Author | Zhou Zhiyu
In 2025, HEVs (Hybrid Electric Vehicles) became a bright spot in the global automotive market. Last year, Toyota sold 4.43 million HEVs globally, with each vehicle generating a net profit of RMB 15,600. Ford’s HEV sales in North America increased by 21.7% during the same period, while pure electric vehicles declined by 14.1%. A niche market that Chinese automakers had long overlooked continued to maintain steady and significant growth overseas.
Outside of China, HEVs have never gone ‘out of fashion’ in the global market.
Over the past decade, Chinese automakers almost exclusively focused their resources on pure electric and plug-in hybrid vehicles. On one hand, this was driven by policy guidance; on the other hand, rapid advancements in the supply chain for batteries and electric drives made plug-in hybrids a阶段性最优解. Meanwhile, the hybrid electric system, due to technological barriers and cost structures, was relegated to a secondary position.
However, this landscape is changing.
Entering 2026, mainstream automakers such as Great Wall, Changan, GAC, Geely Auto, and Chery are accelerating the launch or advancement of their HEV technology roadmaps, collectively making a significant push into this territory previously dominated by Japanese automakers. This is no longer an individual company’s product choice but appears to reflect the industry’s reevaluation of the global hybrid market.
The explosive growth of plug-in hybrids over the past five years has enabled Chinese automakers to build a complete electric drive supply chain and achieve production capacity in the millions. By scaling down battery sizes and retaining the electric drive architecture, a lower-cost HEV solution has now become practically feasible.
Against the backdrop of annual global fuel vehicle sales still exceeding 70 million units, HEVs have become one of the key pathways for Chinese automakers to penetrate the traditional automotive market.
Plug-in hybrids paved the way for HEVs by paying the ‘tuition’.
According to information obtained by Wall Street News, this new wave of domestic HEVs has clearly diverged from the technical pathways of traditional Japanese hybrid systems.
Ren Xiangfei, Chief Engineering Technology Scientist of Geely Auto, pointed out to Wall Street News that Geely’s new generation i-HEV is essentially developed from plug-in hybrid technology. “It can be imagined as a plug-in hybrid with an i-HEV exclusive battery.”
The basic principle of HEV is not complicated: it does not rely on external charging but powers the battery through the engine and energy recovery. The motor intervenes during low-speed and start-up stages, helping the engine operate within an efficient range, thereby reducing fuel consumption. The battery capacity is usually small, and the user experience is close to that of a traditional fuel vehicle, except for the addition of an electric drive system that helps save fuel.
Toyota has built a nearly thirty-year systemic advantage based on this technological route. From the first-generation Prius to the latest THS system, Toyota has formed a complete supply chain and process standard around the planetary gear structure, which later entrants find difficult to replicate directly.
Chinese automakers have chosen to ‘circumvent’ this challenge.
Over the past five years, the surge in plug-in hybrids has driven the scaled production of DHT (hybrid transmission), motors, and electronic control systems. Related industrial chains have matured rapidly, leading to significant cost reductions. These capabilities originally served plug-in hybrids, but by shrinking the battery pack and adjusting control strategies, they can be quickly converted into HEV products.
Geely’s i-HEV, released on April 13, achieves an engine thermal efficiency of 48.41%. The Emgrand i-HEV recorded a real-world fuel consumption of 2.22 liters per 100 kilometers, and Ren Xiangfei stated that “this is not even the lowest.” The entire system originates from the Leishen plug-in hybrid platform, which has been installed in 1.15 million plug-in hybrid vehicles over three years, accumulating 25.4 billion kilometers. Transitioning from plug-in hybrids to HEV is almost seamless.
Ren Xiangfei said: “The safety standards, design philosophy, and intelligent features of i-HEV are all designed based on the same logic as plug-in hybrids.”
Each company is expanding at a rapid pace. Geely announced immediate mass production upon release, with the Xingyue L and Xingrui launching pre-sales on April 19. By the end of the year, the Boyue L and Emgrand models will also be launched. Fan Junyi, General Manager of Geely Auto Sales Company, revealed that the China Star series of fuel vehicles will fully adopt i-HEV by mid-2027.
Changan’s Blue Whale Super Hybrid, released on March 30, achieved a real-world urban fuel consumption of 2.98 liters per 100 kilometers in sedan tests. The HEV versions of the Yidong, UNI-V, and CS55PLUS have already been submitted to the Ministry of Industry and Information Technology (MIIT). GAC’s GMC hybrid transmission has been iterated to its third generation.
Great Wall’s approach is slightly different. The Guiyuan platform does not create a separate system specifically for HEV; instead, HEV is simply one powertrain option derived from this architecture.
The specific paths may vary slightly across different enterprises, but the underlying logic remains consistent: leveraging the electric drive capabilities accumulated during the plug-in hybrid era to enter the HEV market in a reverse ‘dimension-reduction’ approach.
To a certain extent, the investment in plug-in hybrids over the past five years has already pre-paid the costs for HEV development.
Hybrid vehicles are no longer the equivalent of ‘feature phones.’
If the sole advantage were better fuel efficiency, HEVs would not be anything new.
The real change lies in their shedding the previous label of being a ‘low-end technology.’
The penetration rate of new energy vehicles in China has exceeded 50%, but nearly half of users have yet to make the switch. This group is not simply conservative; rather, they are constrained by practical conditions: over 60% of households lack fixed charging facilities, pure electric vehicles experience significant range reduction in northern winters, and charging infrastructure remains scarce in rural markets.
In recent years, industry resources have been heavily concentrated on battery electric vehicles (BEVs) and plug-in hybrids (PHEVs), leaving the needs of this segment of users unmet.
HEVs happen to fill this gap: no charging required, driving habits similar to traditional fuel vehicles, and fuel consumption reduced by 30% to 40%. At current oil prices, the long-term cost advantages are becoming apparent. Changan has calculated that the fourth-generation Yidong Blue Whale Super Power model achieved an urban real-world fuel consumption of 2.98 liters per 100 km, compared to 6 liters for comparable gasoline vehicles. Assuming an annual mileage of 15,000 km and a gasoline price of 8.57 yuan per liter for grade 92 fuel, users can save 3,882 yuan annually or 23,300 yuan over a six-year vehicle replacement cycle.
More importantly, the price threshold is decreasing. According to industry insiders consulted by Wall Street News, the manufacturing costs of hybrid transmissions, motors, and electronic controls have dropped significantly due to the massive production capacity established during the plug-in hybrid era. Chinese automakers that develop and produce core components independently enjoy cost advantages 15% to 20% lower than their Japanese counterparts. Without large battery packs, HEVs also have a Bill of Materials (BOM) cost 10,000 to 20,000 yuan lower than comparable PHEVs.
BYD’s DM-i series has championed the slogan of ‘price parity between hybrids and gasoline vehicles,’ breaking through the pricing barriers between PHEVs and conventional fuel cars. Now, HEVs have reached a similar tipping point. Relying on the production capacity of its Galaxy series PHEVs, Geely Auto has directly adapted the same hybrid powertrain for HEVs, achieving near price parity with similarly configured gasoline vehicles.
When HEVs can achieve a price range close to or even on par with that of fuel-powered vehicles, their market foundation will be reopened.
The domestic HEV market is already gaining momentum. Sales are expected to exceed 1.2 million units by 2025, and industry forecasts predict a rise to between 1.8 and 2 million units by 2026, with penetration rates surging from around 5% to 8%.
However, if it were only about fuel efficiency and affordability, Japanese HEVs achieved this two decades ago. Professor Shuai Shijin from Tsinghua University pointed out at a recent high-level forum on the development of smart electric vehicles that Toyota’s power-split architecture ‘was once a towering achievement in hybrid technology, but it has now been marginalized.’
The underlying logic is that Japanese hybrid vehicles cannot run air conditioning when parked, lack robust OTA capabilities, and fail to support advanced autonomous driving functions, mainly because their batteries are too small to sustain the continuous power required for intelligent systems. Over the past decade, intelligence has become the exclusive domain of pure electric and plug-in hybrid vehicles, while HEVs have gradually been regarded as ‘feature phones’—reliable and fuel-efficient but lacking in intelligent experience.
China’s new generation of HEVs is breaking this binding.
GAC Xingyuan Super Dual Engine is equipped with a 5.4kWh high-rate battery, three times the capacity of Japanese hybrids, with a peak power exceeding 150kW. This battery is not intended for pure electric range but serves as a power supply base for vehicle intelligence, enabling features such as parking air conditioning, external power supply, sentry mode, full-time online cabins, and running without starting the engine. Geely i-HEV directly adopts the GEEA 3.0 electronic and electrical architecture, which is equivalent to plug-in hybrids. The Great Wall HEV solution incorporates Coffee EEA 4.0 and VLA large models.
Compared to Japanese solutions with 1-2 kWh batteries, China’s HEVs now feature ‘large batteries,’ providing reliable support for functionalities that were previously difficult to achieve in HEVs.
By increasing battery capacity and integrating more advanced electronic and electrical architectures, HEVs are beginning to possess stable power supply capabilities, with some models directly adopting electronic and electrical architectures at the level of plug-in hybrids.
This means consumers no longer need to choose between the convenience of no charging and an intelligent experience.
Once this is validated by the market, the product logic of HEVs will undergo a fundamental change: it will no longer be seen as a transitional solution but as a long-term viable powertrain option.
Xu Xiangyang, a professor at Beihang University, predicted at the high-level forum on the development of intelligent electric vehicles that by 2035, all traditional energy passenger vehicles will be fully hybridized.
Go to Toyota’s home turf.
The domestic market is just the starting point; the real competition lies overseas.
In the first three quarters of 2025, China’s HEV exports increased by 94.1% year-on-year. However, within the overall structure of China’s automobile exports, the proportion of HEVs remains relatively low, with growth mainly concentrated in fuel vehicles, plug-in hybrids, and pure electric vehicles.
Overseas markets exhibit strong demand for HEVs, yet the supply from Chinese automakers has only just begun, resulting in a clear mismatch.
In Southeast Asia, the Middle East, South America, and Africa, the penetration rate of charging stations is extremely low. With few charging piles, it is not easy for pure electric vehicles to gain traction. The lack of home charging habits among local consumers also limits the development of plug-in hybrids. HEVs do not rely on charging infrastructure, offering the convenience of refueling and driving immediately, providing an experience a notch above traditional fuel vehicles. Great Wall Haval H6 HEV has already been competing head-to-head with Toyota in Southeast Asia, Latin America, and the Middle East.
The data from Europe and the US further illustrates the issue. In 2025, annual HEV sales in Europe reached 4.567 million units, growing nearly 20% year-on-year, capturing a market share of 35%, surpassing pure electric vehicles as the largest electrified category. In the same year, the US sold 2 million HEVs, up 26.6% year-on-year, being the only powertrain type to achieve market share growth. Insufficient charging facilities and high electricity prices have led consumers in developed markets to make a pragmatic calculation.
The EU has imposed an additional tariff of up to 45.3% on China’s pure electric vehicles, while HEVs face only a 10% basic tariff. For the same vehicle shipped from China to Europe, the cost is lower for HEVs.
However, the market is not determined solely by products.
Toyota’s advantage in the global HEV market stems not only from technology but also from decades of accumulated strengths in its dealer network, after-sales systems, and brand trust. Chinese automakers now offer lower-cost, more intelligent products, but building channels and brand trust takes more than a year or two.
Chinese automakers are rapidly catching up. Chery was the earliest to establish a presence in Southeast Asia and the Middle East, Geely has a foothold in Malaysia through Proton, and Great Wall Motors operates a factory in Thailand. However, compared to Toyota’s market density, Chinese automakers still lag by an order of magnitude.
The global strategy of Great Wall’s Guiyuan platform has been unveiled: promoting hybrid electric vehicles (HEVs) and internal combustion engine models in Southeast Asia and the Middle East, with 49 core modules reusable across powertrain systems, and a single architecture adaptable to different markets. On the day Geely Auto launched its i-HEV, it initiated the “Ten-Thousand-Mile Journey, Global Expansion” plan. Li Chuanhai, President of Geely Auto Research Institute, stated that development adheres to global vehicle standards, advancing simultaneously in domestic and international markets. At the launch of Changan Automobile’s Blue Whale Super Power platform, Zhao Fei, General Manager of Changan Automobile, described it as a “Global Hybrid Solution from China.”
Behind these moves lies a redefinition of the role of HEVs, which are set to become a critical tool for automakers in global competition.
In terms of approach, Chinese automakers have taken a decade-long detour—from plug-in hybrids and range extenders back to HEVs. However, this “detour” has allowed the supply chain, electric drive technologies, and scale capabilities to mature earlier. When these capabilities are reassembled, the HEV becomes a product that can be redefined.
The hybrid system established by Toyota over more than three decades remains robust. Nevertheless, Chinese automakers are entering this market via the flank, leveraging lower costs and stronger intelligent capabilities.
For Chinese automakers, product competitiveness has gradually improved, but channels, branding, and service systems still require time to develop.
HEVs will not be the ultimate destination, but they may become the most pragmatic entry ticket in the next phase of global competition. With products being rolled out, the real competition is just beginning.