GLOBAL FLEXFUEL MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2023 - 2030)

Global flexfuel market size is estimated to be valued at US$ 9,357.0  Mn in 2023 and is expected to reach US$ 19,427.0 Mn by 2031, exhibiting a compound annual growth rate (CAGR) of 11% during forecast period (2024 to 2031)

Flexfuel which is also known as flexible fuel vehicles (FFVs) are automobiles with internal combustion engines that can run on more than one fuel and also a mixture. Typically, flexfuel vehicles can operate with a blend of up to 85% ethanol fuel (E85) and 15% gasoline or petrol. The ability of flexfuel vehicles to run on more than one fuel makes them attractive options as they provide fuel flexibility and reduce dependence on gasoline. The key drivers of the flexfuel market growth include supportive government policies, rising crude oil prices, a growing global automotive market, and decreasing dependence on fossil fuels.

Global flexfuel market is segmented by blend, application, feedstock source, and region. By blend, the market is segmented into E10, E15, E70, E75, E85, ED95, and E100. The E85 segment accounts for the largest share of the market due to its widespread availability and suitability for use in light vehicles. E85 is a blend of 85% ethanol and 15% gasoline and offers reduced emissions as compared to pure gasoline.

Global Flexfuel Market Regional Insights

• North America is expected to be the largest market for the global flexfuel market during the forecast period, accounting for over 38.5% of the market share in 2023. The market growth in North America is due to supportive policies, well-established ethanol production, and a large automotive market.
• Europe accounted for over 26% of the market share in 2023. The market growth in Europe is due to the growing adoption of biofuels and government incentives promoting flexfuel vehicles.
• Asia Pacific accounted for over 16% of the market share in 2023. The market growth in Asia Pacific is due to rapidly growing automotive sales and supportive government policies in countries like India, Thailand, and Australia.

Figure 1. Global Flexfuel Market Share (%), by Region, 2023

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Global Flexfuel Market Drivers:

• Supportive government policies and incentives: Governments across several countries have implemented supportive policies, mandates, and incentives to drive the adoption of flexfuel vehicles. Financial incentives including fuel tax reductions and favorable vehicle taxation policies are attracting customers towards flexfuel cars and light commercial vehicles. Such strong government support is propelling the global flexfuel market growth.
• Growing production and adoption of biofuels: Rising production and adoption of biofuels like ethanol and methanol globally is a key factor propelling flexfuel vehicles sales. As more ethanol gets blended with gasoline, it creates the need for more compatible flexfuel engines. Major biofuel-producing countries are promoting flexfuel vehicle adoption in line with their targets to cut oil imports and reduce emissions.
• Technology innovations in engines and fuel systems: Major automakers are investing in research and development (R&D) to develop improved flexfuel engine technologies that can efficiently operate on any ethanol-gasoline blend. Dual-fuel injection systems, corrosion-resistant fuel system components, and engine control module tunings are some innovations enabling wider ethanol compatibility. As engine and fuel technologies evolve, they will accelerate the adoption of high ethanol blend flexfuel vehicles.

Global Flexfuel Market Opportunities:

• Export potential in developing countries: Many developing countries in Asia, Africa, and Latin America have low vehicle ownership rates, rapidly growing economies, and supportive biofuel adoption policies. This creates significant opportunities for global automakers to enter these untapped markets with their flexfuel models. Localization efforts including sourcing feedstocks and setting up flex-fuel plants will also boost exports.
• Transition towards sustainable aviation fuels (SAF): Rising focus on reducing carbon emissions is driving the development of renewable aviation fuels including ethanol and methanol blends that can significantly lower the lifecycle emissions of air transport. This will spur the use of flexfuel vehicles at airports to handle the distribution logistics safely and efficiently. Strategic partnerships between flexfuel automakers, airlines, biofuel producers, and airport operators will accelerate the deployment of flex-fuel vehicles for seamless SAF integration.
• Partnerships for infrastructure development: Flexfuel automakers should pursue strategic tie-ups with fuel retailers and infrastructure providers to jointly fund and develop an expanded network of flex-fuel pumps globally. Well-established partnerships can help share the infrastructure costs, drive greater consumer awareness about station locations through apps, and attract more customers to switch to ethanol-compatible vehicles. The joint development efforts will help unlock the full potential of flexfuel vehicles.

Global Flexfuel Market Trends:

• Product development of flexible fuel additives: Leading fuel additive companies are developing specialized flex-fuel additives that enhance engine performance across wider ethanol blend ranges. Fuel injector cleaners, corrosion inhibitors, lubricity improvers, and combustion catalysts are some additives that optimize engine operation on ethanol blends from E15 to E85. The growing product development focus will improve flex-fuel vehicle performance and drive their adoption.
• Emergence of E85 as a preferred lex-fuel lend: Among various ethanol-gasoline blends, E85 has emerged as the most preferred flexfuel option due to its higher bio-based composition (85% ethanol), capability to reduce emissions significantly as compared to pure gasoline, and availability. Automakers are designing and optimizing engines to maximize performance on E85.
• Growth in hybrid flexfuel vehicles: Automotive Original Equipment Manufacturers are combining hybrid and flexfuel technologies to develop environmentally friendly hybrid flex-fuel models. These vehicles allow drivers to run on any blend of ethanol and gasoline and also switch between electric and combustion modes. The hybrid-flexfuel combination enhances fuel efficiency, cuts emissions, and provides greater fuel flexibility. Advancements in hybrid powertrains will spur the launch of more hybrid flexfuel variants.

Global Flexfuel Market Restraints:

• Higher vehicle cost: Additional compatible fuel system components and advanced engine technologies required for flexfuel vehicles entail higher manufacturing costs compared to conventional gasoline-only models. This results in purchasers having to incur a higher upfront vehicle cost, which limits adoption among value-conscious customers. Bringing down the overall vehicle cost through scaled-up production and technology improvements remains a key challenge.
• Inadequate E85 refueling infrastructure: A major constraint hampering flex-fuel vehicle growth is the lack of sufficient E85 refueling infrastructure in many countries. Large upfront investments required setting up separate ethanol storage tanks and pumps at filling stations are a key deterrent.

Recent Developments

New product launches

• In January 2022, Archer Daniels Midland Company, a U.S.-based multinational food processing and commodities trading corporation involved in the production of oilseeds, corn, wheat, cocoa, and other agricultural commodities, launched its enhanced VERITASTM ultra-low carbon ethanol solution for cleaner transportation fuels. This new ethanol solution significantly reduces carbon intensity as compared to traditional ethanol.
• In September 2021, DuPont, a U.S.-based chemical company that was founded in 1802 by French-American chemist E.I. du Pont, announced the commercial launch of its newest enzyme technology, -DuPont’s sustainable solutions for better ethanol (SSBETM). This new enzyme innovation improves the ethanol production process efficiency.
• Acquisition and partnerships
• In February 2022, Bunge Limited, agribusiness and food company, acquired a corn ethanol plant in the U.S. from Southwest Iowa Renewable Energy. These 120 million gallons per year dry-mill ethanol plant acquisition aligns with Bunge Limited’s strategy to grow its renewable fuels business.
• In June 2021, Archer Daniels Midland Company and Gevo Inc. announced a partnership to produce sustainable aviation fuel by using ethanol and carbon capture. Gevo Inc. is a renewable chemicals and advanced biofuels company that focuses on delivering low-carbon sustainable fuels and chemicals. This partnership combines Archer Daniels Midland Company (ADM’s) ethanol production and Gevo’s expertise in sustainable aviation fuel production.

Figure 2. Global Flexfuel Market Share (%), by Type, 2023

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Top companies in Global Flexfuel Market

• Archer Daniels Midland Company
• DuPont
• BP
• Royal Dutch Shell
• Poet LLC
• Cargill
• Purfresh Inc.
• Andersons Inc
• Aceites Manuelita S.A.
• Abengoa Bioenergy
• Flint Hills Resource
• Raízen
• Valero Energy Corp.
• Green Plains Renewable Energy Inc.
• Bunge Limited
• CropEnergies AG
• Cristal Union
• Darling Ingredients Inc.
• Eco-Energy
• Advanced Bioenergy LLC

*Definition: Flexfuel or flexible fuel vehicles are automobiles with internal combustion engines that can operate on more than one fuel, typically a blend of gasoline and ethanol. Flexfuel vehicles provide fuel flexibility and reduce dependence on gasoline. Key applications include passenger vehicles, light, and heavy commercial vehicles. Growing shift towards renewable transportation fuels globally is driving demand for flexfuel vehicles. With supportive government policies and advancements in engine technology, the global flexfuel market is expected for robust growth during the forecast period.

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