Summary of Key Points
The extended-range vehicle (ERV) segment is experiencing a stark contrast in market trends: on one hand, sales have been continuously declining (a 25.2% year-on-year decrease in June, making it the only new energy vehicle category to show a significant decline), with even the once-dominant brand Li Auto accelerating its shift to all-electric vehicles; on the other hand, numerous automakers are entering the market (Volkswagen, Xiaomi, Toyota, and others have all launched ERVs). The underlying reason is that the core advantage of ERVs—solving range anxiety—has diminished due to improvements in electric vehicle range and more extensive charging infrastructure. However, for joint-venture companies under pressure to transform, ERVs represent a low-cost and quick entry into the new energy market. For brands like Xiaomi, ERVs serve as a tool to meet the needs of family users. At the same time, ERVs are evolving towards higher-end models with larger batteries and an international focus, but the era of easy profit-making is over.
Why Have ERVs Suddenly Become Less Popular?
The decline of ERVs is essentially due to the erosion of their core competitive advantage:
1. Li Auto Can No Longer Lead: Li Auto once relied on its ERV L series for 90% of its sales, but now it has shifted to all-electric vehicles (with the i6 accounting for 70% of total sales in June), resulting in a 26,000-unit decrease in ERV sales year-on-year, which accounts for 80% of the overall decline in the ERV market.
2. Electric Vehicles Are Becoming More Adequate: Electric vehicles now typically have a range of 400-500 kilometers, and charging facilities at highway service areas are available with 98.8% coverage. Fast charging can replenish 300 kilometers in just 10 minutes—previously, the need for ERVs was due to concerns about running out of battery, but these issues have been resolved.
3. Economic Advantages of Electric Vehicles Overweight ERVs: ERVs require maintenance of the engine (similar to fuel vehicles), whereas electric vehicles do not. Additionally, ERVs have dual systems (battery and range extender), leading to higher failure rates and repair costs. Consumers are voting with their wallets; in June, ERVs accounted for only 6.4% of the new energy market, making them a niche product.
Why Are Automakers Still Entering the ERV Market Despite Poor Sales?
The reasons vary among automakers, but they all make practical decisions:
1. Joint-Venture Brands: A Last Resort for Transformation: Companies like Volkswagen and Toyota once dismissed ERVs as the worst option, but now their fuel vehicle sales are being eroded by domestic new energy players like BYD, and there are no breakout electric models. Since ERV technology shares similarities with fuel vehicles (e.g., engines), the development threshold is lower, investment required is less, and time to market is faster. For example, the Volkswagen ID.ERA 9X ERV version sold 3,017 units in June, becoming the top-seller in Volkswagen's new energy lineup.
2. Xiaomi: Filling a Product Gap: Xiaomi's current electric vehicles focus on performance and handling (SU7/YU7), but family users require more space and comfort. The newly launched “Pengcheng” ERV series (such as the N90 full-size SUV) aims to fill this gap, using a separate brand to avoid confusing consumers about its electric nature. ERVs also offer flexible pricing options (e.g., adding camping kits to boost premiums), which electric brands cannot achieve.
How Have ERVs Changed?
ERVs are no longer pursuing low-cost competition; instead, they are moving towards higher-end models with larger batteries:
1. Rising Prices: In June, ERVs priced over 200,000 yuan accounted for more than 65% of sales, with average prices rising against the trend. Due to the dual power systems, material costs are high, necessitating higher prices. Models like the Li L9 and WM9 are priced above 300,000 yuan, representing the brand's premium offerings.
2. Larger Batteries: By 2024, the average range of ERVs and electric vehicles is expected to reach 140 kilometers, with some models (such as the Leapmotor D19) reaching 400-500 kilometers, on par with electric family cars. However, larger batteries also increase vehicle weight; for example, the Zhiji LS6 ERV version weighs 80 kilograms more than its all-electric counterpart, leading to higher energy consumption.
3. Bigger Sizes: Mainstream ERVs are large SUVs that can accommodate both systems and provide ample space for family users, which is why they are still accepted in the high-end market.
The Future of ERVs: Survival Through International Expansion?
Although the ERV market is shrinking domestically, there is an alternative: international expansion.
1. Strong Overseas Demand: From January to June this year, ERV exports grew by 233.5% year-on-year, outpacing electric (104.9%) and hybrid (153.9%) vehicles. Regions with underdeveloped charging infrastructure, such as Southeast Asia and the Northeast, benefit from ERVs' flexibility in using both fuel and electricity.
2. Challenges Remain: High costs mean that only through higher-end offerings and international expansion can ERVs reduce their expenses, but competition will become increasingly fierce. Companies like Leapmotor and Li Auto are already expanding overseas, with joint-venture brands likely to follow suit. The era of easy profits is over; survival requires genuine competitiveness.
Conclusion
The story of ERVs is not over, but they are no longer the solution to all new energy challenges. For automakers, they serve as a transitional option for transformation; for consumers, they are only worth considering in scenarios where charging facilities are limited. In the future, ERVs will either need to establish a foothold in the high-end market or find new opportunities overseas—otherwise, they may gradually be replaced by all-electric vehicles.