The Road to Full Electrification Needs a Detour

As the transition to electrification accelerates, automakers and policymakers are increasingly exploring alternatives that balance emission reduction with real-world usability. While battery electric vehicles (BEVs) are often positioned as the end goal, challenges around charging infrastructure, cost and consumer confidence continue to slow mass adoption in many regions. In this context, Extended-Range Electric Vehicles (E-REVs) have emerged as a pragmatic solution that blends electric driving with added flexibility.

An E-REV is essentially a battery electric vehicle with a small internal combustion engine (or generator) onboard. This engine has a single purpose: to generate electricity when the battery charge runs low.

Pros of an E-REV

• No range anxiety: You can drive electric for daily use and the range extender kicks in on long trips. There’s no urgent need to stop and charge.

• Best of both worlds: EV driving experience (quiet, instant torque) and flexibility of liquid fuel for longer journeys.

• Smaller battery required: Compared to long-range BEVs, E-REVs use a smaller battery, which reduces cost, vehicle weight and the need for critical raw materials.

• Easier transition to full EVs: E-REVs serve as an ideal bridge technology for hesitant users and perform well in regions with limited charging infrastructure.

• Efficient real-world use: Many users drive mostly electric day-to-day and the fuel is used only occasionally.

Cons of an E-REV

• More complexity: Having both electric and combustion systems onboard increases complexity. More components can mean higher maintenance risk and costs.

• Still uses fossil fuel: E-REVs are not zero-emission in all scenarios and regulatory treatment can be less favorable than for BEVs.

• Higher cost vs. simple hybrids: E-REVs are more expensive than conventional hybrids and potential savings depend heavily on individual driving patterns.

• Packaging trade-offs: The gasoline engine, fuel tank and battery all take up space, which can reduce interior room or cargo capacity.

• Long-term uncertainty: Some policymakers view E-REVs as a temporary solution, creating a risk of being squeezed between BEVs and stricter Internal Combustion Engine (ICE) bans.

Overall, an E-REV makes the most sense in situations where charging infrastructure is uneven, daily driving is mostly electric, but occasional long trips are unavoidable. It’s particularly well suited for individuals or organizations that want to reduce emissions now while transitioning pragmatically toward full electrification, rather than making an abrupt, all-or-nothing shift.

Low-priced, compact EVs are the answer to rising pricing concerns

Our analysis shows that electric vehicles consistently cost more than internal combustion engine vehicles. Traditional automotive OEMs face ongoing challenges in reducing EV manufacturing costs, as electric vehicles rely on advanced driving systems and smart technologies that require higher upfront investment. This leaves less room for cost optimization.

As a result, automakers are increasingly consolidating around compact EVs, often through partnerships and shared platforms. This approach supports faster, more cost-efficient model launches aimed at mainstream consumers.

Source from SBD Automotive's Report - 623 - EV Guide - 2025 HY2 Europe

Affordability with a good range is the goal for automakers

Looking at the key market segments that automakers are currently prioritizing, it clearly appears that expensive SUVs and trucks remain out of reach for most buyers, slowing mass-market penetration and reinforcing price sensitivity as a dominant demand driver.

Source from SBD Automotive's Report - 623 - EV Guide - 2025 HY2 Europe

The following chart compares EV-native and transitional automakers based on vehicle price and minimum electric range. The charts include BEV, E-REV, and FCEV passenger vehicle and light commercial EV models that are either in production or officially announced.

Source from SBD Automotive's Report - 623 - EV Guide - 2025 HY2 Europe

Usage incentives and charging infrastructure investments to accelerate EV adoption

Offering affordable vehicles alone is not enough. Automakers must also ensure a smooth user experience through non-monetary incentives and improved charging accessibility. At the same time, governments are rolling out comprehensive strategies that combine grid modernization, targeted infrastructure investments and financial incentives.

To maximize the environmental benefits of EV adoption, both governments and automakers need to consider regional requirements when developing charging infrastructure and collaborate to integrate renewable energy sources.

That said, purchase rebates, subsidies or tax credits on their own are often insufficient. In many regions, combining monetary incentives with non-monetary and usage-based benefits has proven more effective across different demographic groups. Examples include free charging programs offered by employers, consumer vouchers, incentives from utility companies and access to high-occupancy vehicle lanes.

Several governments, including those in China, Australia, Indonesia and India have introduced or are actively implementing nationwide charging infrastructure initiatives. Meanwhile, some European countries and U.S. states offer tax breaks and subsidies to support charging station deployment. Despite these efforts, charging infrastructure development remains uneven due to differing regional approaches to incentivization.

Targeted investments in both public and private charging networks tend to focus on regions with higher EV adoption. In parallel, some regions are revising EV ownership targets and incentives by introducing tax benefits. Increasingly, the effectiveness of EV incentives is tied to broader policies around renewable energy integration and grid modernization, highlighting the need for a comprehensive, system-wide approach to sustainable transportation.

Luigi Bisbiglia Senior Business Development Manager SBD Automotive

 "Electric vehicle adoption is increasingly shaped by three key factors: affordability, usable range, and charging infrastructure readiness. Automakers are consolidating around compact, lower-cost EVs to address rising price sensitivity and enable broader mass-market adoption. At the same time, E-REVs are emerging as a pragmatic transitional solution, offering mostly electric driving while mitigating range anxiety in regions with uneven charging access. However, affordable vehicles alone are not enough; governments and industry players must accelerate adoption through coordinated investments in charging infrastructure, grid modernization and renewable energy integration, complemented by a mix of financial incentives and usage-based benefits that improve the overall EV ownership experience."

To explore how these trends impact your strategy and operations, we invite you to get in touch for a deeper discussion. Email info@sbdautomotive.com to connect with one of our team of experts to discuss your requirements further.