Study Reveals Growing Interest In Battery-Electric, Hybrid Alternative

If Goldilocks is searching for a new vehicle that’s electric but won’t trigger range anxiety, yet is pretty good for the environment she might think an extended range electric vehicle, or EREV, is just right, and a growing number of consumers think so too.

Indeed, a survey of more than 2,800 new car buyers in the U.S. and 2,300 in the United Kingdom and Germany late last year revealed a good many of them would consider an EREV for their next vehicle, if available.

That’s a key finding of a study by McKinsey & Company on the market potential of EREVs.

Unlike plug-in or conventional hybrids, an EREV is powered by a battery-electric motor that’s charged on-the-go by a small internal combustion generator. The result, according to the study is an electric-only driving range of 100-200 miles compared to 20-40 for a plug-in hybrid. Total driving range for an EREV is 400-500 miles.

Many consumers in the study weren’t familiar with the technology behind an EREV and appeared reluctant to consider such a vehicle. But in an interview, study co-author Patrick Hertzke revealed consideration for their next vehicle changed when the technology and capabilities were explained.

“It was very interesting that when you went from not explaining what an EREV was to explaining what an EREV was, the interest, which jumped to 18% took share from people that were considering an internal combustion engine from a hybrid, from a full battery electric and plug in hybrid,” Hertzke explained. “So what it tells us is that there is this underlying interest in electrified vehicles, and it tells us that range concerns and charging concerns are still one of the big impacts for U.S consumers.”

With those results in mind, the study suggested a key market for EREVs would be what it described as EV owners considering switching back to an ICE vehicle due to “frustration with inadequate charging ability and driving range in their current vehicles.”

The openness to EREVs comes at a time when the volume and pace of sales of battery-electric vehicles is beginning to pick up, although they still represent a small share of the market.

During the first quarter of this year nearly 300,000 EVs were sold in the U.S. according to data from Cox Automotive’s Kelley Blue Book. That represented just 7.5% of new vehicle sales during that period, up slightly from 7.0% during Q1, 2024.

The prospects for accelerating EV sales is murky as import tariffs, a Trump administration threat to end federal tax incentive for EV purchases and support for funding a national charging network hang in the air.

It’s a starkly different climate in China where EVs dominate sales. But as Hertzke pointed out, interest in EREVs over there caught the attention of McKinsey & Co., leading to this study.

“We've seen some real excitement around EREVs and a huge growth in China last year, which surprised a lot of people,” Hertzke said. “I think we were forecasting that some of that would occur but we saw much higher growth of EREVs and plug-in hybrids in China than we did even BEV growth in 2024 and so that triggered our interest.”

While the capabilities of EREVs might lead to some conversions of shoppers who had considered internal combustion or other electrified vehicles, the McKinsey study also revealed the costs of producing them might be attractive to automakers.

“If focused on providing an electric range of 150 miles, EREV combined powertrain costs could be as much as $6,000 lower than BEV powertrain costs,” the study said.

That cost advantage is likely to attenuate however, however as battery costs begin to decline, bringing the cost to produce an EREV to between similarly-sized internal combustion and battery-electric vehicles, according to the study.

Right now there aren’t very many EREVs available, but that’s changing.

Among some of the EREVs planned to hit the market, Stellantis’s Ram truck brand will begin selling the EREV RamCharger later this year and Volkswagen Group is reviving the Scout brand that will include EREV versions of the Terra pickup truck and Traveler SUV.

As in the case of plug-in and conventional hybrids, the study considers EREVs a “bridge technology,” providing a waystation for those not ready quite yet to make the jump to a full battery-electric vehicles while the charging infrastructure improves, selection increases and the price for BEVs comes down.

Hertzke points out rising consideration for BEVs in each successive study conducted by McKinsey along with increased sales and broader product lines at lower price points in the offing as evidence consumers will eventually go full battery-electric for subsequent purchases.

But for right now, EREVs may prove just right for many consumers, even if they’re not named Goldilocks.