Chinese Plug-in Hybrids Surge 368% in Europe Amid Changing Market Dynamics

In the first quarter of 2025, a noticeable transformation is taking place on the streets of Europe, with an increasing number of plug-in hybrid vehicles (PHEVs) in circulation. In the UK, a 30-year-old mother recently purchased a plug-in hybrid MG HS, stating, “It’s affordable, and I don’t have to worry about running out of battery for my commute.” Such choices were uncommon a few years ago, but now PHEVs are becoming the “preferred alternative” for many European families.

Policy Changes and Chinese Brands’ Resilience
In October 2024, the EU imposed a staggering 45.3% anti-subsidy tariff on Chinese electric vehicles, causing hesitation among several Chinese car manufacturers. However, just two quarters later, instead of retreating, they responded with a combination of powertrains, leading to a remarkable rebound. In the first quarter of 2025, Chinese automotive brands recorded a significant resurgence in the European market. According to preliminary statistics from the market research firm Dataforce, registrations of Chinese vehicles in Europe reached 148,096, marking a 78% year-on-year increase. This growth is particularly striking amid a largely stagnant European automotive market, where overall new car registrations were nearly flat, with a year-on-year market share decline of 0.2%.

Simultaneously, data from the European Automobile Manufacturers Association (ACEA) indicated that new car sales in Europe totaled 3.382 million units in the first quarter, reflecting a slight decline of 0.4% year-on-year. Several major manufacturers, including Stellantis, Hyundai, Toyota, and Nissan, experienced a drop in sales. In contrast, SAIC Motor Corporation achieved a notable 33.5% year-on-year growth with 78,505 units sold, particularly impressive given that they sold 22,296 new vehicles in March alone, a staggering 74.4% increase compared to the previous year.

Among Chinese automotive brands, MG remains the most popular, with BYD closely following. In the first quarter, BYD’s sales surged nearly fourfold to 27,365 units. Meanwhile, Chery, which was relatively unknown last year, has also seen remarkable growth with its Omoda and Jaecoo brands, jumping from 413 to 15,663 units, making it one of the fastest-growing emerging players.

Chinese brands’ sales of PHEVs skyrocketed by 368%, with market share increasing from around 5% to 14%. The combined market share of hybrid and gasoline vehicles rose from 44% in 2024 to 47%. Notably, the overall market penetration of Chinese brands has improved significantly. In the same period last year, their market share stood at 2.5%, but by the first quarter of 2025, it had climbed to 4.5%. This growth is particularly evident in Southern European countries and Luxembourg, where awareness and acceptance of Chinese cars among local consumers are on the rise, reflecting an increasing interest in cost-effectiveness and new energy technologies.

From Marginal to Mainstream
The rapid growth of Chinese car manufacturers in Europe is no coincidence, as it results from multiple factors working in concert. Firstly, the diversity of product offerings and the ability to adapt quickly have been crucial to their success. In response to the EU’s electric vehicle import tariffs, companies swiftly adjusted their product structures by increasing the availability of PHEVs and hybrid models, successfully navigating policy restrictions while expanding their market presence.

Secondly, price competitiveness remains a potent weapon for Chinese brands. A survey conducted by the market research firm Escalent among 1,600 consumers in France, Germany, Italy, Spain, and the UK revealed that 72% of new car buyers believe Chinese cars should be cheaper than traditional brands. One-third of respondents indicated they would consider purchasing a Chinese brand if it were 11% to 20% cheaper than mainstream options, and 10% of consumers would be swayed by even a 10% price difference.

However, the rise of Chinese manufacturers is no longer solely about being “cheap.” In recent years, brands like MG and BYD have made significant advancements in design, features, range, and technology, gradually shedding the stereotype of “cheap imitations.” For instance, models like MG’s ZS and BYD’s Seal U not only match the functionality of mainstream European brands but also enhance their credibility through localized strategies that improve after-sales service and customer experiences.

Additionally, brand marketing and perception are evolving. Since 2016, MG has sponsored Liverpool in the Premier League; earlier this year, they secured a partnership with Bayer Leverkusen in the Bundesliga; and in July, MG returned as a principal sponsor at the Goodwood Festival of Speed, succeeding Porsche.

Chinese brands also resonate well with younger European consumers. Surveys indicate that 19% of individuals under 35 would consider a Chinese brand even without significant price advantages. These younger buyers have higher demands for smart cockpits, in-car entertainment systems, and advanced driver assistance features, which are strengths of Chinese brands.

Challenges Ahead
According to industry observers, the surge in PHEVs represents a tactical response to policy gaps and reflects a strategic adjustment based on a deep understanding of the European market structure. For Chinese manufacturers that have weathered the storm and found their rhythm, this might not just be a temporary fix but a pathway to global competitiveness. However, maintaining vigilance is essential. The recent success of Chinese brands in Europe is just a phase; the real competition is just beginning.

Under the latest EU emissions regulations, by 2025, the average CO₂ emissions of each car manufacturer must comply with their respective targets. For example, MG’s target is 95.7 g/km, yet their actual emissions in the first quarter exceeded this by 15 g/km. Chery’s situation is even more critical, with fleet emissions exceeding the standard by 47 g/km, far beyond the required 94 g/km.

The low sales proportion of electric vehicles significantly contributes to these excess emissions. Reports suggest that MG’s battery electric vehicle (BEV) sales account for only 13%, while Chery’s Omoda and Jaecoo combined only represent 6%.

To mitigate risks, some companies are opting for a Carbon Pooling strategy. MG has hinted at reducing the proportion of gasoline vehicles and sharing emissions quotas with other manufacturers to avoid penalties. BYD is also in discussions with European partners to join a carbon pool, having achieved a total carbon emission level 80 g/km below their target in the first quarter, placing them in a favorable position to potentially profit from selling carbon credits.

Currently, companies like Volvo, Polestar, and Smart have formed a carbon pool with Mercedes-Benz, while Tesla has become a carbon partner for manufacturers like Stellantis, Toyota, and Mazda. For brands like MG and Chery, which are still teetering on the edge of compliance, finding suitable partners will be a critical step towards success in the coming years.

As one industry observer noted, “PHEVs are a stopgap measure; in the long run, local manufacturing and a higher proportion of pure electric vehicles will be essential.” Presently, BYD is actively advancing its new factory in Hungary, slated to commence production in 2026; Chery is negotiating assembly line projects in France and Italy; and SAIC MG also plans to establish a factory in Europe.