 2024, Deep Blue Automotive has sold nearly 128,900 EREV units, retaining a sturdy foothold in the top three position within the industry segmentIn total, the company rolled out 243,900 new vehicles throughout 2024, though specific figures regarding EREV sales remain undisclosed
Its main competitors still include Li Auto, Harmony Smart Mobility, Deep Blue, and Leap Motor, with top two dominating the high-end market segments.
Over time, the transition towards EREVs has shifted from initial skepticism to becoming a pivotal contender within the new energy vehicle marketCompanies like Li Auto have set a benchmark in this domain, inspiring brands such as WMI, Leap, and Deep Blue to roll out their EREV offerings, some even targeting higher-end niches that Li has pioneered.
Analyses suggest that the domestic EREV market remains relatively concentrated, with key players in the industry poised for substantial growthAs they benefit from early market presence and an established brand reputation, ongoing demand for EREV models is likely to result in greater sales figures for these first-movers.
As the market wrestles with the inertia of pure electric vehicle sales against the allure of hybrids like EREVs, it suggests that a turning point could be on the horizonInitially focusing their energies on pure electric routes, automakers are now racing to refine hybrid technologies in response to consumer demands for efficiency and convenience.
As NEVs have gained strong traction, consumers, particularly those reliant on traditional pumps for their fuel, are increasingly considering hybrid alternatives that mitigate range anxiety and charging inconvenience—which looms as the main incentive for the rapid ascent of hybrid vehicles.
Recent trends highlight that the quick growth of EREVs or generally plug-in hybrids is substantially linked to their success in attracting consumers away from gasoline vehicles, accelerating the shift from fossil fuels towards new energy solutions.
The plummeting costs of battery technology have narrowed the price gap between pure electric vehicles, fuel cars, and hybrids, yet challenges surrounding range persist
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