In a market where competition is cutthroat, automakers are quickly running out of moves. With price cuts and smart features yielding diminishing returns, the strategies to drive sales are narrowing. But now there’s a new card on the table: range-extended electric vehicles (REEVs).
According to 36Kr, Xpeng Motors has been ramping up its REEV project. The company finished sourcing key components earlier this year and is now fully immersed in developing its first REEV. Mass production is expected by the second half of 2025.
“We’ll be ready before the fourth quarter of next year,” an insider said. By then, Xpeng plans to offer a robust lineup of both fully electric and range-extended models.
Xpeng’s first REEV will be a large SUV, codenamed G01. “It’s based on the G9 model and targets the market segment priced above RMB 200,000 (USD 28,195),” a source said. The SUV will be produced at Xpeng’s second factory in Huangpu, Guangzhou.
In a strategic move, Xpeng has chosen Dongan Auto Engine to supply the range extender for this vehicle—a partner that previously provided components for Li Auto’s REEVs.
When asked for more details, Xpeng’s official response was that further information would be shared at the annual 1024 Tech Day event.
And it’s not just Xpeng making this move. Zeekr, Avatr, IM Motors, Aion, and Xiaomi Auto have all rolled out their own REEV models this year. Automakers are converging on a two-pronged strategy: fully electric vehicles and plug-in hybrids, including REEVs.
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Nio remains one of the few holdouts, still committed solely to fully electric vehicles. The company relies on its battery swapping infrastructure to sustain monthly sales of approximately 20,000 units. Nio plans to expand further, aiming to build 5,000 battery swapping stations across China by the end of 2025.
But in an industry marked by fierce competition and limited resources, most automakers don’t have the time or capital to build such extensive infrastructure. For them, range-extended and hybrid vehicles have become critical lifelines for boosting sales.
Xpeng turns up the heat on its REEV strategy
Until recently, REEVs were a low-key subject at Xpeng Motors. An employee told 36Kr that the company had quietly been researching the concept for some time. “Some of the research started two years ago, but leadership hadn’t fully committed,” the employee said.
That stance has shifted. Xpeng’s position on REEVs has become much clearer this year.
CEO He Xiaopeng has openly discussed the demand for hybrid vehicles on several occasions. During the company’s Q1 earnings call, He acknowledged that the shift from fully electric to range-extended technology presents challenges, but made it clear that Xpeng is looking ahead to the next generation of REEVs.
With sales of REEV models rising at Li Auto and Aito, and new models arriving from brands like Zeekr and Avatr, Xpeng’s leadership has seen the opportunity. “The market ceiling for REEVs is still high, and the return on investment is solid,” a source said.
Another insider shared that He has set the bar high for Xpeng’s REEVs, expecting no half-measures. “We don’t want to settle for an interim solution,” He reportedly told his teams, underscoring that the company’s range-extended products must meet the highest technical standards.
After selecting Dongan Auto Engine as its range-extender partner, Xpeng has accelerated its REEV development.
At a recent event celebrating the launch of Xpeng’s Mona M03 model, He announced that the company would release a new model each quarter over the next five quarters. Sources confirmed that the new lineup will include REEVs.
Typically, developing a new energy vehicle (NEV) takes 18–24 months. Xpeng, however, is pushing to meet its production goal by the end of next year.
Meanwhile, Xpeng is also preparing for production. Filings reveal that the company’s second-phase factory in Guangzhou will have the capacity to produce up to 300,000 NEV bodies annually, including two fully electric models and one plug-in hybrid. Each model will have a production capacity of 100,000 units.
The total investment for the factory’s expansion amounts to RMB 1.2 billion (USD 169.2 million), with an estimated construction time of 18 months.
REEVs: A new lever for sales growth
Despite earlier criticisms that REEVs are an outdated technology, their advantages—comparable driving experiences to fully electric vehicles and no range anxiety—are winning over consumers.
But automakers are looking beyond just consumer experience.
From a cost perspective, while battery prices have fallen to RMB 0.4 (USD 0.06) per watt-hour, a 60 kWh battery pack still costs around RMB 40,000 (USD 5,640). A solid range extender, however, costs just RMB 10,000 (USD 1,410). Combining this with a smaller 30 kWh battery pack gives REEVs a clear cost advantage over fully electric vehicles, which explains why electric cars in the mid- to high-end market are generally priced higher than REEVs.
In addition to cost benefits, REEVs are also evolving toward larger batteries and faster charging, addressing earlier issues with slow charging times. For example, CATL has launched the Shenxing battery, which offers a 300-kilometer pure electric range and supports 3C fast charging. Battery manufacturers like Eve Energy and Svolt are also moving in this direction. Big batteries and small range extenders are becoming an increasingly popular setup among automakers.
On the market side, the numbers are speaking for themselves. In the first half of this year, China’s NEV sales hit 4.944 million units. Fully electric vehicles accounted for 3.019 million units, up 11.6% year-on-year, while plug-in hybrids—including REEVs—saw sales skyrocket by 85.2% to 1.922 million units.
Globally, enthusiasm for fully electric vehicles in Europe and the US has cooled somewhat, with more consumers leaning toward hybrid models. Xpeng hopes that, by 2033, its overseas sales will account for 50% of its total volume. Reaching that target with only fully electric models would be a significant challenge.
“NEV penetration is largely driven by users transitioning from gasoline vehicles, and it’s not easy to get them to go straight to fully electric cars,” an industry insider told 36Kr. “Range-extended or plug-in hybrid vehicles offer a smoother upgrade path, providing an enhanced experience compared to gasoline cars.”
For Xpeng, the risks of betting only on fully electric vehicles are high. The company’s average monthly sales in the first half of this year were below 15,000 units.
Meanwhile, competitors offering both fully electric and range-extended models have captured more market share. Huawei’s Aito and Li Auto regularly post monthly sales of over 40,000 units, and Leapmotor saw its August sales surpass 30,000 units.
With the launch of range-extended models, Xpeng is positioning itself to pull another lever for sales growth. “Xpeng’s mission is to popularize artificial intelligence and smart technology in cars, ultimately achieving autonomous driving. Right now, choosing the right powertrain is about scaling sales,” an internal source said.
Accelerating the rollout of REEVs and seizing market share early is likely one of Xpeng’s top priorities in the near future.
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Li Anqi for 36Kr.