ALTERNATIVE FUEL VEHICLE MARKET Challenges and Opportunities

One of the major challenges faced by the global alternative fuel vehicle market is the high upfront costs of these vehicles compared to conventional gasoline or diesel vehicles. Alternative fuel vehicles such as electric vehicles, plug-in hybrids, and fuel cell vehicles tend to be more expensive than conventional vehicles due to the additional costs involved in battery packs and other electric components According to a study by the European Commission's Joint Research Centre in 2021, battery packs alone account for around 30-50% of total electric vehicle costs depending on battery size and chemistry.

Market Opportunity - Developing markets adopt alternative fuel vehicles

One of the significant opportunities for the global alternative fuel vehicle market is the growing adoption in developing markets. Several high growth developing economies such as China, India, Brazil, and Mexico are showing increased focus on promoting electric mobility to support national emission reduction targets and also reduce dependence on imported oil. These markets offer a vast untapped demand as their vehicle parc is expected to grow rapidly in the coming years due to rising disposable income. OEMs are actively launching affordable electric models targeting such emerging markets. Local production of lithium-ion batteries and other electric components is also being encouraged to boost the domestic electric vehicle supply chain.