Global Hybrid & Electric Vehicles Report

Report Overview

Regulatory Support Driving Rapid Gains for Both Hybrid and Electric Vehicles

Battery electric vehicles will account for the majority of global HEV sales gains through 2030, but hybrid vehicles will also continue to achieve strong growth. Challenges with meeting ambitious emissions reduction targets will allow regulatory support for transitional hybrid vehicle technologies to persist longer than was expected in the early 2020s.

Key Themes Covered in this Report:

• EU market development amid 2025-2026 regulatory uncertainty
• US supplier responses to dwindling EV subsidies
• Impacts of Chinese automaker expansion into foreign markets

Featuring 128 Tables & 81 Figures!

Global demand for hybrid and electric vehicles is forecast to increase 15% per year to 66.8 million units in 2030. Growth will be driven by ongoing technological advances and continued emphasis on motor vehicle fleet emissions reductions worldwide.

European Market Advancing Despite Policy Uncertainty

Following a brief slowdown in 2024, European HEV markets have resumed posting rapid growth, with strong gains throughout 2025 continuing into 2026. However, the 2024 market slowdown intensified concerns about the feasibility of the region’s EV adoption targets, leading to the December 2025 announcement of a proposed softening of regulatory targets. While the new regulatory framework has yet to be finalized, it is expected to include revisions such as replacing the 2035 target of ending new ICE vehicle sales with a target of 90% emissions reductions compared to 2021 levels.

The new framework for 2035 allows automakers significantly more flexibility, and possible compliance strategies include both heavy focus on fully electric vehicles and more mixed approaches involving both EVs and hybrids. While the regional HEV market is expected to expand rapidly in all cases, the fleet structure within the HEV space carries considerable uncertainty.

US Automakers Pivoting Amid Regulatory Retreat

The US electric vehicle market suffered a significant blow in 2025, when key subsidies promoting EV adoption were ended under the Trump administration. US EV sales plummeted in the final months of 2025, and while this segment began to recover in 2026, it is expected that quarterly EV sales could take 18 months or more to again reach the levels seen immediately prior to subsidy expiration.

In the face of waning policy support, US-based automakers have announced major cancellations of planned EV launches, accepting heavy restructuring losses. However, these companies have announced a wide variety of new hybrid vehicle launches, even as they have stepped away from EVs.

EREV Subsegment on the Rise

Extended-range electric vehicles (EREVs) are a subsegment of plug-in hybrids that offer a driving experience more similar to a true EV while retaining a supplementary ICE engine to expand range. Formerly a niche segment, these are seeing a surge in interest, particularly from US automakers pivoting away from fully electric vehicles. With range anxiety representing an especially significant market factor in the US, EREVs offer a promising avenue to continuing a more moderately-paced EV transition in the country.

Outside of the US, EREVs have a significant presence in China, but have yet to make an impact on European markets, as these products did not have a clear role to play under pre-2026 regulatory frameworks. However, greater flexibility under the EU’s updated policies could open the door to European adoption, with investment in product development for the American market creating possibilities for wider deployment.

Global Hybrid & Electric Vehicles Report Details

Leading Companies Driving Trends in the Global Hybrid & Electric Vehicles Industry

Historical Market Size & Growth Drivers

What Factors Impact Hybrid & Electric Vehicles Market Growth?

Since 2015, global demand for hybrid and electric vehicles has increased rapidly, with double-digit annual growth occurring in most years. Sales growth has been driven by ongoing technological advances, which have allowed these products to steadily improve in both cost and performance. Other factors driving growth in HEV demand include:

• increasing consumer familiarity with HEVs
• government regulatory support and incentives, at both the manufacturer and consumer level
• expansion of key supporting infrastructure, such as public EV charging stations

Demand for HEVs is also linked to broader trends in global motor vehicle sales levels, which can be volatile from year to year. While rising penetration of HEVs has typically offset any broader market downturns thus far, the correlation between trends in HEV sales and total motor vehicle sales will tend to increase over time as these products continue to gain market share.

All HEV types compete directly not only with conventional motor vehicles, but also with each other. Thus far, both hybrid and electric vehicles have tended to receive strong regulatory support, allowing for healthy growth in both segments. However, regulatory regimes in many markets – particularly in Europe – will shift over time toward supporting EVs exclusively, at the expense of hybrid vehicles.

What Causes Regional Variations in Hybrid & Electric Vehicles Use?

Global penetration of hybrid and electric vehicles varies sharply from country to country. Because HEVs carry significant price premiums over conventional ICE vehicles, demand is heavily concentrated in relatively high-income countries, while market penetration in lower-income countries remains very low.

HEV markets are also heavily influenced by governmental regulatory schemes, which can vary considerably from region to region. Most high-income countries maintain regulations supporting HEV usage to some degree, but these can vary in both aggression of adoption targets as well as the level of support for differing technologies within the HEV umbrella.

Consumer interest in HEVs is also influenced by cultural norms and attitudes around motor vehicle use. This is perhaps most clearly seen in the contrast between Europe and the US, with range anxiety – including concerns about the ability of EVs to be used on long road trips, or for towing or hauling – representing a significantly greater obstacle to EV adoption in the US market.

Global Hybrid & Electric Vehicles Report Scope

This study analyzes the global market for hybrid and electric vehicles by powertrain, vehicle type, and global region. Historical data (2015, 2019, and 2025) and forecasts for 2030 and 2035 are presented for demand, production, and net exports in thousand units.

Hybrid and electric vehicle demand is broken out by powertrain:

• hybrid vehicles
  • full hybrid
  • plug-in hybrid
• electric vehicles
  • battery electric
  • fuel cell electric

Demand is also segmented by vehicle type:

• light vehicles
• medium and heavy vehicles