As global automakers announced plans to launch Extended Range Electric Vehicles (EREVs) to overcome the electric vehicle chasm, focusing on the Chinese and North American markets, attention is turning to whether Europe will also emerge as a new sales outlet. The European Union (EU) has mandated that, after 2035, only zero-emission vehicles may be sold. Automakers are pushing EREV as an alternative to electric vehicles, which are struggling with sales.
An EREV refers to a vehicle where the electric motor is the main power source. It does have an engine, but it is only used to generate power for charging the battery. This differentiates it from a Plug-in Hybrid Electric Vehicle (PHEV), where the engine is the primary power source and the battery is the secondary one. EREVs have more than twice the driving range of hybrids and lower manufacturing expenses due to a smaller battery capacity.
The rising interest in EREVs in Europe is due to these advantages. Recently, electric vehicle sales in Europe have been sluggish. According to the European Automobile Manufacturers Association (ACEA), electric vehicle sales in Europe reached approximately 2 million units in 2022 and 2.4 million units in 2023, but dropped to about 1.9 million units last year. In the first quarter of this year, electric vehicle sales totaled over 412,000 units, which is half the number of hybrid vehicles sold (964,000 units).
The number of companies selling EREVs in Europe is increasing. Currently, companies selling EREVs in Europe include Japan's Mazda and China's Reev Motor. Mazda has launched the EREV model of its electric sports utility vehicle (SUV) MX-30, while Reev Motor is selling the EREV model of its mid-sized SUV C10.
Volkswagen, which has the highest sales in Europe, has also announced plans to introduce EREVs in Europe starting in 2026. Oliver Blume, Chief Executive Officer (CEO) of the Volkswagen Group, unveiled the company's EREV concept vehicle last month in Shanghai, stating that "it could be an attractive technology in Europe." Additionally, Stellantis, which has the second highest sales, has launched the EREV large pickup truck RAM 1500 Ramcharger in North America.
In Europe, it will be prohibited to sell vehicles emitting carbon dioxide after 2035, and EREVs are currently also subject to regulations. The automotive industry is calling for a relaxation of the regulations on EREVs. European automotive manufacturers are struggling due to competition from countries like China, raising the possibility of regulatory relief.
The expansion of the EREV market in Europe could present new business opportunities for domestic corporations. Hyundai Mobis plans to supply battery systems (BSA) to Volkswagen starting in 2026. The BSA includes control devices and other electronic components to ensure that batteries operate safely and efficiently in electric vehicles. High-capacity, efficient battery systems are core components that determine the quality and performance of electric vehicles. Hyundai Mobis has been developing components for EREVs that Hyundai Motor will launch in North America since last year.
Hanon Systems, which supplies thermal management air conditioning systems for electric vehicles to German automakers like Volkswagen, BMW, and Mercedes-Benz, has previously supplied electrification-related components to Volkswagen's electric vehicle platform and can supply EREV components to Volkswagen. A Hanon Systems representative said, "We have a local research institute in Germany, so we can adequately respond to demand."