As sales growth of battery-electric vehicles (EVs) has slowed amid looming regulatory deadlines in the EU and the U.S., there’s an intermediary technology to ease customers’ range anxiety and cost concerns while still advancing the transition to full electrification: the extended-range EV.
Extended-range EVs use both a battery and small gasoline-powered generator. The generator recharges the battery on longer trips, removing range anxiety by giving drivers the option of using gas stations instead of public chargers on road trips. Unlike plug-in hybrids (PHEVs), which use both a gas engine and an electric motor to drive the wheels, extended-range EVs always power the wheels with electricity. This configuration can deliver a longer-electric only driving experience, up to 100-200 miles compared to the 20-40 miles typical for PHEVs. Very few Americans drive more than 200 miles on a typical day. Extended-range EVs by some estimates will operate on electric power 95 percent of the time.
Despite their strong sales momentum in China, extended-range EVs remain relatively unknown in the U.S. and Europe. Fewer than 20% of new car buyers in our forthcoming survey research indicated they were familiar with extended-range EVs. (The sample included more than 2,800 respondents from the U.S. and 2,300 from Germany and the U.K.) The Ram Charger 1500 from Stellantis should arrive later this year, and other models are planned, including a pickup and an SUV from Volkswagen’s Scout brand.
Building extended-range EV recognition among consumers in new markets is critical since extended-range models’ combination of electric driving and wider range addresses consumers biggest concerns about pure-battery EVs. Once they understand extended-range EV technology, cost-conscious buyers and drivers who can’t charge at home or live where public charging stations are scarce may embrace this new alternative. Additionally, extended-range EVs are cheaper to make than pure EVs, so they’ll be more affordable to consumers.
If focused on providing an electric range of ~150 miles, an EREV’s combined powertrain costs could be as much as $6,000 lower than BEV powertrain costs. In this example, we compared a fictitious 68kWh EREV variant with a 148kWh variant with NMC battery pack and do not include IRA subsidies.
The moment has come for car manufacturers to decide whether extended-range EVs are part of the solution for lower carbon emissions.
Extended-Range EVs vs PHEVs: What’s the Difference?
An extended-range EV is a mix of battery and internal-combustion engine technology. Unlike plug-in hybrids (PHEVs), which use a parallel electric motor and gas-burning powertrain configuration, an extended-range EV comprises a small ICE-powered generator that recharges the battery pack on longer trips. Without a mechanical connection between the engine and driven axles, the extended-range EV customer gets a longer “pure EV” mode experience.
Extended-range EVs and PHEVs are similarly versatile: both can be charged using standard EV charging stations, home chargers, and fast-charging outlets and refueled at existing gas stations. However, extended-range EVs can provide up to 100-200 miles of electric driving versus the 20-40 miles of electric range typically available with PHEVs. Unlike conventional hybrids, Extended-range EVs can often operate without emitting carbon dioxide.
Many consumers struggle to discern different hybrid powertrains, so automakers must focus on clear communication and customer education, which could include digital visuals of range and charging scenarios, myth-fact campaigns, and satisfied-customer testimonials. Explaining this technology in a practical, useful way can reduce anxiety around range, cost, and fuel usage and build understanding and trust.
Recently completed consumer research by McKinsey underscores the point. Fewer than 20 percent of U.S. and European consumers were familiar with extended-range EVs. But once they understood the basics, a sizeable segment (in some cases larger than for PHEVs or full-battery EVs) said they would consider an extended-range EV for their next vehicle purchase. Notably, most of these potential buyers previously considered purchasing a conventional gasoline or hybrid vehicle, indicating that extended-range EVs could convert more traditional vehicle owners to electric driving.
Strongest Case: Few Players, Big Range, Low Cost
Only a few extended-range EVs are available or announced for the global market: among these models, electric ranges are around 30-150 miles, and total ranges are around 400-800 miles. An electric range of 100-200 miles would meet most drivers’ daily commuting needs, which suggests an extended-range EV market sweet spot. There will be some carbon emissions when the gasoline engine kicks in to recharge. But Ford CEO James Farley said recently up to 95% of the miles driven in an extended-range EV will be all-electric and emissions-free.
Because the battery pack is the most expensive part of an electric car, extended-range EVs with smaller packs are cheaper to make. As mentioned above, a 68 kilowatt-hour extended-range EV can be made today for $6,000 less than an EV with a 148 kilowatt-hour battery pack. However, as battery costs continue to decline, the cost gap between battery-electrics and extended-range EVs will likely shrink. Extended-range EV production costs are expected to fall between costs for comparable gasoline and EV vehicles.
Under current regulation, EU emission targets require all new vehicles sold to be zero emissions by 2035, which means extended-range EV sales could continue in the region through 2034. Depending on development timelines, OEMs need to carefully consider whether this window will be sufficient to profit from the customer demand.
Unlike the EU, the U.S. has no zero-emissions requirement for new car sales. At the federal level, EPA standards tie compliance bonuses to electric driving ranges. California’s zero-emissions vehicle program mandates 100 percent electrification in new cars sold by 2035, but one-fifth of those vehicles could be PHEVs or extended-range EVs, and manufacturers could receive full credit for each vehicle with an electric range of at least 70 miles. With current regulatory environment uncertainty, extended-range EVs are a good bridge technology versus EVs and a cost-effective hedging approach for automakers.
The Bottom Line
A robust consumer education campaign will be essential for manufacturers that bring extended-range EVs to new markets. If differences between extended-range EVs, EVs, and PHEVs are apparent, new customers could embrace extended-range EVs, especially in the U.S.
Manufacturing challenges involve the need to integrate two power systems and supply chains – batteries and an internal combustion engine – into one vehicle. Although manufacturers have been doing this already with gas-electric hybrids and plug-in hybrids, EREVs will require a larger and heavier battery pack. The larger battery pack will increase demands on manufacturers’ supply chain for cell raw materials and require more complex and robust assembly systems.
The most critical consideration for manufacturers is whether they can bring models to the market while they’re still relevant for consumers. Every new powertrain choice requires significant investments in platform and component development and manufacturing. In Europe, it will be a narrower window because of regulatory mandates. The potential payoff will be lower if the shift to EVs happens more quickly, but with a fair number of unknowns in the current environment, EREVS are a very worthy consideration.
