Global Hybrid & Electric Vehicles

Scope of the Report:

This Freedonia Group report analyzes the scope, size, and growth of the global hybrid and electric vehicle market, including key trends in powertrains, vehicle types, and regions. Historical data are provided for 2015, 2019, and 2025 for demand, production, and net exports, with forecasts for 2030 and 2035. In addition, annual historical and forecast data is provided for selected time series. Data are provided in units. Also included is an analysis of key industry players and their global market share.

Abstract

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.

Key Trends

• European markets growing rapidly despite softening regulatory targets
• US automakers pivoting to EREVs as regulatory support weakens
• Chinese automakers aggressively targeting foreign markets
• Electric heavy truck deployment accelerating