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The EU car industry wants plug-in hybrid vehicles to be considered carbon neutral, but data from thousands of vehicles shows that PHEVs emit just 19% less CO₂ per km, on average, than petrol and diesel cars. Carmakers are pressuring EU lawmakers to treat hybrids as clean vehicles under a ‘technology neutral’ approach to decarbonising cars. But T&E analysis of emissions data from 127,000 PHEVs finds they emit far more than claimed and the extra fuel consumed costs the average driver €500 a year.

PHEVs are supposed to save on emissions and fuel by switching between a battery, which is recharged by being plugged in, and a petrol or diesel engine. But in the real world, CO₂ emissions from plug-in hybrids are almost five times what official tests suggest. The real-world data differs hugely from the official ‘WLTP’ tests where vehicles are driven in a way that regulators consider to be normal.

In the real world, plug-in hybrids emit 135g of CO₂ per km on average, according to T&E analysis of data gathered by the European Environment Agency (EEA) from fuel monitors on 127,000 vehicles registered in 2023. Petrol and diesel cars emit 166g of CO₂/km on average.

Engines still running in electric mode

Even when driven in electric mode, PHEV engines consume 3 litres of petrol per 100km, on average, the EEA data shows. As a result, they emit 68g of CO₂/km in electric mode – 8.5 times as much as official tests claim. This is because the electric motors in PHEVs generally have insufficient power for higher speeds or steep inclines and the engine needs to kick in. On average, the engine supplies power during almost one-third of the distance driven in electric mode, according to the data.

€500 extra a year

PHEVs cost drivers €500 more a year than claimed to fuel and charge because of the hidden fuel consumption in both electric and engine modes, the report also finds. Not only are plug-in hybrids expensive to drive, they are also more expensive to buy than clean alternatives. The average selling price of PHEVs in Germany, France and the UK in 2025 is €55,700, according to Bloomberg Intelligence. This is €15,200 higher than the average price of a battery electric car.

Lucien Mathieu, cars director at T&E, said: “Plug-in hybrids are one of the biggest cons in automotive history. They emit almost as much as petrol cars. Even in electric mode they pollute eight times as much as official tests claim. Technology neutrality cannot mean ignoring the reality that, even after a decade, PHEVs have never delivered.”

Long range PHEVs = more emissions

PHEV emissions are also increasing because of the trend towards longer electric ranges as bigger batteries make the vehicles heavier and, therefore, burn more fuel in engine mode. These heavier vehicles also consume more energy than smaller cars when driven on the battery. Plug-in hybrids with an electric range above 75 km actually emit more CO₂ on average than those with a range between 45 and 75 km, the data shows.

Mercedes-Benz has the biggest gap between its official and real-world PHEV emissions, according to the 2023 data, emitting 494% more, on average. Its GLE-Class has the highest real-world emissions gap of cars sold that year, exceeding its official value by 611%. The other major European carmakers emitted around 300% more than their official CO₂ ratings.

The European car industry wants to be allowed to sell PHEVs after the EU’s 2035 deadline for zero-emission cars. Carmakers are also demanding that the EU cancel the ‘utility factors’ it has set to correct the CO₂ rating of plug-in hybrids. The utility factors set for 2025 and 2027 gradually correct the gap between official and real-world emissions, meaning carmakers’ EU CO₂ targets get stricter, pushing manufacturers to sell more battery electric cars.

Lucien Mathieu said: “Weakening the rules for plug-in hybrids is like drilling a hole in the hull of Europe’s car CO₂ law. Instead of steering the market toward affordable zero-emission cars, carmakers will flood it with expensive, polluting PHEVs. That risks sinking the EV investment certainty the market desperately needs.”

By Emily Bary

A Deutsche Bank analyst is upbeat about Vertiv’s stock and says the rush of new data-center deals suggests ‘the bull case may not even be bullish enough’

Vertiv makes cooling technologies that are vital to AI data centers.

Data-center technology provider Vertiv Holdings Co. has been a big winner as artificial intelligence has proliferated. But Deutsche Bank says investors who missed out on the stock’s 1,600%-plus rally over the past three years can still get in on future gains – though not quite at the same magnitude.

Admittedly, Vertiv’s stock (VRT) is expensive relative to recent historical levels, at least when you look simply at how it trades relative to forward earnings. Deutsche Bank’s Nicole DeBlase noted it trades at a ratio of 39x, versus its 32x one-year median.

But she thinks it’s better to look at the stock’s ratio of price to earnings to growth, where it screens in the bottom quartile among peer stocks in the multi-industry and electrical-equipment sector, meaning it’s relatively cheap from that perspective.

Read: AI has already disrupted hiring for these jobs, as adoption nears a tipping point

She pointed to “a clear bifurcation in medium-term earnings growth algorithms between the secular growth ‘haves’ and ‘have nots’” and predicts that this split will “persist for the foreseeable future.” Therefore, she thinks it makes sense to look at Vertiv’s profile relative to peers, some of which are exposed to a more challenged macroeconomy.

Vertiv supplies electrical and mechanical equipment that goes into data centers, and DeBlase said it stands to benefit from perhaps $7 trillion in overall data-center infrastructure investments that could be made from 2025 to 2030, a number that comes from McKinsey estimates.

The company provides direct-to-chip liquid-cooling technologies, and that market could grow even more quickly that that for general electric equipment since the revenue base is negligible now. Previously, “traditional data centers did not broadly require liquid-cooling infrastructure,” DeBlase said. But AI is very power intensive and requires cooling systems to maximize efficiency.

DeBlase lifted her price target on the stock to $216 from $168, with the new target implying 20% upside. By applying more bullish assumptions, however, she could see the stock hitting $230, or 27% above current levels.

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But the growing hubbub around data-center investments now has DeBlase wondering: “Is the bull case bullish enough?” She noted big recent arrangements such as one between OpenAI and Broadcom Inc. (AVGO) and another between OpenAI and Advanced Micro Devices Inc. (AMD), and those are just a few of the newly announced deals.

“While it is impossible to know to what extent projects of this magnitude were already embedded in third-party data-center capacity forecasts, it does seem fair to say that if sizable project announcements continue, the bull case becomes increasingly likely – and the bull case may not even be bullish enough.”

More from MarketWatch: Why Broadcom’s OpenAI deal may not be all it’s cracked up to be

-Emily Bary

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  10-15-25 1752ET
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