Climate-neutral mobility of the future will be overwhelmingly battery-electric—and the figures show that sales of battery-electric cars have picked up even more momentum this year. This is a welcome development! However, the truth is also that the charging infrastructure is insufficiently developed in many areas and charging prices are generally far too high. This applies not only to Germany, but even more so to most European countries. For example, Hamburg alone has more charging points than Bulgaria or Slovakia.

PHEVs bridge the gap between climate-friendly mobility and the desire for robust everyday usability. They allow consumers to drive fully electric on shorter journeys—whether it's the commute to the office, the trip to school, the sports club, or to the next village. And they can continue driving even if the next charging station is too far away. Where the electric range and power are insufficient, the conventional drive system can engage.

Stricter regulations cause several problems

This drive concept is proving popular with consumers. Between January and July 2025, PHEVs accounted for around 38% of all new electric vehicle registrations in the EU. The German automotive industry has a strong presence here; its share of new PHEV registrations during this period was 57%.

However, the attractiveness of these vehicles could decline noticeably in the coming years, as the European Union plans to tighten the so-called utility factor in several stages. This factor describes the ratio of electric to combustion engine use. With this regulatory tightening, the Commission intends to apply a different metric to vehicle usage, taking into account past customer data. The problem: With this measure, the EU risks making the vehicles less attractive to both consumers and manufacturers, and weakening public acceptance of the transformation.

The mechanism works as follows: If the car is running on its combustion engine, CO₂ emissions are calculated based on fuel consumption. If the car is running on electric power, CO₂ emissions are assessed as zero grams for fleet regulations. A PHEV with a utility factor of 1 means it operates 100% of the time electrically. A utility factor of e.g. 0.3 means a PHEV operates 30% of the time electrically. The lower the utility factor, the lower the proportion of electric driving and the higher the CO₂ value. The utility factor thus indicates how well PHEVs contribute to achieving manufacturers' climate and fleet targets. A tightened utility factor implies a lower proportion of electric driving, and the vehicles' CO₂ value worsens.

In the context of the planned review of CO₂ fleet regulations for passenger cars and light commercial vehicles, the German Association of the Automotive Industry (VDA) advocates for a number of flexibilities—including suspending the tightening of the utility factor. Instead, industry and policymakers should jointly develop sensible incentives and measures to specifically increase the electric driving share of plug-in hybrids.

To be clear: The majority of PHEV owners use their vehicles as designed – primarily for electric operation, with the combustion engine serving as a supplement. However, usage data also shows that some PHEVs are not yet being driven sufficiently in electric mode. The automotive industry itself is working on numerous solutions to improve this.

One concrete approach: Within a certain mileage range, the battery must be charged to a specified percentage at least once. In this case, the vehicle would alert the driver to the mandatory charging process through increasingly intense visual or audible warnings. If this charging process is not carried out, the system's performance will be noticeably reduced after a certain time delay—without affecting driving safety. This measure therefore explicitly applies to those who operate their PHEV exclusively using the combustion engine.

A range of displays in the vehicle are also conceivable – including information on the electric driving percentage or charging frequency. This additional information could incentivize drivers to use electric power more often.

PHEVs are central to the decarbonization of road traffic

PHEVs are aimed at drivers who primarily use electric power in their daily lives but occasionally need to cover longer distances and therefore rely on the added safety of a combustion engine. PHEVs are thus already making a significant contribution to the ramp-up of electromobility and the climate-neutral mobility of the future. At the same time, it's true that the typical PHEV is driven predominantly on electric power in practice—being its strength. The vast majority of everyday journeys can be completed purely electrically, without placing undue strain on the power grid and with significantly smaller, resource-efficient batteries than in pure electric vehicles. For longer journeys, such as vacations or highway trips, the combustion engine is readily available. The PHEV thus combines the best of both worlds: a high proportion of electric driving in everyday life and range flexibility when needed.

This illustrates that there are a multitude of mobility needs, for which corresponding solutions must be available. Therefore, the full spectrum of drive technologies is required. This includes battery-electric vehicles as well as plug-in hybrids, range extenders, and vehicles powered exclusively by renewable fuels.

➡️ The strength is precisely this diversity of drive systems to achieve climate protection goals as quickly as possible.

Besides the drive technology, the energy source is also crucial. This means we need to ramp up renewable energy sources as well as expand the necessary infrastructure—that is, the corresponding expansion of the grids and the refueling and charging options. Likewise, the costs of public charging must be attractive. Only this way a lasting incentive for more frequent charging will be created.

PHEVs are crucial for industrial policy value creation

PHEVs will continue to play a significant role worldwide. Strengthening and ensuring a long-term perspective for the contribution of PHEVs to climate protection would help retain billions in investment in Europe, stabilize production sites, and secure jobs for the long term. We must not forget that PHEVs represent the entire industrial competence chain of Europe: batteries, power electronics, electric motors, combustion engines, transmissions, and software. In other words, plug-in hybrids secure substantial investments and jobs along all stages of the value chain, particularly for medium-sized suppliers. We should continue to leverage this potential.

This urgently requires a clear regulatory perspective from policymakers, which could be based on other major markets—for example, China and the original regulation in California.