AUTONEWS

China changes PHEV rules to "race" with Europeans

China has once again changed the rules aimed at controlling the plug-in hybrid (PHEV) market, imposing changes on electric-only range, but also limitations on combustion engines that take on the role of the main engine. According to Automotive News, German manufacturers feel this is a strategy to push them out of the market.

Vehicles equipped with plug-in hybrid powertrains emerged as a first step towards electric cars, as they allowed for short trips in electric mode, initially up to 50 km, before resorting to the combustion engine for longer trips, with the adoption of increasingly larger batteries increasing electric-only range. Like this strategy followed by Europe, China has also been increasing the capacity of PHEVs to operate in zero-emission mode, but not only that, in order to benefit from reduced taxes and tax incentives.

In 2025, China recorded more than 31 million vehicles sold in its domestic market. Among these, 39% were 100% electric and 24% PHEVs, with the latter being the second most important category when it comes to receiving incentives or enjoying more favorable rates. Originally, to access benefits, PHEVs had to offer a range of 43 km, a figure that in January 2026 evolved to 100 km, requiring larger batteries, making this type of vehicle more dependent on state aid to be competitive, since larger batteries correspond to higher prices.

Now, China is preparing to require PHEVs to offer a range of 160 km, which forces the use of even larger and more expensive batteries, far superior to those used in Europe, where 80 km is the target. Simultaneously, the Chinese authority intends to impose a minimum efficiency on the combustion engines that power PHEVs. This decision results in the end of the large V6 and V8 engines that some European PHEVs offer, whose fuel consumption is necessarily high, as are emissions.

Raising the bar for electric range, which requires larger batteries, as well as reducing the displacement and power of combustion engines to be more fuel-efficient, are mere details for Chinese manufacturers, but represent a definitive blow for foreign manufacturers, especially German luxury brands, which have obvious difficulties adapting to the new guidelines, as they are too far removed from European requirements. These manufacturers, which have a large presence among luxury market customers, believe that the changes to be introduced in the PHEV regulations are specifically designed to artificially exclude them from the Chinese market. This is ironic, since it was precisely the German brands that most vigorously fought for the softening of penalties for Chinese automakers entering the European market, fearing retaliation in their domestic market.

China’s latest taxation rules have raised the bar for plug-in hybrids, rewarding models that can travel much farther on electricity alone with more lenient bills. Previously PHEVs only need to achieve 27 miles (43 km) to qualify for discounts, Automotive News reports. From January of this year that threshold was upped to 62 miles (100 km). If you’ve been wondering why so many Chinese PHEVs now have a better electric range than EVs from a few years back, there’s your answer.

Western PHEVs were traditionally designed around small battery packs and modest electric ranges, and even the best of the current crop, like the Range Rover, can just about manage 75 WLPT miles (121 km). But many Chinese plug-ins now claim more than 100 miles (160 km) of electric driving before the engine ever needs to wake up.

Some can go many times further. The new Lotus Eletre hybrid promises a crazy 260 miles (420 km) on a charge thanks to a humongous 70 kWh battery. That’s on the optimistic Chinese CLTC cycle, but even on the European WLTP test, Lotus claims 217 miles (350 km). The Eletre is an EV turned into a hybrid, a popular Chinese strategy, whereas European brands prefer to build hybrids from ICE machines. But that could be changing.

The rule changes don’t just focus on electric range. Regulators have also tightened efficiency requirements when vehicles are operating on gasoline power alone, which isn’t great for PHEVs whose combustion fallback is a dirty great V8. Together, those changes have created an environment where many legacy plug-in hybrids – which are still desirable and offer tax advantages in Europe – suddenly look like yesterday’s technology.

That shift is having a dramatic impact on the market, Auto News says. Audi, BMW, Mercedes-Benz, Jaguar Land Rover and others have either drastically reduced or effectively eliminated their plug-in hybrid offerings in China. Models that once qualified for incentives no longer meet the latest requirements, making them much less attractive to buyers.

And soon they might be less attractive in the West, too. Chinese brands like Lynk & Co are already shipping their long range 08 SUV plug-ins to Europe, and Geely-owned Volvo’s new 112-mile (180 km) XC70 will eventually join them.