Will Plug-in Hybrid Electric Vehicles Define the Future of Transportation in 2025?

What will be the new track for Plug-in Hybrid Electric Vehicles (PHEVs) and other new energy vehicles in 2025? According to the latest statistics released by China's Ministry of Public Security on January 17, by the end of 2024, the number of electric vehicles and PHEVs in China reached 31.4 million, accounting for 8.90% of the total number of automobiles. Among these, fully electric vehicles and PHEVs comprised 70.34% of the new energy vehicle segment. In 2024, new registrations of PHEVs, electric cars, and other new energy vehicles reached 11.25 million, representing 41.83% of all new car registrations, marking an increase of 3.82 million units compared to 2023, reflecting a remarkable growth rate of 51.49%. Rapid growth can be traced from 1.2 million units in 2019 to 11.25 million in 2024, showing an impressive expansion in the market for new energy vehicles and PHEVs.

Why are new energy vehicles, including PHEVs, growing so rapidly in China? What are the drivers behind the flourishing of PHEVs and other electric cars? The past year witnessed robust performance and increasing market share for all electric vehicles, including PHEVs.

As per the data from the China Association of Automobile Manufacturers, in 2024, production and sales of PHEVs and electric vehicles in China both exceeded 12 million units, with production and sales reaching 12.88 million and 12.86 million units respectively, representing year-on-year growth of 34.4% and 35.5%. PHEVs and other new energy vehicles accounted for 40.9% of all new car sales, continuing to be a vital growth area for the China's automotive market. A policy briefing from the National Development and Reform Commission noted that as of 2024, the domestic market penetration rate for new energy passenger vehicles, including PHEVs, exceeded 50% for seven consecutive months.

Several factors propel this unprecedented growth in PHEVs and electric vehicles. Crucially, advancements in battery technology are pivotal to the swift development of new energy vehicles, including PHEVs. The introduction of high-energy-density lithium iron phosphate batteries significantly reduces the cost of PHEVs while enhancing their safety and longevity. The diverse battery options cater to various usage needs, and increased range satisfies the everyday travel demands of more consumers.

Moreover, supportive policies have been powerful accelerators for the development of PHEVs and electric vehicles. The Chinese government, along with local authorities, has rolled out various initiatives encouraging the transition to PHEVs and electrifying the domestic vehicle fleet. In 2024, over 6.6 million old vehicles were replaced with new energy or more fuel-efficient models, with PHEVs capturing a significant portion of this transition.

Additionally, the gradual completion of supporting infrastructure has significantly eased the "range anxiety" of electric vehicle users, including PHEV owners. According to the National Energy Administration, China has built over 12 million units of charging infrastructure, with more than 95% of highway service areas now equipped to offer charging services to PHEV and electric vehicle users.

Looking ahead to 2025, new growth points for PHEVs and other electric vehicles loom on the horizon. Although the growth momentum for PHEVs and other new energy vehicles was strong in 2024, industry experts believe they will not entirely replace conventional vehicles in the short term. Currently, PHEVs and electric cars account for a relatively small portion of the total vehicle population.

However, by 2025, PHEVs and other electric vehicles will continue to evolve. While the market penetration of new energy passenger vehicles might stabilize, heavy-duty electric trucks could emerge as a new growth area, and the export of PHEVs and electric vehicles is expected to remain strong.

The "2024-2025 Energy Conservation and Carbon Reduction Action Plan" explicitly promotes the development of new energy heavy trucks as crucial to lowering carbon intensity in the transport sector by 5% compared to 2020 by the end of 2025. To achieve this goal, expanding the use of PHEVs and zero-emission vehicles in medium and short-haul transport will be key.

Moreover, the maturation of charging infrastructure will further facilitate the adoption of PHEVs and electric vehicles in long-haul transport. Recent government guidelines advocate for high-power charging technologies and encourage innovations that enhance the capabilities and services of charging facilities. These advancements could address current limitations facing PHEVs and electric vehicles.