Over the past three years, extended-range electric vehicles (EREVs) were the undisputed answer in the Chinese automotive market.
Li Auto Inc (LI) used the technology to become the top-selling new energy vehicle (NEV) startup, while AITO leveraged it for a remarkable turnaround. By 2025, even the most steadfast proponents of pure electric vehicles (BEVs) made a collective shift. XPeng Inc (XPEV) launched its Kunpeng Super Extended-Range system, with brands like IM Motors and Avatr quickly following suit. The promise of "no range anxiety" became a default statement in new car launch presentations.
The reversal, however, arrived faster than anyone anticipated.
Data released on June 11th by the China Passenger Car Association (CPCA) revealed that wholesale sales of EREVs in May plunged by 24.9% year-over-year, marking the largest single-month decline in nearly five years. In the same month, overall NEV wholesale figures continued to grow at a double-digit pace, making EREVs the only segment moving against the trend.
Yet, bets on the table continue to increase. A wave of new EREV models from companies like XPeng, Leapmotor, and Xiaomi Corp. (XIACY), which were greenlit during the segment's peak, are now queuing up to enter a market that has already turned downward.
The journey from project approval to market launch for a vehicle typically takes two to three years. These models were finalized when EREVs were the fastest-growing category; by the time they roll off production lines, the market has shifted direction.
Shifting Dynamics Within the Decline
On the May retail top-ten list for NEVs, only one model offering an EREV version remained: the AITO M6. Expanding the view to the entire market, only three EREV models achieved monthly sales exceeding 5,000 units: the AITO M6, AITO M7, and SAIC Volkswagen's ID.ERA 9X.
Many recall what this list looked like two years ago: the Li Auto L series and AITO M7 took turns dominating the charts, with "fuel-and-electric capable" vehicles once claiming nearly half of the NEV market.
In May of this year, however, EREV wholesale volume stood at 95,000 units, shrinking its share within the NEV market to just 7%. During the same period, BEV sales grew 16.6% year-over-year, and plug-in hybrids (PHEVs) also saw growth of over 10%. Within the entire NEV market, only EREVs were in decline.
May represented the largest year-on-year decline for the EREV segment in the past five months. In February 2026, EREV sales fell 20.1% year-over-year, followed by a 9.1% drop in April. Cumulative wholesale volume for the first five months reached 410,000 units, nearly 10% lower than the same period last year. Looking further back, EREV retail sales were surging at a rate close to 80% in 2024, before the annual growth rate plummeted to just 6% in 2025.
Why has the decline been so sharp? Cui Dongshu, Secretary-General of the CPCA, analyzed on June 11th that the significant overall drop in May was largely due to the substantial scale of Li Auto's strategic transition.
Examining specific data, in May 2025, Li Auto delivered 40,856 vehicles. At that time, the i6 model had not yet launched, meaning almost all deliveries were EREVs. In May of this year, Li Auto delivered 33,350 vehicles, with the i6 (a BEV) exceeding 20,000 units for three consecutive months, leaving only about 10,000 units for the L-series EREVs. Within a year, Li Auto alone reduced its monthly EREV volume by nearly 29,000 units, while the entire industry's year-on-year reduction was approximately 31,500 units.
In other words, the record single-month decline in the EREV market over nearly five years is largely attributable to Li Auto's sales mix adjustment. Li Auto also paid a price, with its total May deliveries down 18.37% year-over-year.
This shift is not confined to one company. CPCA data shows that the sales mix between BEVs and EREVs among new automaker brands has shifted from 59:41 in 2024 to 71:29 in 2025. In May this year, BEVs accounted for 81% of sales among new automaker models, compared to 58.9% in the same month last year—a jump of over 22 percentage points in one year, with penetration also moving into the 100,000-150,000 yuan price bracket. For example, over 80% of buyers of the Leapmotor C10 in the past year opted for the BEV version.
Multiple factors underpin this change. By the end of April, the number of public charging piles nationwide approached 5 million, with ultra-fast charging coverage in highway service areas exceeding 98%. Battery costs have declined for two consecutive years, making EREV versions of the same model often more expensive than their BEV counterparts, essentially erasing the price gap between comparable BEVs and EREVs. Policy and fuel prices have also shifted simultaneously: the purchase tax exemption was changed to a halved rate, the range threshold for EREVs was raised, and the longstanding weakness of high fuel consumption (over 8 liters per 100km when the battery is depleted) collided with elevated oil prices.
The foundational rationale for EREVs—"anxiety prevention"—is losing its practical basis. After the largest player's departure, the seating order at the table is being reshuffled.
A Fragmenting Market
Among the players betting on EREVs, XPeng placed one of the heaviest bets and was the first to encounter the market shift.
In November 2024, when He Xiaopeng launched the Kunpeng Super Extended-Range system, he defined EREV as a technology path destined to "coexist long-term" with BEVs, declaring 2026 as XPeng's "year of dual powertrains" with plans for seven dual-power models. In the first quarter of this year, EREV versions of the G6, G7, and P7+ launched as scheduled, with the first batch of owners taking delivery just as EREV sales began their year-on-year decline in February.
According to sales data from the first 12 hours after the XPeng GX launch, orders exceeded 24,800 units, with BEV variants accounting for over half.
The production and sales curve of range extender suppliers closely mirrors the overall market trend. Dong'an Power, which supplies range extenders to automakers like XPeng and Voyah, saw its engine sales drop 21.1% year-over-year in April, followed by a 25.44% decline in May. For the first five months, its cumulative engine sales fell 9.79%, closely matching the 9.7% decline in the overall EREV market.
However, there is another side to the story. AITO has held the core EREV market: the AITO M6, launched in late April, achieved over 20,000 deliveries in its first month. The new M9, launched on May 27th, received over 20,000 orders within 24 hours. More telling is the M8: in the first quarter, its EREV version sold over 15,000 units, while the BEV version sold fewer than 5,000. Even with dual powertrain options, consumer choice in the above-300,000-yuan segment is the complete opposite of that in the 150,000-250,000-yuan bracket.
EREVs have not failed entirely; they are undergoing a structural shift segmented by price.
The resilience of high-end EREVs isn't solely due to long-distance assurance. A traditional automaker executive explained that the premium experience defined by features like refrigerators, TVs, and large sofas itself consumes significant power. High-power supply from a large battery forms its foundation, while extreme off-road conditions for rugged vehicles require a failsafe that won't leave them stranded. This makes EREV a suitable solution for high-end models.
In the mass market, however, users are more concerned with range and refueling/recharging costs. Cui Dongshu also noted that for consumers with demanding commutes or in areas with underdeveloped charging infrastructure, EREVs and PHEVs remain better choices.
Yet, current data suggests the 300,000-yuan family EREV segment pioneered by Li Auto is in a state of limbo: demand hasn't vanished, but a player to fully capture it has yet to emerge.
Bets Still in Transit
Those eyeing this vacant seat, along with the next wave of new EREV models, are listed in the Ministry of Industry and Information Technology's (MIIT) vehicle approval system.
The MIIT's 408th batch of new vehicle announcements published on June 10th provides a panoramic snapshot of this market mismatch.
Among the NEV models declared in this batch, there were 802 BEVs, while PHEVs and EREVs combined totaled only 123. In the equivalent batch a year ago, under the passenger vehicle classification, the number of PHEV and EREV declarations still exceeded that of BEVs. Automakers' new project approvals have quietly shifted direction.
However, bets already in motion are difficult to retract. According to CMB International statistics, 54 new EREV models are set to launch in 2026, nearly triple the number in 2024.
As recently as late last year, some securities firms predicted that the wholesale growth rate for PHEVs (including EREVs) in 2026 would reach 31%, three times that of BEVs. Yet, just five months later, EREVs became the only negatively growing category within the NEV track. The speed of the consensus collapse highlights the depth of the mismatch.
A new automaker executive admitted that developing EREVs is a "helpless" choice for new players. Compared to EREVs, PHEVs hold advantages in certain driving conditions, a point more sensitive to consumers in lower-to-mid price segments. However, due to production license restrictions, most new automakers cannot produce PHEVs and are thus compelled to choose the EREV path.
The EREV version of the Leapmotor D19, equipped with an 80.3 kWh battery, awaits delivery, while XPeng's large EREV SUV is still queued up. These models share a common trait: pure electric range is generally over 300 kilometers, double that of the previous generation of EREVs.
The most prominent card is held by Xiaomi. The market has long anticipated Xiaomi's first EREV SUV, which also aims to capture the seat left vacant after Li Auto's retreat, as there is currently no complete successor for user preference in the 300,000-yuan family EREV segment.
Cui Dongshu also pointed out that Xiaomi's new EREV model "should be able to" stimulate this specific market segment. With companies like XPeng, Zeekr, and Xiaomi successively launching EREV products, there is still room for growth in the mid-to-high-end price segments for EREVs.
Actions within the supply chain reveal the weight of these bets.
In April, CATL upgraded its second-generation Xiaoyao battery designed for extended-range hybrids, pushing the pure electric range to 600 kilometers. The battery giant's confidence is backed by data: over 95% of extended-range hybrid vehicles sold in 2025 with a pure electric range exceeding 300 kilometers used the Xiaoyao battery. On Sunwoda's list of new bulk supply customers for 2026 are Xiaomi and SAIC Volkswagen.
While the end market is receding, the arms race in the supply chain is intensifying.
This seemingly contradictory betting has a data-driven explanation. According to Gaogong Industry Institute (GGII) statistics, global NEV sales from January to February this year fell 7% year-over-year, but power battery installation volume grew 5% against the trend, driven by increased battery capacity per vehicle. This is even more pronounced for EREVs: the Li Auto L6 has a 35.8 kWh battery, while the Leapmotor D19 uses an 80.3 kWh battery—more than doubling in two years.
Battery manufacturers are no longer betting on continued volume growth for EREVs, but rather that the EREVs that survive will be those with large batteries.
However, the closer large-battery EREVs get to BEVs, the harder it becomes to refute the "transitional technology" argument. When an EREV carries an 80 kWh battery, utilizes 800V fast charging, its difference from a BEV is merely an engine that remains silent most of the time. The reasons to pay for this engine are disappearing across one price segment after another, with the only domestic segment still holding firm being the above-300,000-yuan bracket.
Particularly as new technologies like solid-state batteries mature and address the pure electric range bottleneck caused by excessive vehicle weight, the high-end market may further shift from EREVs to high-performance BEVs. For EREVs, the distinction between them and BEVs could be further eroded.
Another outlet lies beyond China's borders. CPCA data shows that in May, the proportion of EREVs within NEV exports rose to 4.4%, up from 2.0% a year ago. Calculated accordingly, EREV exports in May were approximately 19,000 units, quietly absorbing about 20% of EREV wholesale volume.
The most convincing move comes from Li Auto itself: the company, which has shifted its domestic focus to BEVs, disclosed during its Q1 earnings call that it has signed agreements with dealers in Saudi Arabia and the UAE. It plans to enter the Middle Eastern market in the third quarter with its L-series EREV lineup, with the first model being an overseas version of the new L9 customized for local charging conditions. In regions with sparse fast-charging networks, "anxiety prevention" remains a critical need.
However, this export channel currently cannot fully cushion the domestic downturn. If exports are stripped from wholesale figures, the actual domestic decline for EREVs in May would be even steeper.
The schedule for the second half of the year is already full. In the third quarter, Li Auto's overseas L9 will head to the Middle East, the EREV version of the Leapmotor D19 will ramp up deliveries, and Xiaomi's first EREV SUV is also expected to debut.
Expectations in the supply chain for the second half are also high. Dong'an Power stated in mid-May that a major client has a product launching in the second half, and the company is preparing capacity, expecting a significant year-on-year increase in range extender production for the full year. This range extender supplier did not reveal the client's identity, but no one prepares production lines in advance for a market they are pessimistic about.
The seat left by Li Auto remains empty for now. In the second half of the year, the first contender to reach for it will emerge.
Comments