Plug-in Hybrids Become a New Growth Pole

I. Overall Market: A Single-Month Rebound Fails to Hide Accumulated Pressure

The latest data from the European Automobile Manufacturers' Association (ACEA) shows that the EU passenger car market experienced a temporary recovery in August 2025, with sales increasing by 5.3% year-on-year to 677,786 units, ending a period of sluggish sales.

This growth was primarily driven by a rebound in demand in core markets such as Germany and Spain, as well as the concentrated launch of new models by automakers to meet carbon emissions regulations to stimulate consumption.

However, from a long-term perspective, market fundamentals remain under pressure. In the first eight months of 2025, EU passenger car sales fell slightly by 0.1% year-on-year. While the decline was nearly flat, it reflects that macroeconomic uncertainty and consumer wait-and-see sentiment continue to suppress market activity.

A research report by Kaiyuan Securities points out that the rising cost of car purchases in a high-interest environment has led some consumers to postpone their car replacement plans, resulting in a "low desire cycle" in the market. This trend is particularly evident in major markets such as France and Italy.

II. Powertrain Structure: Hybrids Become the Absolute Mainstream, Fuel-Engine Vehicles Accelerate their Decline

1. Hybrid: Leading the Transition with a 34.7% Market Share

In the first eight months, hybrid electric vehicles (HEVs) maintained their top position with a 34.7% market share, becoming the preferred choice for EU consumers transitioning to electric vehicles. This advantage stems from their technological maturity and high adaptability to various scenarios. HEVs require no external charging and fit into existing refueling infrastructure. Their upgraded dual-motor architecture delivers smooth power delivery and efficient energy recovery, perfectly meeting the diverse needs of urban commuting and suburban driving.

Regional HEV sales in markets such as France, Spain, and Germany all achieved double-digit growth, with France experiencing over 34% growth. Against the backdrop of high oil prices, HEVs' fuel efficiency and policy and tax incentives have combined to maintain their dominant market position.

2. Pure Electric Vehicles: Share Increases, But Growth Lags Behind Target
The pure electric vehicle (BEV) market exhibits "low-base growth": its share reached 15.8% in the first eight months, up from 12.6% in the same period last year, but still well below the EU's decarbonization transition targets. Although BEV sales increased by 30.2% year-on-year in August, performance in core markets was mixed. Germany contributed the majority of the growth (BEV sales of 39,000 units in August, up 45.7% year-on-year), while France only achieved a monthly recovery due to base effects and subsidies.

The core bottlenecks hindering the popularization of pure electric vehicles remain: mainstream models are 20%-30% more expensive than fuel vehicles, the 450-550 km range is insufficient for long-distance travel, and charging infrastructure is insufficient in areas such as urban areas. Kaiyuan Securities points out that a substantial breakthrough in BEV penetration will require the mass production of new-generation pure electric platform models and a reduction in battery costs.​

3. Fuel-powered Vehicles: Market Share Shrinks 10 Percentage Points in One Year

The accelerated decline of the traditional fuel-powered vehicle market is inevitable. In the first eight months of 2024, the combined market share of gasoline and diesel vehicles plummeted from 47.6% in the same period to 37.5%. Gasoline vehicle registrations fell 19.7% and diesel vehicle registrations dropped 25.7%. This trend stems from the EU's stringent carbon emissions regulations, which will take effect in 2025. New car CO₂ emissions must be reduced to 93.6 grams per kilometer. To avoid fines, automakers are forced to reduce fuel-powered vehicle production capacity and increase prices, forcing consumers to switch to new energy vehicles.

Ⅲ. Structural Highlights: Plug-in Hybrids and the Breakthrough of Chinese Automakers

Plug-in hybrid electric vehicles (PHEVs) became the fastest-growing segment, with 631,000 registrations in the first eight months, bringing their market share to 8.8%. August alone saw a year-on-year increase of 54.5%, marking six consecutive months of strong growth.

A PHEV's 50-80 km pure electric range covers daily commuting, while the retained engine alleviates range anxiety. Some high-end models even feature high-voltage fast-charging technology, providing a user experience close to that of pure electric vehicles, making it an ideal choice for transitioning from combustion engines to battery electric vehicles (BEVs).

Notably, Chinese automakers are capitalizing on the plug-in hybrid trend to accelerate their entry into the European market. In the first eight months of the year, BYD's European sales surged 280% year-on-year, while SAIC's sales increased by 19.7%.

Their plug-in hybrid models accounted for 41% and 49% of their sales, respectively. Against the backdrop of the EU's imposition of high tariffs on Chinese pure electric vehicles, plug-in hybrids have become a key breakthrough for Chinese brands, directly impacting the market share of domestic European automakers.