By Zhineng Auto
In July 2026, China and the US sold 1.473 million and 1.364 million passenger cars/light-duty vehicles, respectively.
The two markets differ by only 8%, already at the same order of magnitude.
If you open the hoods of these over 1 million new cars, you will find almost two different eras inside.
◎ In July, China's BEV sales reached 626,000 units, accounting for 42.5%; the US had only 73,400 BEVs, accounting for 5.4%. China's BEV sales are 8.5 times those of the US.
◎ The US sold 206,000 HEVs, while China sold only 78,400; the US figure is 2.6 times that of China.
Both China and the US are burning less gasoline, but taking different paths: China is phasing out the engine, while the US is using HEVs to extend the engine's lifespan.
Part 1: Both Are Electrifying, but No Longer at the Same Table
According to Argonne National Laboratory data, in July 2026, US light-duty vehicle sales totaled 1.364 million, of which:
◎ BEVs: 73,400 units, 5.4% share, YoY -41.5%;
◎ PHEVs: 19,800 units, 1.4% share, YoY +3.2%;
◎ HEVs: 205,900 units, 15.1% share, YoY +15.0%;
◎ BEVs + PHEVs totaled 93,200 units, with plug-in share at only 6.8%, YoY -33.8%.
In July, the US sold 299,000 "electrified vehicles," with nearly 70% being HEVs that cannot be externally charged. Americans have not rejected electrification; they are buying hybrids that do not require changing their habits.
China's structure is completely different. In July 2026, new vehicle insurance registrations for passenger cars in China reached 1.473 million:
◎ BEVs: 625,600 units, accounting for 42.5%;
◎ PHEVs: 216,300 units, accounting for 14.7%;
◎ EREVs: 83,200 units, accounting for 5.6%;
◎ HEVs: 78,400 units, accounting for 5.3%;
◎ Gasoline vehicles: 467,600 units, accounting for 31.7%.
BEVs, PHEVs, and EREVs totaled 925,000 units, accounting for 62.8%.
Restoring the market to per 100 new cars sold:
| Per 100 New Cars | China | US |
|---|---|---|
| BEV | 42.5 | 5.4 |
| PHEV/EREV | 20.3 | 1.4 |
| HEV | 5.3 | 15.1 |
| ICE and Others | 31.9 | 78.1 |
Looking only at "whether there is an engine or not": in the US, about 95 out of every 100 cars still have an engine, while in China, it has dropped to about 58.
In July, for every 100 cars sold in China, 58 still had an engine. Over half of the new cars still have an engine (now acting as a range extender or a dedicated hybrid engine). "Removing it" is the direction, and pure electric is the major trend this year, but indeed, China has taken the lead globally in terms of scale.
◎ In China, the engine has stepped down from being the protagonist of the powertrain to a supplementary energy tool in EREVs and PHEVs, or is not installed at all (in BEVs);
◎ In the US, the engine remains the power foundation for the vast majority of cars, with HEVs just making it stay in the center while consuming less fuel.
Part 2: The Chinese Auto Market is Shrinking; ICE Vehicles Are Exiting
In July, new vehicle insurance registrations for passenger cars in China fell by 20.1% YoY; the market itself is sluggish.
By powertrain:
◎ Gasoline vehicles: YoY -40.1%;
◎ BEVs: YoY +2.4%;
◎ PHEVs: YoY -17.8%;
◎ EREVs: YoY -19.9%;
◎ HEVs: YoY -3.7%.
New energy vehicles are not experiencing across-the-board growth. Except for a slight increase in BEVs, PHEVs, EREVs, and HEVs all declined. The penetration rate continues to rise, mainly because gasoline vehicles are falling even harder.
From January to July, cumulative new vehicle insurance registrations for passenger cars in China reached 10.199 million, YoY -18.8%. Among them, gasoline vehicles accounted for 4.178 million, YoY -26.9%; BEVs reached 3.68 million, YoY -4.8%.
In July, BEV sales already exceeded gasoline vehicles by 158,000 units; pure electric has become the largest single powertrain type in terms of sales.
In the past, automakers developed ICE vehicles first and then added hybrid or electric versions; now, many Chinese brands have reversed this process, building cars around batteries, electric drives, and E/E architectures first, and adding engines only as needed to solve range issues.
EREVs and PHEVs still retain engines, but the role of the engine has changed.
Part 3: Americans Want to Save Fuel, but Don't Want to Change the Format
In July, US BEV sales fell 41.5% YoY, while HEVs grew by 15%. The practical choice is clear: they still care about fuel consumption and operating costs, but they are unwilling to pay more for electrification, bear charging uncertainties, and suffer from long-distance range anxiety.
HEVs perfectly meet this demand.
No need to install charging piles, no need to plan charging routes, no need to change refueling habits. For automakers, HEVs can be directly integrated into best-selling sedans, SUVs, and pickups without having to overhaul the entire vehicle platform, supply chain, and dealer network at once.
Therefore, HEVs in the US are not a transitional product before pure electrics arrive, but the most mature commercial solution at present.
According to the US Energy Information Administration, in Q2 2026, HEVs accounted for 16% of light-duty vehicle sales, hitting a record high; BEVs were at 6%, and PHEVs at 1.4%. After the federal EV tax credit expires at the end of September 2025, BEV demand has noticeably fallen back.
Using minimal changes to capture some of the benefits of electrification.
The cost of this path must also be calculated.
◎ HEVs still require engines, transmission systems, fuel tanks, motors, and small batteries, making them mechanically more complex. It preserves the factories, suppliers, employment, and dealers of the US auto industry, but may also slow down the urgency for companies to fully transition to electric platforms.
◎ In terms of product lineup, Japanese brands like Toyota and Honda are more likely to reap the benefits of this HEV boom. The US market has preserved the engine, but who makes money from extending the engine's lifespan is another calculation.
Part 4: Behind the Two Routes Are Two Manufacturing Systems. China Removes the Engine, the US Keeps It. Who Will Win?
What China has chosen is a supply chain restructuring.
Batteries, motors, motor controllers, power semiconductors, and E/E architectures are replacing engines, transmissions, and fuel systems to become the core of automotive value.
This route requires heavy upfront investment, fast iteration, and fierce price wars. The benefit is that battery costs continue to drop, economies of scale are constantly increasing, and new players can bypass the technical barriers of traditional engines.
What the US has chosen is gradual improvement on the existing system.
HEVs continue to use engine factories, traditional parts suppliers, existing platforms, and dealer networks. It is easily accepted by consumers, and automakers can continue to make profits from large SUVs and pickups.
◎ In terms of short-term commercial returns, the US route is not lagging, and is even more stable.
◎ In terms of long-term industrial transformation, the question is whether the center of automotive value will continue to shift towards batteries, electric drives, software, and electronic architectures. If it does, staying with HEVs in the long run might preserve today's profits but lose the scale and iteration speed of the next-generation platform.
The two countries have different understandings of industrial risks:
◎ Chinese automakers fear missing out on the next-generation automotive architecture;
◎ US automakers fear destroying the existing profit system too early.
One fears turning too slowly, the other fears turning too fast.
Who will win? Looking only at the domestic markets of the two countries over the next three to five years, the answer is relatively clear.
In China, BEVs, PHEVs, and EREVs will continue to squeeze out ICE vehicles. Even if total sales face pressure, the exit of gasoline vehicles may be faster than that of new energy vehicles. In the US, HEVs will most likely continue to grow, while BEVs will have to wait for lower prices, a more mature charging network, and a new round of competitive products.
Therefore, the Chinese market will "de-engine" faster, while the US market will keep engines for longer.
But the decisive battleground is not just within the two countries. North America has already built a relatively independent auto manufacturing system using tariffs, industrial policies, and localization requirements, making it difficult for Chinese automakers to directly enter the US market in the short term.
The real confrontation is in third-party markets: Europe, Southeast Asia, South America, and the Middle East. Charging infrastructure in these places is generally not as good as in China, and consumers care about both price and refueling/after-sales service. China's BEVs, PHEVs, and EREVs will face off directly with Japanese HEVs, American brand SUVs, and local ICE vehicles.
The advantages of Chinese cars lie in battery costs, product iteration, and diverse powertrain routes; the advantages of US, Japanese, and European automakers lie in brand, channels, finance, and global after-sales service.
So the ultimate winner may not be the one that removes the engine earliest, nor the one that keeps it the longest. Whoever has lower costs and can turn faster will stand firm.
Summary
In July 2026, sales in China and the US differed by only 8%, while BEV sales differed by 8.5 times; US HEV sales were 2.6 times those of China. This is no longer a difference in the speed of penetration rates, but two different bets placed by two industrial systems on the future of automobiles.
China treats batteries, electric drives, and electronic architectures as the center; the engine can be eliminated or reduced to a supplementary energy tool. What the US offers consumers is lower fuel consumption rather than a complete change in how they use cars, with the engine staying on via HEVs.
In the short term, the US route is more stable, protecting profits, employment, and the supply chain. In the long term, if battery prices continue to drop and charging infrastructure continues to expand, the advantages of the Chinese route in cost and iteration speed will become more apparent. The question is not whether the engine will disappear, but how long it will remain in the center of the powertrain.
China is redrawing the automobile with pure electrics and plug-in hybrids, while the US is extending the life of traditional automobiles with hybrids.