Surge in Plug-in Hybrid Electric Vehicle (PHEV) Ranges Ahead of New EU Rules

– Automakers extend PHEV ranges to comply with EU regulations.

– New models like Superb iV and Passat offer over 100 km range.

– Tax benefits drive PHEV sales growth in the UK and Germany.

The market for all hybrid vehicles and plug-in hybrid electric vehicles (PHEVs) is witnessing significant changes, driven by upcoming European Union (EU) regulations and tax benefits for business buyers. Automakers are working hard to meet stringent emissions targets which explains why newer PHEVs are emerging with notably enhanced electric-only ranges.

Many news models offered in Europe are being delivered with an estimated range in excess of 100 km. For example, the 2024 Skoda Superb iV PHEV features an impressive 135 km electric-only range, up from 56 km, thanks to a larger 25.7 kWh battery and advanced electronics. The VW Passat PHEV now offers 120 km. Similarly, the MG HS PHEV and Renault Rafale provide 121 km and 100 km, respectively, making PHEVs more practical and competitive.

Factors Driving the Surge in PHEV Ranges

Several factors are contributing to the surge in PHEV ranges, according to Automotive News Europe. One major driver is the EU’s revised “utility factor” for CO2 emissions calculations, set to take effect in 2025 for new models and 2026 for existing models. This adjustment aims to better reflect the real-world use of PHEVs, encouraging automakers to enhance electric ranges to meet emissions targets. Additionally, changes in “benefit-in-kind” taxation in the UK and Germany are incentivizing longer electric ranges. In Germany, PHEVs with a range of 80 km or more qualify for a reduced monthly tax rate, while in the UK, longer-range PHEVs benefit from lower benefit-in-kind tax bands.

PHEV sales have seen a resurgence, with Europewide sales up 4.9 percent through May 2024. This growth is partly due to the new longer-range models, which help automakers meet tougher emissions targets starting in 2025. Germany and the UK, the two largest PHEV markets in Europe, have reported significant sales increases, with 73,700 and 64,770 sales respectively through May. Despite this growth, experts like Matthias Schmidt of Schmidt Automotive Research predict that PHEV market share will plateau around 10 percent due to tightening emissions targets and a shift towards zero-emission vehicles by 2035.

The VW Group has revamped its PHEV powertrain to achieve electric-only ranges exceeding 100 km. The new eHybrid system features a larger 19.7 kWh battery, liquid cooling, and enhanced power electronics, allowing for DC fast charging.

The surge in PHEV ranges reflects two trends. One is the lower-than-expected EV take-rate, and the other is driven by regulatory changes and market incentives. PHEVs are becoming a more attractive option for consumers and businesses alike, aligning with upcoming EU emissions regulations.

Most automakers has announced that they are dialing back their investments in EVs, turning their focus on hybrids and plug-in hybrids. While all of the models mentioned are not available for purchase in North America, more PHEVs are expected to arrive in the coming months and years, and most likely with EV ranges that extend well beyond 50km, which is a norm in mid-2024.