Chinese cars have played a big role in boosting UK PHEV sales but they are falling back home
China pulled incentives for PHEVs and EVs this year and the former’s sales dipped – but the latter actually grow
Are we seeing the beginning of the end of plug-in hybrids?
China has been leading the world in PHEV production and sales, accounting for 76% of the global total in 2025. But this year something weird has been happening.
The overall car market in China has been slowing, with retail sales down 20% in April. The local China Passenger Car Association attributed the fall to rising oil prices as buyers gave petrol cars a swerve.
But also hit hard are PHEVs and range-extender EVs, down 22% on the same month last year, reducing their share to 19%. Meanwhile, sales of pure EVs were up 2.4%, raising their share to 40%.
Is this the canary in the coal mine for PHEVs?
China has pioneered the use of bigger batteries and smaller engines to allow what are essentially EVs to travel further. Buyers of more premium cars especially have bought into the concept, led by the likes of Li Auto. Meanwhile, BYD pivoted its entire ICE strategy into PHEVs.
So-called new energy vehicles in China were always forecast to do badly this year as the country ended purchase tax exemption on PHEVs and EVs from January. But that doesn’t explain why PHEVs have been hit while EVs have been unscathed. European premium makers have failed to translate their success at selling PHEVs to European buyers over to China.
In a market that should be ripe for buyers seeking the same premium combustion experience with lower taxes, their offerings have been even less well accepted than their EVs. For example, of the 144,000 cars BMW sold in China in the first three months of the year, just 0.1% were PHEVs, and Mercedes-Benz has said it’s phasing out PHEV sales there.
You wouldn’t think there was a problem from looking at UK sales. In less than a year, Chinese brands have gone from zero to absolutely dominating mainstream PHEV sales here, grabbing a 44% share in the first three months. In April, they took the top six slots in the PHEV chart, led by the Jaecoo 7.
Of course, PHEVs here have a shelf life ending in 2035 if the government’s current plan persists. In the EU, a recent tweak to rules will allow a certain percentage after 2035. But the surprise slump in China might foreshadow a future in which EVs are good enough to dump the inherent compromises in doubling up drivetrains.
