Summary of Key Points
Range-extended vehicles (REVs) were once extremely popular from 2021 to 2025, offering the advantage of being able to use both fuel and electricity to address the concerns of limited battery range in electric vehicles, making them a sought-after option in the new energy market. Companies like Li Auto rose to prominence thanks to REVs, while Wenzhijie established itself in the luxury segment. Even Volkswagen, which had previously criticized REVs, launched the ID.ERA9X. However, 2026 has seen a sharp turnaround: sales of REVs declined by 13.1% year-on-year in the first half of the year, with a particularly steep drop of 25.2% in June, making them the only category among the three main new energy vehicle segments to experience a decline. The primary reason for this shift is Li Auto's transition to all-electric vehicles, as the proportion of REVs in its sales dropped from nearly 100% last year to less than 30% in May this year. Other factors contributing to this trend include reduced concerns about battery range, the loss of cost advantages over electric vehicles, and the diminishing impact of policy incentives.
In the future, REVs will not disappear completely but are likely to survive only in specific scenarios such as MPVs, mid-to-large SUVs, and areas with limited charging infrastructure. The so-called "super REVs" (with large batteries and fast charging capabilities) may actually undermine their value, leaving them with a limited time to thrive.
I. From a Boom to a Decline: The Rise and Fall of Range-Extended Vehicles
The period from 2021 to 2025 was the golden age for REVs. According to data from the China Association of Automobile Manufacturers (CAAM), sales of REVs surged by 218% year-on-year, reaching 1.235 million units in 2025, accounting for over 10% of the new energy market. Models like Li Auto's L series and Wenzhijie's M7/M9 were extremely successful, with companies such as Xpeng, Zhiji, and Xiaomi also entering the market. However, 2026 has been a turning point: sales in the first half of the year dropped by 13.1%, and in June, they plummeted by 25.2%, the largest decline in nearly five years. The situation on the product side is even more dire; in May, only three REVs sold over 5,000 units per month, with Wenzhijie's M9 being the only REV model in the top ten new energy vehicle rankings.
The most significant factor is Li Auto's shift to all-electric vehicles. In May, of the 33,000 vehicles delivered by Li Auto, only 22,900 were REVs (less than 30%). This single change by Li Auto contributed more than 90% of the overall decline in REV sales.
II. The Three Main Factors Behind the Decline of REVs
The decline of REVs is not accidental but results from the combined effects of three factors:
1. Reduced Concerns about Battery Range
The main advantage of REVs was their ability to overcome the limitations of electric vehicles, such as short range and difficulty in charging. However, with the current mainstream electric vehicles having a range of over 600 kilometers and the widespread adoption of 800V high-voltage charging systems, fast charging can replenish the battery by 300 kilometers in just 10-15 minutes. There are now over 5 million public charging stations nationwide, with fast charging coverage exceeding 98% in highway service areas, even reaching nearly full coverage in third- and fourth-tier cities. As charging becomes more convenient, the need for REVs as a backup option (similar to using a portable charger) is diminishing.
2. Loss of Cost Advantages
Previously, the cost of batteries was higher, making REVs cheaper than electric vehicles. However, battery prices have dropped significantly, narrowing the price gap between the two. More importantly, the ongoing costs of using an electric vehicle—about 1,600-2,400 yuan in electricity fees per year for users who drive 20,000 kilometers—outweigh the cost savings from REVs (which include fuel and maintenance expenses). Additionally, gasoline prices have risen by 23.5% year-on-year in May, further eroding the cost advantage of REVs.
3. Diminishing Policy Incentives
In July 2026, the Ministry of Finance and other authorities announced that starting from 2027, REVs will be subject to the same vehicle and vessel tax as fuel vehicles (while electric vehicles are still exempt). Although the tax amount is relatively small (e.g., 360 yuan per year for a 2.0L engine), this signals the end of policy support for REVs, reducing their competitiveness.
III. Who Will Still Buy Range-Extended Vehicles?
REVs will not disappear entirely but will only survive in certain scenarios:
1. MPV Users: These vehicles are designed for carrying multiple passengers on long journeys, and the need for a backup power source is particularly important. For example, 60% of ZeroRun D99 MPV orders are for REV models.
2. Long-Distance SUV Users: They use electric mode for urban commuting and occasionally switch to fuel mode for longer trips. Models like Li Auto's L series and Xiaomi's upcoming SKYNOMAD (a large SUV with a length of 5.2-5.3 meters) target this group, offering users a sense of security.
3. Users in Areas with Limited Charging Infrastructure: These include rural areas in the northwest and southwest, as well as cold regions in the northeast where electric vehicle range is reduced. In such areas, REVs remain a necessary option due to limited charging facilities.
Zhu Jiangming, the chairman of ZeroRun, mentioned that 60% of their MPV orders are for REV models because users need a reliable power source for long journeys. Li Auto also noted that 65% of their customers do not have home chargers, and with fast charging costing only 0.3 yuan per kilometer compared to 0.5 yuan for fuel, the difference in cost is not significant, indicating ongoing demand for REVs.
IV. Super Range-Extended Vehicles: A Lifesaver or a Speeding Up of Their Obsolescence?
Automakers are developing "super REVs" with large batteries and fast charging capabilities (e.g., Li Auto's high-range batteries and ZeroRun D99's 80.3 kWh battery, providing a range of 480 kilometers on electric mode). The idea is to allow users to drive mostly in electric mode and only switch to fuel mode in rare situations. However, this may accelerate the decline of REVs:
- Higher Costs: The additional components (engine, generator, fuel tank, etc.) for REVs increase their cost by 15,000-25,000 yuan compared to electric vehicles. For example, while a 100-kWh battery in an electric vehicle costs less than a 80-kWh battery in a REV, the additional components in a REV raise the overall cost.
- Reduced Use of Range Extenders: With larger batteries, users are more likely to prefer using electric mode, reducing the need for range extenders and potentially leading to lower demand for these components.
The ultimate outcome of super REVs may not be to enhance their popularity but rather to diminish their role, turning the engine from a core power source into a backup option. As electric charging infrastructure improves, the value of range extenders will decrease.
V. The Future of Range-Extended Vehicles
REVs will not disappear from the market but will become more niche:
- Higher Prices: They will likely be priced higher, as the cost of dual systems (electric and fuel) reduces profit margins, making them competitive only in more expensive vehicles.
- Limited Survival Time: The duration of REVs' popularity depends on two factors: the expansion of fast charging infrastructure and users' willingness to pay for the extra convenience. With faster charging network development and declining demand for backup options, the time left for REVs is limited.
Xpeng's entry into the REV market in 2026, amidst a surplus of models (with 21 new REVs launched in the first half of the year), highlights the challenges they face in a saturated market. It’s no wonder some say, "REVs are on their way out, and now Xiaomi is joining the race."
In summary, the golden age of REVs has passed, and they will likely play a minor role in the new energy market, rather than being a dominant force.