SHANGHAI (Reuters) - Chinese electric vehicle maker Nio is planning to launch its first hybrid model in 2026 and will only sell it in overseas markets, including the Middle East, North Africa and Europe, according to two people with knowledge of the matter.

Nio to date has only manufactured pure electric vehicles. It is building the hybrid vehicle to address challenges faced by Chinese firms selling EVs in foreign markets, which have put up trade barriers and been slower to install charging facilities.

Development of the extended range hybrid, under the Firefly brand, stems from suggestions by Nio's main investor, Abu Dhabi investment vehicle CYVN Holdings, that this could boost sales in Middle Eastern markets, where the infrastructure is not ready for mass adoption of EVs, said the people, who declined to be named as the plan is private.

It is scheduled to be launched in late 2026 and delivery will start in 2027, one of the people said. The model will not be sold in China, where Nio would continue to offer only EVs with batteries that can be swapped, they added.

Nio declined to comment on the hybrid model plan. The company said that the Firefly brand would use pure EV technology, without elaborating further.

Chinese media outlet Yicai first reported Nio's plan to develop a hybrid model on Friday.

Nio will unveil the first model under the Firefly brand at its annual event on Dec. 21. It is counting on the model to sell into European's mass market with designs catering to European consumers' preference for nimble small-sized cars.

The European Union has imposed new tariffs of more than 20% on Nio's EVs to the region for the next five years on top of an existing 10% import duty, which one of the sources said had largely undermined Firefly's competitiveness.

While Chinese-made EVs are subject to the tariffs, hybrids are still exempted, encouraging plans of hybrid exports to Europe.

Nio received $2.2 billion in investment from CYVN Holdings in 2023, largely relieving liquidity pressure on the Chinese automaker, which has struggled to break even while doubling down on its research and development efforts.

Nio agreed in February 2024 to license its EV technologies to CYVN.