Between 2021 and 2023, global car brands announced a total of €265 billion in investments toward electric vehicles, batteries, and charging technology. For many automakers, these plans were made assuming that battery electric vehicles (BEVs) would supplant hybrid and pure-combustion cars.
But hybrids aren’t being supplanted by BEVs—in fact, they’re thriving as a category. According to the International Energy Agency, global BEV sales achieved an impressive 13.7% growth rate in 2024, to 10.8 million units worldwide. At the same time, plug-in hybrid electric vehicle (PHEV) sales rose by a colossal 54.8%, to 6.5 million units.
The surging demand for hybrids suggests they’ll coexist with BEVs for many years to come. But if this is the case, what should automakers do with the roadmaps they made assuming the future was BEV-only? Given the sheer amount of money at stake, it’s not possible to walk back and write down these commitments. And, for the sake of the planet, we shouldn’t squander this generational opportunity to electrify and bring down global vehicle emissions.
Automakers’ conundrum
Earlier this year, my company proposed a solution at the Shanghai Auto Show. While it might sound counterintuitive, we genuinely believe it’s the best path to facilitate BEV innovation and adoption, while also bringing down global emissions. The auto industry should be turning their BEV models into hybrids.
To understand where I’m coming from, we need to place this moment in the historical context of the automotive industry. And that context is the widespread assumption among automakers that the car market will converge toward one powertrain category.
It doesn’t matter what exactly the model is. In the 20th century, it was the internal combustion engine (ICE); until recently, it was believed it would be BEVs in the 21st century. But the assumption was that virtually all mass-market cars would have the same powertrain architecture.
The reason? Complexity. Different powertrain systems require different parts and raw materials. They require different sets of expertise to design, optimize, and install. And they need different facilities and processes to manufacture.
So, if an automaker wants to offer more than one powertrain category, then it needs to multiply its production footprint. Which means multiplying many of its costs and forcing it to focus its energy on under-the-hood systems that tend not to get noticed by consumers.
The above is sound supply-side logic. But it doesn’t match today’s market reality, in which the desire for combustion and hybrid models is far stickier than expected. Rather than being a brief transitional step, hybrid vehicles are set to remain a major fixture of global vehicle sales for decades to come. By 2035, cars with a combustion engine will still represent at least half of global vehicle sales.
Brands now have a problem. If they want to cater to this persistent demand for hybrid and combustion cars, then they’ll need to cannibalize their investment and resources for BEV development and production. But if they don’t cater to this demand, they won’t be able to sell enough models to meet their revenue and sales targets.
Rethinking ‘hybrid’ vehicles
There is a third option, and it comes from challenging the current reality in the industry—that BEV and hybrid cars each need parallel production processes. Is it possible to do away with this?
BEVs and hybrids are shaped differently. This is because a BEV powertrain can enjoy a range of space efficiencies by doing away with the combustion engine, radiator, and supporting mechanical components in the front compartment. As a result, BEVs can be shorter, sleeker, and more aerodynamic than their combustion counterparts.
Because of this, the “hybridization” of cars has pretty much meant one thing: turning ICEs into hybrids by adding electrical systems. Only ICEs, the thinking went, would have the space and shape that would allow powertrain components to be rearranged. As a result, the industry has come to accept that hybrid platforms are fundamentally different from BEV ones, and so they need different assembly lines and supply chains.
What automakers need is a solution that allows them to produce both BEVs and hybrids without the need for parallel production. That means a shared platform and frame across powertrains, which can then be inserted in during vehicle assembly. But, until now, that’s suggested doing away with dedicated BEV platforms—with the aerodynamic and energy efficiencies they bring, along with all the investment that’s gone into developing them—and simply using something more like hybridized ICE cars as a foundation to build both BEVs and hybrids.
However, it is possible to go the other way—if we treat the hybrid powertrain not as a series of systems (engine, motor, transmission) that must be integrated and packaged by an automaker, but instead as a ‘plug and play’ system. We can instead develop integrated hybrid powertrains that fit in the shorter front compartments of BEVs—or, in short, we can turn them into hybrids.
At the Auto Shanghai this year, my team at Horse Powertrain debuted just a solution: a “future hybrid concept” that we plan to launch in 2028. It’s a combined engine, motor, and transmission in a tight block—for the first time, a hybrid powertrain that’s compact enough to fit in the front compartment for a BEV. This allows automakers to use their BEV models as foundations for hybrid models with minimal extra cost.
A counterintuitive approach
Hybridizing BEVs sounds extremely counterintuitive. But it’s the ideal solution for OEMs. It allows them to continue to go all-in on BEV investment and innovation, while still offering hybrid models with minimal additional expense. And it allows some much-needed breathing space to perfect BEV technology and prove its long-term viability to consumers, all while still meeting market share and sales targets. By allowing higher volumes of BEV platforms to be sold in hybridized form, OEMs can more rapidly amortize their investment in the technology and iterate on their model line-ups.
This approach will bring more ICE and hybrid drivers into the BEV ecosystem. Hybridized BEVs can retain key qualities that make pure-electric vehicles so pleasant to drive, like smooth handling or optimized noise and vibration. By exposing motorists who’d not otherwise buy a BEV to these positives, hybridization can help grow the total market for BEVs.
For the sake of the planet, BEVs need to be the foundation for next-generation mobility. Through hybridizing them, we’re allowing BEVs to be just that. Rather than a step back, hybridizing BEVs is a big moment in enabling their widespread adoption, since it eliminates the trade-off automakers currently need to make between BEV investment and their commercial goals.
Matias Giannini is the CEO of Horse Powertrain.
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
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