In Depth: Hybrid Revival Gives China’s Carmakers a Leg Up on Western Rivals
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When Honda Motor Co. Ltd. and Sony Group Corp. pulled the plug on their Afeela electric vehicles (EVs) in late March, it landed as the latest sign that the auto industry’s EV revolution has hit a wall.
Honda cited “changes in the business environment” as it stepped back from its electrification targets, joining a growing list of global giants that have quietly done the same. Since October 2025, General Motors Co., Ford Motor Co., Stellantis NV and Porsche AG have all slowed their shift away from internal combustion engines, taking enormous financial losses along the way.
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- Honda-Sony cancel Afeela EVs; GM, Ford, Stellantis, Porsche slow EV shifts amid weak demand, slow charging, Chinese competition.
- Policy reversals: China cuts NEV rebates/tax exemptions; EU revises 2035 to 90% zero-emission; Trump revokes US EV mandates/credits.
- Hybrids surge: 38.7% Europe sales early 2026 (up from 34.5% 2025); Chinese firms invest in HEVs for efficiency/export edge.
1. Honda Motor Co. Ltd. and Sony Group Corp. canceled their Afeela EVs in late March 2026, signaling a stall in the auto industry's EV shift [para. 1].
2. Honda blamed changes in the business environment and retreated from electrification targets, following GM, Ford, Stellantis, and Porsche, who slowed EV transitions since October 2025, incurring major losses [para. 2].
3. Analysts cite weak EV demand, slow charging infrastructure growth, and Chinese undercutting of Western rivals as key reasons [para. 3].
4. Volkswagen CEO Oliver Blume stated late last year that combustion engine cars could persist 10-15 more years, with VW producing ICE, hybrids, and EVs concurrently [para. 4].
5. This trend reduces certainty of phasing out fossil fuel vehicles orderly [para. 5].
6. Chinese automakers like SAIC retained ICE and hybrids; in 2024, SAIC shared hybrid tech with VW and GM, inverting traditional tech flow from West to China [para. 6].
7. Policy shifts, not just tech, drive the change; in major markets, governments cut EV support, boosting hybrids (HEVs) from transitional to primary option [para. 7].
8. HEV rise advantages Chinese makers over Western firms that focused on full EVs [para. 8].
9. China's auto trade-in program now offers price-based rebates: 12% up to 20,000 yuan ($2,890) for NEVs, 10% up to 15,000 yuan for small-engine ICE cars, weakening NEV demand [para. 10][para. 11].
10. CPCA estimates average subsidies dropped 20%, hitting low-end models [para. 12].
11. NEVs now face 5% purchase tax (capped 15,000 yuan), ending prior exemption; execs pushed for this parity, as NEVs dodge fuel-based taxes [para. 13][para. 14].
12. Suggestions include weight-based consumption tax and road fees factoring weight/fuel efficiency for EVs to balance costs [para. 15][para. 16][para. 17].
13. EU softened 2035 fossil fuel ban to 90% zero-emission new cars, due to battery/supply chain gaps and member state pushback; this reversed aggressive EV plans by VW, Mercedes, BMW [para. 18][para. 19].
14. In U.S., President Donald Trump (inaugurated Jan 20, 2025, after 2024 win over Harris) revoked Biden's 2030 half-EV sales order in Jan 2025 and axed up to $7,500 EV tax credits via Republican package eight months later [para. 20][election_info].
15. HEVs evolve with better efficiency/emissions, no longer just transitional [para. 22].
16. Europe: HEVs hit 38.7% sales in first two months 2026 (up from 34.5% in 2025) [para. 23].
17. China: HEVs ~3% domestic sales 2025 but 41% NEV export value early 2026 (up from 31%) [para. 24].
18. Chinese firms like Geely (new hybrid April 2026), Changan (March), Great Wall (Jan) invest in HEVs for efficiency standards (3.3L/100km by 2030) [para. 25][para. 26][para. 27].
19. Japan (Toyota) leads with power split tech, but Chinese emphasize EV motor integration, dual motors, real-time power adjustment [para. 28][para. 29][para. 30][para. 31].
20. Experts urge hybrids amid charging/range issues [para. 32].
(Word count: 498)
- Honda Motor Co. Ltd.
- Honda Motor Co. Ltd. and Sony Group Corp. discontinued their Afeela EVs in late March, citing "changes in the business environment." Honda stepped back from electrification targets, joining GM, Ford, Stellantis, and Porsche in slowing the shift from internal combustion engines. (48 words)
- Sony Group Corp.
- Sony Group Corp., partnering with Honda, discontinued its Afeela EVs in late March amid EV demand shortfalls and industry slowdowns. Previously showcased a 2026 prototype at CES.
- General Motors Co.
- General Motors Co. slowed its shift from internal combustion engines since October 2025, incurring huge losses. In 2024, SAIC Motor announced sharing hybrid know-how with GM as a joint venture partner.
- Ford Motor Co.
- Ford Motor Co. slowed its shift away from internal combustion engines since October 2025, joining GM, Stellantis, and Porsche, amid EV demand shortfalls and financial losses.
- Stellantis NV
- Stellantis NV slowed its shift away from internal combustion engines since October 2025, alongside GM, Ford, and Porsche, incurring enormous financial losses amid falling EV demand and other challenges.
- Porsche AG
- Porsche AG slowed its shift away from internal combustion engines since October 2025, joining GM, Ford, and Stellantis, and incurring enormous financial losses amid EV demand shortfalls.
- Volkswagen AG
- Volkswagen AG CEO Oliver Blume stated combustion engine cars could remain viable for 10-15 years. The German group now produces ICE, hybrid, and EV models simultaneously. SAIC shares hybrid tech with VW via joint ventures. EU's revised 2035 zero-emission target prompted VW and peers to adjust electrification plans.
- SAIC Motor Corp. Ltd.
- SAIC Motor Corp. Ltd., once China’s largest auto seller, announced in 2024 it would share hybrid know-how with joint venture partners Volkswagen and GM, inverting the flow of innovative tech. Qiu Jie, deputy head of its R&D Innovation Headquarters, urged continued hybrid development due to NEV limitations like charging infrastructure and range anxiety.
- Sony Honda Mobility
- Sony Honda Mobility, joint venture of Sony and Honda, canceled its Afeela EVs in late March amid EV market challenges and business environment changes. It showcased the Afeela Prototype 2026 at a CES press conference in Las Vegas on Jan. 5, 2026.
- Mercedes-Benz Group AG
- Mercedes-Benz Group AG launched electrification plans, alongside Volkswagen and BMW, in response to the EU's initial 2035 ban on fossil fuel car sales, aiming to boost EV share in global sales. The EU later scaled back to 90% zero-emission vehicles by 2035.
- BMW AG
- BMW AG launched electrification plans prompted by the EU's initial 2035 ban on fossil fuel car sales, aiming to boost EVs' share in global sales. (25 words)
- Geely Automobile Holdings Ltd.
- In April, Geely Automobile Holdings Ltd. launched a new hybrid technology offering greater thermal efficiency and lower fuel consumption, reinforcing its multipronged vehicle strategy. It plans to roll out a series of HEVs powered by this tech later in 2026. The system adjusts power output in real-time based on driving habits and road conditions. (58 words)
- Chongqing Changan Automobile Co. Ltd.
- In March, Chongqing Changan Automobile Co. Ltd. introduced a new hybrid system that boosts fuel efficiency without requiring external charging, as part of its investment in HEVs amid shifting EV policies.
- Great Wall Motor Co. Ltd.
- In January, Great Wall Motor Co. Ltd. showcased a vehicle platform compatible with HEVs and plug-in hybrids.
- Toyota Motor Corp.
- Toyota Motor Corp. holds a technological edge in the HEV market with its power split device, deemed the best energy-saving solution by experts, challenging Chinese automakers like Geely in the domestic market.
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