China falls back on gasoline to drive its global EV conquest

China’s electric-vehicle revolution just engaged reverse gear.

The world’s largest EV producer is flooding international markets with plug-in hybrid electric vehicles that run both on batteries and gasoline. Chinese hybrid exports more than tripled in the first half of 2025 from a year ago, compared with just a 40% increase for battery-electric vehicles, according to the China Association of Automobile Manufacturers.

European markets absorbed the biggest wave, with Chinese hybrid imports jumping more than sixfold, while battery-only vehicle imports declined 2%, data from the China Passenger Car Association showed. Belgium, where most cars enter Europe for distribution across the continent, became the landing spot for the majority of Chinese hybrids even as Europe struggles with ambitious 2035 zero-emission targets.

This U-turn by Chinese automakers, which control more than half of global EV demand with 11 million units of annual sales, signals the world isn’t yet ready to abandon combustion engines, carmakers and industry analysts told Rest of World. While plug-in hybrids emit roughly 30% less carbon than traditional gasoline vehicles, as estimated by the International Energy Agency, their use of fossil fuels could delay the global transition to zero emissions by years.

“We’re already seeing a strategic pivot among Chinese automakers to include PHEVs in their export mix,” said Bill Russo, CEO of Shanghai-based strategy and investment firm Automobility. “In markets where BEV infrastructure or incentives are weak, PHEVs offer a practical solution and allow Chinese players to compete on cost, range, and performance.”

Plug-in hybrids account for almost a third of China’s overall EV exports. They have transformed what was once a pure-electric export strategy into a multipronged one that manages infrastructure limitations and consumer anxiety about running out of charge.

Chinese auto major BYD’s plug-in hybrid exports to Brazil, its biggest overseas market, are now almost double those of its pure-electric models. The company’s ability to pivot quickly reflects the flexibility Chinese carmakers have developed to respond to international market demand.

Europe’s trade policies have accelerated this trend. While the European Union imposed additional tariffs on Chinese battery-electric vehicles to protect local manufacturers, plug-in hybrids have escaped these trade barriers, creating an unexpected loophole that Chinese companies have exploited aggressively.

“The overall export growth in EV [sales] in the first half of the year was better than expected thanks to PHEVs and other hybrid cars,” Cui Dongshu, secretary-general of the China Passenger Car Association, said in his July market analysis report.

The charging infrastructure gap remains the fundamental driver of this shift. Markets from Southeast Asia to Latin America lack the charging networks necessary to support mass adoption of battery-only vehicles, making hybrids an attractive compromise that addresses range anxiety while still offering some environmental benefits.

“If I only look at producing BEVs, then I miss out 50% of the new energy vehicle market,” Vincent Wong, executive vice president of Chinese carmaker SAIC-GM-Wuling, told Rest of World, at the Gaikindo Indonesia International Auto Show in July. “There is a place for PHEVs. The transition to BEVs really depends on various countries’ policies and ecosystem.”

Japanese carmakers pioneered the hybrid trend decades ago, with Toyota and Honda leading the way. Their traditional hybrids generate electricity while driving and braking, with no plugging in required. Chinese companies jumped in much later with a different approach: plug-in hybrids that owners can charge at home or at charging stations, giving them more electric range before the gasoline engine kicks in.

The timing of China’s hybrid push coincides with weakening EV incentives globally. In the U.S. — where Chinese EVs face outright bans, and federal grants and tax credits for EVs expire next month — the market remains dominated by Japanese, South Korean, and domestic manufacturers offering various engine options.

The current situation reflects market reality rather than ideological positions, according to Michael Dunne, former president of General Motors in Indonesia, who now runs automotive consulting company Dunne Insights.

“Most people like to think, ‘Will the world go all-electric, or will it stay gasoline?’” Dunne told Rest of World. “The reality is, there will be a distribution of powertrains depending on the customer, the region, the country and incomes.”

The surge in Chinese hybrid exports could last three to five years before battery technology and infrastructure catch up to ambitions, Russo said. But despite the current detour, the long-term potential for EVs is strong, with the hybrid surge being more tactical rather than strategic, he said.

“This is a transitional phase, not a reversal,” Russo said. “Long term, the global trajectory still points toward zero-emission vehicles.”

The EU’s recent decision to extend compliance periods for automakers to meet emission targets reflects the growing recognition that the original timelines were overly optimistic. This regulatory flexibility is creating space for Chinese hybrids to establish market presence while pure-electric infrastructure develops.

Still, some Chinese carmakers remain committed to the pure-electric vision. William Li, founder of Nio, is a prominent holdout, maintaining his company’s exclusive focus on battery electric vehicles.

“If I could go back in time, I would also make Range Extended Electric Vehicles to make some profit,” Li told the media on August 1, a day after launching Nio’s latest BEV, the Onvo SUV L90, in Hangzhou, China. “What I can do now is to persist until everyone is willing to buy BEVs in the future.”

Range Extended Electric Vehicles (REEVs) use a small internal combustion engine or generator to charge the battery when it runs low, extending driving range beyond what the battery alone provides. They represent another variation in China’s diversified approach, according to Chinese auto-market research firm Gasgoo. These vehicles, along with hybrids, offer consumers multiple options between pure-electric cars and traditional gasoline vehicles.

The export market’s importance has intensified as Chinese automakers face consolidation pressures domestically. With home growth slowing and competition fierce, international expansion through whatever engine type sells has become essential. The rise in China’s hybrid exports has also challenged assumptions about the pace of global energy transition. While governments worldwide have maintained ambitious electrification targets, the reality is that consumers and infrastructure have lagged.

Data from Belgium and broader European markets suggests Chinese carmakers have found a regulatory sweet spot by producing vehicles clean enough to meet current standards but practical enough to overcome infrastructure limitations.

Chinese automakers’ flexibility in offering engine options gives them an obvious advantage. Unlike rivals committed to single technologies, Chinese companies can adjust their product mix to match local conditions and regulations.

Many Chinese carmakers will continue to produce hybrid cars as long as demand exists, Wong said. China’s consolidation of its domestic market has made export success critical, regardless of the technology under the hood.

Predictions of a rapid, wholesale adoption of battery-only vehicles have given way to a more complex reality where multiple technologies will coexist for longer than anticipated, Dunne told Rest of World. The original ambition was perhaps too lofty, he said.

“PHEVs are a bridge — they’re better than pure gasoline,” Dunne said. “The speed to EVs is less quick than some hoped, but it’s still moving in the right direction.”