Hybrids are quietly taking more share in EU registrations. That reshapes who wins across batteries, power electronics and thermal systems—and what investors, policy-watchers and consumers should watch next.
Registration mix shift: hybrids grab the wheel
European registrations are moving toward electrification—but with a notable tilt to hybrid-electric vehicles (HEVs). In the first half of 2025, HEVs commanded roughly a third of the EU market, while battery-electric vehicles (BEVs) pushed higher but remain well below 20%. Specifically, industry data show BEVs at 15.6% share in H1 2025, up from 12.5% a year earlier, PHEVs at about 8.4%, and hybrids the single largest powertrain group. Total EU car registrations fell 1.9% in H1, underscoring a difficult backdrop for automakers. (ACEA, Electric Cars Report)
Under the surface, the picture is uneven. Germany posted a strong rebound in BEV registrations earlier in the year even after abruptly ending national BEV purchase subsidies in December 2023; France’s BEV volumes slipped as its revamped “eco-bonus” excluded some Chinese-built models. Meanwhile, hybrid growth has been broad-based across France, Spain, Italy and Germany. (European Alternative Fuels Observatory, Reuters, T&E)
Policy is part of the story. The EU has finalized countervailing duties (on top of the 10% car tariff) on Chinese-made BEVs, and national incentive regimes have been shifting—Germany’s subsidy removal, France’s “made-in-Europe” bonus design, and the UK’s ZEV mandate with compliance flex. These measures influence model availability, pricing and buyer timing, helping hybrids hold serve while BEV economics and supply chains recalibrate. (Reuters, Noerr, Argus Media)
Why hybrids are winning share now
Three practical drivers are supporting hybrids:
- Upfront price & familiarity. HEVs and many PHEVs carry smaller batteries and use mature ICE platforms, often landing at more accessible list prices than BEVs—especially where subsidies are pared back or targeted. (OSW Ośrodek Studiów Wschodnich)
- Charging realities. Urban fast-charging still varies in cost and convenience, and homeowners without private driveways face friction. That keeps hybrids attractive for mixed driving. (This is changing as networks expand, but unevenly by market.)
- OEM margin math. Several European brands have signaled margin pressure on BEVs amid price competition and component costs, while hybrids are helping to stabilize mix and cash generation in 2025. Renault, for instance, has leaned on hybrids to support volumes through a challenging H1; Stellantis is also emphasizing profitable ICE/hybrid derivatives while navigating tariffs and restructuring. (Renault Group Media, Reuters, Financial Times)
Important nuance: BEV growth is not “dead”—it accelerated to 15.6% share in H1 2025 and rose sharply in Germany despite subsidy removal. The pivot is about cadence and composition: buyers are adopting electrified options, but hybrids are the near-term bridge where price, charging and incentives are in flux. (ACEA)
Margin profile: hybrid vs. BEV
The unit economics differ by segment and brand, but directionally:
- Hybrids: Smaller battery packs, largely existing platforms, and proven powertrains support steadier margins. Suppliers can reuse ICE components plus 48V or full-hybrid modules.
- BEVs: Margins hinge on battery costs (chemistry choices), power electronics (SiC vs. silicon), and ramp efficiency. As EU duties raise some import costs and localized supply chains scale, BEV profitability should improve—but 2025 remains a transition year for many OEMs. (Financial Times)
Who benefits in the parts stack?
Power electronics & semis: SiC keeps gaining
Hybrids and BEVs both lean into efficient inverters and robust power management—especially at higher voltages. European chip leaders Infineon and STMicroelectronics are expanding automotive SiC capacity and deepening supply agreements with global Tier-1s. Infineon just raised profitability guidance on improving auto demand; ST has multi-year SiC supply deals into ZF’s inverter programs. (Reuters, ST News)
Why this matters: Even if BEV ramp timing wiggles, electrified powertrain penetration (HEV/PHEV/BEV) keeps the electronics content per vehicle climbing. That supports SiC and advanced power modules—benefiting European suppliers tied to inverters, onboard chargers, DC-DC, and thermal control.
E-axles, inverters and 48V systems: Tier-1s in the sweet spot
ZF continues to push e-axles and electrified driveline platforms, while BorgWarner is adding inverter and high-voltage coolant heater awards for hybrid platforms—a subtle sign that PHEVs are getting more sophisticated thermal and power hardware. Valeo remains active in 48V and integrated power electronics, helping OEMs extend mild-hybridization across line-ups at attractive costs. (press.zf.com, borgwarner.com, Valeo)
Translation: In a hybrid-heavy mix, 48V systems, dual inverters and compact e-axles see steady orders. As BEVs scale, the same suppliers benefit from higher-voltage components—so the supply chain is hedged across scenarios.
Thermal systems: heat pumps and integrated modules
Battery, cabin, and power-electronics temperature management is mission-critical for both hybrids and BEVs (range, durability, comfort). MAHLE is touting thermal modules with integrated heat pumps that can improve EV range, while Hanon Systems has rolled out a 4th-generation heat-pump architecture designed to harvest multiple heat sources. Expect more integrated, refrigerant-based systems as OEMs seek efficiency and packaging gains. (mahle-aftermarket.com, EuropaWire)
Dealerships & service: the hybrid advantage (for now)
From a service-revenue perspective, BEVs generally have lower routine maintenance needs than ICE or hybrids (fewer moving parts, less fluid service). That implies hybrids may sustain higher aftersales activity per vehicle than BEVs in the near term—a relevant angle for dealer groups and service networks planning capacity and training. (Climate Action, IEA)
Policy tailwinds and risks to watch
- EU trade defense: Definitive EU tariffs on Chinese-made BEVs are in force for five years (manufacturer-specific rates). This may nudge pricing and sourcing toward Europe and affect BEV affordability mix in the short run. (Reuters)
- National incentives: Germany’s early end to BEV purchase bonuses created a demand air pocket; France’s green bonus steers support to lower-carbon, Europe-favored models. Expect stop-start effects as capitals revise budgets and rules. (Reuters, T&E)
- CO₂ targets & mandates: EU fleet targets tighten again through 2030, while the UK’s ZEV mandate marches upward (with compliance flex). OEMs may lean on PHEV credits and hybrid compliance levers in the interim. (Argus Media)
Net-net: Policy is moving toward electrification, but the route (tariffs, bonuses, mandates) favors hybrids in the short run where consumer price sensitivity and infrastructure constraints bite.
The supply chain scorecard (2025–2026)
Relative near-term winners
- Power semis & inverters (SiC/IGBT): Volume growth across HEV/PHEV/BEV; visibility supported by Tier-1 contracts. (Reuters, ST News)
- Thermal management: Heat pumps and integrated modules scale in hybrids and BEVs; content per vehicle rises. (mahle-aftermarket.com)
- 48V mild-hybrid systems: Cost-effective path to CO₂ compliance and fuel-economy gains across mainstream segments. (GlobeNewswire)
Execution swing factors
- Battery chemistry mix: Hybrids use smaller packs (often NMC), buffering raw-material exposure; BEV affordability still hinges on cell costs and localized packs.
- Trade and sourcing: EU tariffs can lift BEV transaction prices if supply doesn’t localize quickly. (Reuters)
- Model cadence: Popular B- and C-segment hybrids (and compelling BEVs with net-of-incentive price points) will shape the registration mix quarter-to-quarter. (Reuters)
What to watch next quarter
- ACEA monthly mix updates: Track whether HEV share holds near the mid-30s and if BEVs keep momentum above 15% through late summer. (ACEA)
- OEM order books & pricing: Renault, VW Group, Stellantis commentary on hybrid backlog, BEV discounting, and CO₂ compliance strategies. (Volkswagen Group, stellantis.com)
- Supplier calls: SiC device utilization (Infineon, STMicro), e-axle and HVCH awards (ZF, BorgWarner), and thermal module wins (MAHLE, Hanon) as proxies for 2026 mix. (Reuters, press.zf.com, borgwarner.com, mahle-aftermarket.com)
- Incentive tweaks: Any budget-driven changes in France, Germany or Italy, plus traction (and penalties/credit trading) under the UK ZEV mandate. (Argus Media)
- Tariff diplomacy: EU-China talks that could adjust duty rates or carve-outs—material for BEV pricing and sourcing in 2026. (Reuters)
The dealer-level reality
As hybrids proliferate, dealer service bays may stay busier than a pure-BEV scenario—brake service, fluids, ICE components, and software updates. For BEV-heavy metro markets, capacity planning shifts toward high-voltage safety training and battery diagnostics, but recurring routine maintenance is still lighter than ICE/hybrids. The implication: hybrid strength can cushion fixed-ops revenue, while BEV mix requires new competencies rather than higher throughput. (Climate Action)
Bottom line
Europe’s auto market is electrifying, but 2025’s center of gravity is hybrid. That’s a rational outcome of policy changes, charging realities and consumer price sensitivity. For the supply chain, it’s less a detour than a dual-track highway: electronics, inverters and thermal systems move regardless of whether the energy comes from a 48V mild-hybrid, an HEV/PHEV pack or a BEV skateboard. BEV share is still rising—just not as fast as headline writers predicted. The winners between now and 2026 will be the players that sell into both tracks and keep costs falling as regulations tighten.
Sources
ACEA EU H1-2025 registration mix (HEV share leadership; BEV 15.6%, PHEV 8.4%); market decline. (ACEA, Electric Cars Report)
Germany ends BEV purchase subsidies (Dec 2023) and aftermath. (Reuters)
France “eco-bonus” criteria affecting Chinese-built models. (T&E)
EU definitive tariffs on Chinese BEVs (five years). (Reuters)
UK ZEV mandate trajectory and compliance flex. (Argus Media)
Renault H1 updates; industry June slump and mix. (Renault Group Media, Reuters)
Supplier highlights—Infineon guidance; ZF inverter/SiC deal; BorgWarner hybrid HVCH & inverter wins; MAHLE thermal module. (Reuters, ST News, borgwarner.com, mahle-aftermarket.com)
Disclosure & important information
The information above is for general informational and educational purposes only and does not constitute investment, financial, legal, or tax advice. Markets and policies change quickly—please verify key facts and figures against primary sources (e.g., ACEA releases, company filings, and official government notices) before relying on them. We have cited reputable sources and linked where possible. This article does not recommend buying, selling, or shorting any security or product. If you need advice tailored to your situation, consult a licensed professional in your jurisdiction.