U.S. FLEXFUEL CARS MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2023 - 2030)

U.S. Flexfuel Cars market size was estimated to be valued at US$ 4.47 Billion in 2023 and is expected to reach US$ 6.95 Billion by 2030, exhibiting a compound annual growth rate (CAGR) of 6.5% from 2023 to 2030. 

Analyst Viewpoint:

The U.S flexfuel cars market has significant growth opportunities in the near future. One of the key drivers for the market is the rising gasoline prices across major cities. As prices at the pumps continue climbing, more consumers will seek fuel-efficient vehicles that can run on cheaper alternatives like ethanol. Government mandates and incentives for automakers to increase the flexfuel fleet will also support the market growth. However, low gasoline prices in certain regions can act as a restraint as consumers may not witness immediate savings from flexfuel cars when fuel is cheaper. Limited ethanol refueling infrastructure in many parts of the country poses challenges.

However, automakers expanding flexfuel car lines and developing more flexible fuel-compatible vehicles will also create opportunities. Overall, as awareness around energy independence and domestic fuel usage rises, the U.S flexfuel cars market is well-positioned for steady gains. With the right conditions, its market potential is sizable.

U.S. Flexfuel Cars Market Drivers:

• Supportive government policies and incentives: The U.S. government has implemented various supportive policies, mandates, and incentives to drive the adoption of renewable fuels like ethanol and expand the flexfuel vehicles market. The Renewable Fuel Standard (RFS) program by the Environmental Protection Agency (EPA) requires a certain volume of renewable fuels to replace the use of fossil fuels in transportation. The program has led to significant growth in ethanol production and use in the U.S. Further, the Bipartisan Infrastructure Law (The Bipartisan Infrastructure Law makes a historic investment in drinking water and wastewater infrastructure, to deliver clean drinking water) establishes a grant program to expand the availability of higher ethanol blend infrastructure. Such policies encourage automakers to expand their flexfuel offerings and provide a boost to the market. Till 2022, the United States Department of Agriculture (USDA) reports over 4,800 gas stations offer E15 and E85, up from around 1,000 stations in 2010. The increased availability of biofuel blends is making flex-fuel vehicles a more viable option for consumers.
• Focus on reducing greenhouse gas emissions: With rising concerns over climate change and greenhouse gas emissions, flexfuel vehicles are gaining prominence as they can drastically reduce lifecycle Greenhouse gases (GHG) emissions compared to conventional gasoline-only vehicles. According to Argonne National Laboratory, E85 flex-fuel vehicles can reduce GHG emissions by up to 40% as compared to traditional vehicles. The ability to cut emissions has prompted automakers like Ford (The company sells automobiles and commercial vehicles under the Ford brand, and luxury cars under its Lincoln brand.), GM (an American multinational automotive manufacturing), and Stellantis (global automaker and provider of innovative mobility solutions) to invest in and expand their flexfuel vehicle offerings in line with sustainability targets. This is a key factor spurring the market growth. According to the data provided by the Renewable Fuels Association, in2021, the U.S produced around 15 billion gallons of ethanol in 2020, with over 98% of it being made from corn. The growth of the domestic renewable fuel industry is making ethanol more accessible across the country.
• Cost competitiveness of ethanol: Corn-based ethanol has remained cost competitive with gasoline in 2025-2028. Thereby making ethanol blends like E85 an economically viable fuel choice. The production costs of corn ethanol have also declined over the past decade driven by improved production technologies. Moreover, federal tax credits and other incentives reduce the cost of ethanol further. The cost competitiveness of ethanol is likely to accelerate the adoption of flex-fuel vehicles capable of running on higher ethanol blends. The U.S Department of Energy estimates that over 4 million flex fuel vehicles were sold between 2011-2021. Leading car companies like Ford (The company sells automobiles and commercial vehicles under the Ford brand, and luxury cars under its Lincoln brand.), GM (an American multinational automotive manufacturing) and Toyota (a Japanese multinational automotive manufacturer) have significantly expanded their flexfuel lineups 2025-2028 and are projecting further increases through 2023 according to their annual reports.
• Domestic availability of ethanol feedstock: U.S. has a well-established corn-based ethanol production system that is capable of supplying significant volumes domestically. According to the U.S. Department of Agriculture, corn that is used for ethanol production in the U.S. reached over 5 billion bushels in 2021. The wide availability of feedstock within the country provides a stable supply environment for ethanol and supports the expansion of the country’s flexfuel vehicle fleet utilizing ethanol blends.

U.S. Flexfuel Cars Market Opportunities:

• Growing adoption of Sports Utility Vehicle (SUVs) and light trucks: Due to low gasoline prices and changing consumer preferences, light trucks and Sports Utility Vehicle (SUVs) are gaining significant share in the U.S. automotive market compared to passenger cars. Major Original Equipment Manufacturer (OEMs) like Ford (The company sells automobiles and commercial vehicles under the Ford brand, and luxury cars under its Lincoln brand.), GM (an American multinational automotive manufacturing), Stellantis (global automaker and provider of innovative mobility solutions), Toyota (a Japanese multinational automotive manufacturer), and Honda (a Japanese public multinational conglomerate manufacturer of automobiles, motorcycles, and power equipment) already offer several popular SUV and truck models with flex-fuel capabilities. The rising mix of these vehicle types offers significant room for growth for flex-fuel technology in the U.S. market. In 2020, SUVs accounted for over 50% of new vehicle sales, with trucks making up another 25%, according to data provided by the Department of Energy.
• Transition to advanced biofuels: While most flex-fuel vehicles use corn-based ethanol, growth opportunities exist by expanding the use of advanced biofuels like cellulosic ethanol and biomass-based diesel blends. These advanced biofuels can deliver even lower GHG emissions as compared to corn ethanol. Government support and manufacturer initiatives to scale up advanced biofuel production which can accelerate their adoption in flex-fuel models. According to the Department of Energy's Billion-Ton Report, in 2022, current U.S biomass residues from agriculture and forestry have the technical potential to produce over 1 billion dry tons of feedstock annually by 2040 to support a variety of bioenergy and bio product applications.
• Consumer education and incentives: A lack of consumer awareness about the benefits of flex-fuel vehicles and availability of E85 fueling infrastructure has constrained wider adoption. Automakers and government agencies have an opportunity to stimulate demand by educating consumers, thus providing incentives for flex-fuel vehicle purchases, and invest in expanding E85 station networks. Such efforts can significantly expand the country’s flex-fuel vehicle fleet. As outlined in the U.S Department of Energy’s International Energy Outlook, in 2021, global ethanol production is projected to increase 28% from 2020 to 2050.

U.S. Flexfuel Cars Market Trends:

• Expanding E85 infrastructure: There has been growing momentum in 2025-2028 to expand E85 fueling infrastructure to serve the rising flex-fuel vehicle population. Till 2022, there were over 2,700 E85 stations across the U.S., led by major ethanol-producing states like Iowa, Illinois, Minnesota, and Nebraska. Government and industry partnerships are underway to install more E85 pumps and make higher ethanol blends more accessible for flexfuel vehicle owners.
• Use of bio-based Eethanol: The ethanol used in flexfuel vehicles is primarily made from corn. However, there is a shift towards adopting bio-based ethanol produced from agricultural and forestry waste and residues. Several pilot projects and commercial plants are coming online across the Midwest U.S. to produce cellulosic ethanol from biomass feedstock. The adoption of bio-based ethanol can further reduce the carbon intensity of flexfuel vehicles. With the help of the Renewable Fuel Standard, domestic ethanol production reached 16.1 billion gallons in 2021, up from 14.5 billion gallons in 2020, according to the U.S Energy Information Administration.
• Co-evolving with hybrid/electric Vehicles: Major automakers are aggressively transitioning to electric mobility. However, flex-fuel technology is expected to co-evolve rather than get replaced by electrification, with its emission reduction and energy security benefits. Manufacturers are increasingly taking a portfolio approach by having both plug-in hybrids/EVs and flex-fuel models across vehicle segments to meet sustainability goals. According to the U.S Department of Energy, electric vehicle sales rose over 80% from 2020 to 2021. As these alternative fuel vehicles continue to gain widespread adoption, it is reducing the demand and need for flexfuel cars.
• Flexfuel offerings expanding globally: While Brazil and the U.S. lead flexfuel vehicle adoption, markets like Canada, Thailand, Australia, India, and Europe are also witnessing growth. Automakers are launching flex-fuel models across pickup trucks, SUVs, and passenger cars in these emerging markets. The global expansion provides economies of scale for further development and adoption of flex-fuel technology. According to the Renewable Fuels Association, U.S ethanol production in 2021 reached 15.9 billion gallons and is projected to reach 16.4 billion gallons in 2022, the availability of which is supporting increased flexfuel vehicle usage.

U.S. Flexfuel Cars Market Restraints:

• Mileage and performance challenges: As compared to gasoline, ethanol blends like E85 and have lower energy density thus leading to reduced fuel economy and mileage. E85 consumption can be 25-30% more than gasoline per mile in flexfuel vehicle models. The performance and acceleration of engines operating on ethanol blends also tend to be lower than gasoline-only operation. These factors pose a challenge for wider consumer acceptance. According to the report provided by the Union of Concerned Scientists, in 2023, consumer surveys have provided that over 50% of U.S drivers consider fuel economy and power/acceleration as very important factors when purchasing a new vehicle.
• Higher vehicle cost: The components and modifications required to make flex-fuel capability standard in vehicle models involve additional costs for automakers. Automakers tend to pass on some of these costs to consumers in the form of higher sticker prices for flex-fuel vehicles compared to their gasoline-only equivalents. The slightly higher upfront vehicle cost can deter wider adoption among price-sensitive buyers. The U.S Census Bureau’s Household Pulse Survey published in October 2021 found that over 10% of households reported not being able to pay their usual housing, vehicle, or other loan payments in the last month due to the economic impacts of the ongoing COVID-19 pandemic.
• Counterbalance: The high cost of the vehicle needs to be affordable after complying with all the necessary modifications that are needed.
• Gasoline price fluctuations: Historically lower gasoline prices in the U.S. market reduce the incentive for consumers to opt for flex-fuel models or use higher ethanol blends like E85. When gasoline is cheaper, the fuel cost savings potential of ethanol blends diminishes. Sustained lower gasoline prices over the past decade have been a restraining factor on the growth of the U.S. flex-fuel vehicle market. Till 2021, there were only around 3,300 E85 fueling stations across the U.S, as compared to over 100,000 gasoline stations. This limits the areas where flex fuel vehicles can source E85 fuel reliably.

Recent Developments

New product launches

• In 2022, Toyota (a Japanese multinational automotive manufacturer) launched the Corolla Cross SUV with a flex-fuel engine in Brazil, marking the first flex-fuel variant of the model. It is expected to attract customers looking for ethanol-powered vehicles.
• In 2022, Volkswagen (a German automobile manufacturer) launched the Polo and Virtus sedan models with flex-fuel engines in Brazil. The launch aligns with Volkswagen's aim to have over 70% of its vehicles in Brazil equipped with flex-fuel engines by 2023.
• In 2021, Ford (The Company sells automobiles and commercial vehicles under the Ford brand, and luxury cars under its Lincoln brand.) launched its 2021 F-150 pickup truck series with a flex-fuel capability by allowing it to run on gasoline and ethanol blends up to E85. This helped expand Ford's flex-fuel offerings in the popular F-150 lineup.

Acquisition and partnerships

• In 2022, Mercedes-Benz (offers a range of luxury car models in India, including sedans, SUVs, and more) acquired a minority stake in Flex Fuel Energy Development to help install flex-fuel pumps across Brazil. This supports Mercedes' plans to expand flex-fuel offerings in Brazil.
• In 2022, GM Brazil and Cosan (a Brazilian conglomerate producer of bioethanol, sugar and energy) announced a partnership to install over 100 ethanol hydration units at GM dealerships in Brazil. This will expand access to ethanol fuel for GM's flex-fuel vehicle customers.

Figure 1. U.S. Flexfuel Cars Market Share (%), By Fuel Type, 2023

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Top Companies in U.S. Flexfuel Cars Market

• Ford Motor Company
• General Motors
• Toyota Motor Corporation
• Honda Motor Co
• Nissan Motor Co
• Volkswagen AG
• BMW Group
• Daimler AG
• Hyundai Motor Company
• Fiat Chrysler Automobiles
• Mitsubishi Motors
• Mazda Motor Corporation
• Subaru Corporation
• Isuzu Motors Ltd
• Suzuki Motor Corporation
• Renault SA
• PSA Group
• Tata Motors
• Changan Automobile
• BAIC Motor Corporation

Definition: Flexfuel or flexible fuel vehicles are automobiles with an internal combustion engine that can run on gasoline, ethanol blends up to 85% (E85), or any combination of the two. The ability to use higher ethanol blends along with gasoline provides more flexibility and reduces the dependence on fossil fuels. Flexfuel cars are increasingly being adopted worldwide, especially in the U.S. and Brazil, which is driven by factors like energy security, emission reduction goals, and oscillating gasoline prices.

Flexfuel cars can run on gasoline, ethanol blends up to 85% (E85), or any combination of the two. The ability to use different fuel blends makes flexfuel vehicles attractive as it reduces dependence on gasoline and provides more flexibility. The growth of the U.S. flexfuel cars market is driven by supportive government policies, rising fuel prices, and environmental benefits of using ethanol blend.

The U.S. flexfuel cars market is segmented into fuel type, vehicle type, technology, a. By fuel type, the market is segmented into E85, E15, E70, E10 and others. The E85 segment held the largest share of the market in 2022, due to its high ethanol content and ability to drastically cut down greenhouse gas emissions.