Hybrids still in the mix despite boom in fully electric cars

Stay informed with free updates

Simply sign up to the Electric vehicles myFT Digest — delivered directly to your inbox.

Global carmakers are continuing to hedge their technology bets with plug-in hybrids and range-extended cars, despite a global rise in electric vehicle sales this year. 

The diversified approach to decarbonisation comes on the back of a relaxation in emissions rules in Europe and plans to reduce generous tax credits on EV purchases in the US. 

But car executives and analysts warn that the need to offer so many options will put additional cost pressure on an industry struggling with lower profit margins and an escalating trade war. 

“Having to invest in multiple drivetrains creates headaches all along the value chain,” Eric Zayer, senior partner at consultancy Bain & Co, told the FT’s Future of the Car summit last week. “Obviously that creates a lot of complexity and ultimately cost.”

Sales of electric vehicles jumped 28 per cent in the UK and wider Europe in the first three months of the year compared with the same period in 2024, while sales of petrol-electric hybrids have also risen at a rate of 20.5 per cent, according to European car industry body ACEA.

Fabrice Cambolive, chief executive of the Renault brand, says its recent success with the Renault 5, which is priced below €25,000, signals “a solid foundation . . . to break this glass ceiling on EV transition”.

But Cambolive adds the company will continue providing hybrid and plug-in hybrid options for consumers who are not ready for the switch to EVs: “We are still at the beginning of this transition and there is no bad solution we have to exclude upfront,” he says.

Chinese carmakers making inroads into overseas markets with affordable and high-tech EVs are also offering plug-in hybrid options in the hope of convincing consumers to go fully electric. Hybrids are not subject to EU tariffs of up to 45 per cent on EVs from China.

Jolin Zhang, deputy managing director of BYD Europe, says the Chinese carmaker has developed its plug-in hybrid in a way so that “once you experience our plug-in hybrid elective vehicle, you can experience driving like an EV car”.

In countries including China and the US, the technology offering is becoming even more complex with carmakers offering range-extender electric vehicles, which have small combustion engines used for charging batteries, to address the issue of range anxiety.

Volkswagen is planning to revive its pick-up brand, Scout, which will be launched in an electric form in 2027 with a range extender option. According to Arno Antlitz, chief financial officer, 80 per cent of the pre-booked customers said they would like to have range extender technology. “It would be too risky to start with an electric Scout only in this segment,” Antlitz says.

Another option is range-extended plug-in hybrids, which have a longer electric-only range. 

“A long-range plug-in-hybrid, I would argue, is an electric car with the backup engine when the battery is flat,” says Håkan Samuelsson, Volvo Cars chief executive. “It is a pragmatic bridge solution to wait for our customers to really feel comfortable with an all-electric car.”

But one significant shortcoming for plug-in hybrids is that they are expensive to buy, while a range-extender option also entails additional costs. Demand for plug-in hybrid cars has also been weaker than EVs or petrol-electric hybrids, with sales rising only 5.6 per cent year-on-year in the UK and wider Europe during the first quarter, according to ACEA.

According to Auto Trader, 32 of 144 electric vehicle models on its website are available for under £30,000 while the same is true for 49 of 128 full or mild hybrid models being sold. None of the 99 available plug-in hybrids cost below £30,000.

Current regulations in the EU and UK mean that Prius-type hybrids and plug-in hybrids will be banned from 2035. “In the car industry, that’s tomorrow. So how are we supposed to continue investing in things to provide customer choice when it’s going to be banned,” asks Lynn Calder, chief executive of off-roader manufacturer Ineos Automotive. “There needs to be a reality check.”

But Ian Plummer, commercial director at Auto Trader, says the industry needs to “recognise that we have a direction of travel, whichever the technology may be”.

“[Transport is] the biggest source of carbon emissions in the UK and for sure in Europe as well. And, therefore, we need to face these challenging decisions and find ways to convince consumers [to go electric],” he adds.