Demand Dimension - The overall penetration rate of Extended Range Electric Vehicles (EREV) is expected to maintain at 5.0% in Q1 2025, with differentiation in price segments and vehicle types [2][7] - From 2020 to 2025, the penetration rate of EREV is projected to rise due to the synergy of products, technology, and policies, with an expected range of 10-15% by 2027 [2][7] - In Q1 2025, the penetration rates for different price segments are as follows: 2% for 10-15万元, 6% for 15-20万元, 12% for 20-30万元, 16% for 30-40万元, and 31% for above 40万元 [2][7] - SUV models show a higher penetration rate for EREV compared to sedans, with SUV penetration rates between 8%-14% and sedan rates around 1% from 2024 to May 2025 [2][7] Supply Dimension - Major EREV brands include Li Auto, Hongmeng Zhixing, Leap Motor, and Deep Blue, focusing on large and mid-large SUVs, while also targeting lower price segments with mid-sized SUVs and sedans [3][7] - EREV generally has a lower Bill of Materials (BOM) cost compared to EVs, with a cost difference estimated between 10,000 to 40,000 yuan due to smaller battery capacities [3][7] - In terms of pricing, the price difference between EREV and EVs varies from 0 to 60,000 yuan, with higher price segments showing larger price gaps [3][7] Future Outlook - The next generation of EREV is expected to feature larger batteries, with a suitable range of over 400 km for models priced above 300,000 yuan [4][7] - Future advancements in EREV technology will focus on improving the thermal efficiency of range extenders, with expected efficiencies of over 44% for third-generation engines [4][7]