VEHICLE ELECTRIFICATION MARKET ANALYSIS

Vehicle Electrification Market Size and Trends

The Vehicle Electrification Market is estimated to be valued at USD 110.78 billion in 2024 and is expected to reach USD 227.83 Billion by 2031, exhibiting a compound annual growth rate (CAGR) of 10.8% from 2024 to 2031.

Discover market dynamics shaping the industry request sample copy

Government mandates for electric vehicles along with consumer shift in preferences towards sustainable mobility are expected to drive the industry's growth over the next decade.

Countries like China, the U.S., and Germany have announced plans to incentivize sales and production of EVs. Many automakers are investing heavily in developing EV technology to capture this growing market. Furthermore, decline in battery prices is making electric vehicles more affordable and accessible to masses. Several nations are also simultaneously working to setup adequate public charging infrastructure to alleviate range anxiety among customers and boost electric vehicle adoption rates. With existing tailwinds, the vehicle electrification market is well positioned for robust expansion in the coming years.

Climate Change Concerns

Government policies and regulations regarding vehicular emissions have become stricter over the years with growing climate change concerns. Transportation accounts for a major portion of global greenhouse gas emissions and there is a pressing need to reduce the carbon footprint of passenger and commercial vehicles. Electrified powertrains such as hybrids, plug-in hybrids, and battery electric vehicles generate fewer emissions over their lifecycle compared to conventional internal combustion engine vehicles. Major economies around the world have outlined ambitious targets to curb emissions and have introduced incentives and subsidies to promote the adoption of electric vehicles. Customers are also gradually becoming more environmentally conscious and are willing to pay more for electric vehicles considering the long-term benefits. The automotive industry is actively working to develop affordable electric vehicles with an improved driving range. Meanwhile governments are investing heavily in public charging infrastructure to allay range anxiety issues. All these factors are expected to significantly drive-up demand for electric vehicles in the coming years as countries aim to meet their emissions goals.

For instance, in July 2021, Suzuki Motor Corporation a Japanese multinational mobility manufacturer and Daihatsu Motor Co., Ltd. a Japanese internal combustion engine manufacturer. collaborated on commercial vehicles to advance carbon neutrality initiatives in the mini-vehicle sector. Their joint effort focuses on promoting the adoption of CASE technologies and services, expediting the electrification of mini-vehicles and fostering positive changes in the automotive industry.

Market Concentration and Competitive Landscape

Get actionable strategies to beat competition: Get instant access to report

The technological progress in the field of automotive electrification has been tremendous over the past decade. continuously improving the performance of lithium-ion batteries while bringing down costs. Early electric vehicles had a very limited driving range but battery technology has advanced rapidly with the development of new chemistries, materials and manufacturing processes. The energy density of lithium-ion batteries has increased multi-fold allowing electric vehicles to travel farther on a single charge. Meanwhile, battery costs have dropped substantially owing to economies of scale in battery production and new manufacturing methods. Major automakers now offer electric vehicles with driving ranges comparable to gasoline vehicles at a pricing that is increasingly affordable for mainstream customers after incentives. It is forecasted that battery costs will decline further in future as companies invest heavily in battery R&D and manufacturing capacity increases globally. This will pave the way for mass adoption of affordable long range electric vehicles without compromise. As technology matures and battery prices stabilize at low levels, total ownership costs of electric vehicles are expected to reach parity with internal combustion vehicles over the next few years in most vehicle segments. Both customers and manufacturers will see increasing appeal of electrification.

For instance, in September 2021, the Switzerland-based automation company ABB unveiled Terra 360 electric car charger, offering a unique charging experience for EV owners. This customizable all-in-one charger supports simultaneous charging for up to four vehicles, delivering an impressive 100 kilometers of range in less than three minutes.

To learn more about this report, request sample copy

The vehicle electrification market faces several challenges in its growth. Established automakers' dependence on internal combustion engines results in reluctance to transition fully to EVs. Developing affordable EV battery technologies with sufficient driving range per charge remains difficult due to high material costs. Building out charging infrastructure is a massive undertaking requiring coordination among automakers, energy companies, and governments. Customers are hesitant about EVs due to 'range anxiety' and long charging times. Moreover, shifting heavy industries like trucks and buses to electric power has technological and economic obstacles.

Market Opportunity: Expanding Consumer Market

Government policies pushing for electrification through regulations and incentives will drive automaker investments. As battery and motor technologies improve, EVs are projected to reach price parity with gas vehicles this decade. This will expand the potential customer base. The growing concern over air pollution and climate change boost social acceptance of EVs.

Discover high revenue pocket segments and roadmap to it: Get instant access to report

The Start/Stop System segment is expected to hold the highest share of 17.1% in 2024, due to powerful underlying factors driving consumer demand. As fuel economy and emission standards continue to tighten globally, automakers are under increasing pressure to reduce the fuel consumption and emissions of new vehicles. The Start/Stop System provides an affordable and effective solution to meet these goals. Unlike some other electrification technologies, Start/Stop Systems can be easily integrated into existing internal combustion engine (ICE) vehicle architectures with minimal upgrades required. This has made them appealing for automakers looking to quickly electrify their model lines without a complete redesign.

On the consumer side, drivers have become more environmentally conscious and concerned about high fuel costs. The promise of improved fuel efficiency from Start/Stop technology without compromising driving dynamics or convenience has resonated well. Many buyers see it as a relatively low-cost way to reduce their carbon footprint and monthly fuel bills. Additionally, as automakers have gained experience with the technology, they have enhanced the refinement of restart performance. Early generation systems suffered from occasional rough or delayed restarts, but modern implementations have addressed these issues. Consumers now trust that Start/Stop will be transparent during everyday use.

Insights, By Degree of Hybridization- Battery Electric Vehicle component Drives the Growth of Vehicle Electrification Degree of Hybridization Segment

Within the Degree of Hybridization segmental analysis, the battery electric vehicle category has emerged as the frontrunner for growth. BEVs offer a truly zero-emissions option that is appealing to both environmentalists and those concerned with urban air quality issues from vehicle pollutants. They are also incentivized through supportive government policies in major markets like Europe and China looking to curb their CO2 emissions. For example, Norway has led the world with generous purchase subsidies and tax exemptions that have made BEVs very attractive to buyers.

Technological progress is expanding vehicle ranges and addressing range anxiety concerns that had previously held BEV adoption back. New high-capacity lithium-ion battery packs allow for EPA-rated distances over 250 miles on a single charge for some models. Widespread installation of public fast-charging stations is shortening recharge times from hours to minutes. Meanwhile, automakers are achieving battery cost reductions through extensive R&D bringing the total cost of ownership of a BEV closer to a comparable gas-powered car when fuel savings and incentives are considered. All of these factors are making BEVs a more practical choice for a growing number of drivers and a stimulating growth engine for this segment.

Regional Insights

To learn more about this report, request sample copy

Asia Pacific has been the dominant player in the vehicle electrification market for years and is expected to hold the largest share of 52.20% in 2024, due to China which has emerged as the fastest growing regional market in recent times. Aggressive targets set by the Chinese government to increase electric vehicle production and use have accelerated investments and innovations in the industry. Several new EV startups are coming up in China which are making affordable electric cars that appeal to local customers. At the same time, established automakers like BYD and SAIC are rapidly expanding their electric model lineups. China's large automobile market size and growing preference for new technologies among consumers have accelerated this shift towards electrification. In addition, lower costs of manufacturing EVs in China compared to other regions have made them more competitive in global markets as well. As a result, China has overtaken other regions to become the largest EV market and is surpassing production targets well ahead of schedule.

However, North America is expected to have the highest CAGR of 12.27% in 2024. The large presence of major automotive OEMs like Tesla, GM, and Ford have driven significant investments in research and development of electric technologies. With their headquarters and major manufacturing facilities located in the U.S. and Canada, these companies have been at the forefront of developing electric vehicles. In addition, supportive government policies like tax incentives and emissions regulations have encouraged higher adoption of electric vehicles in the region. As a result, North America accounts for the largest share of electric vehicle sales globally.

While the U.S. and Europe have strong automotive industries and customer demand remains robust, suppliers in these regions are facing challenges from low-cost yet innovative Chinese manufacturers. However, established North American and European suppliers continue leveraging their engineering expertise and quality standards to target high-value segments. Nonetheless, China's aggressive focus on developing a local EV supply chain presents opportunities for partnerships that can help global suppliers access that fast-growing market as well.

Market Report Scope

Vehicle Electrification Industry News

• In April 2022, BMW which is a German multinational manufacturer of luxury vehicles expressed a strong commitment to electric vehicles (EVs) by setting a goal to make 50% of its total sales EVs by 2030. The automaker also launched two electric models, the BMW i4 and iX, emphasizing enhanced performance and longer driving ranges. This move reflects BMW's dedication to sustainable mobility solutions.
• Also in April 2022, BYD Motors a manufacturer of electric vehicles, introduced ECC32 advanced battery electric forklift, weighing 7,000 pounds. Notable for its innovative design eliminating charge restrictions, this forklift enhances the landscape of electric forklift options.
• In June 2021, XL Fleet Corp., known for fleet electrification solutions, collaborated with Rubicon, a smart waste and recycling solutions platform. XL Fleet's solutions were made available to Rubicon’s waste and recycling hauling partners, contributing to sustainable operations and innovative waste management solutions.
• In June 2021, Ford an American multinational automobile manufacturer, acquired Electriphi, a California-based company offering charging management and fleet monitoring software for electric vehicles. Electriphi's team and services were integrated into "Ford Pro."
• In February 2021, Ford an American multinational automobile manufacturer announced plans to fully phase out fossil fuel-powered vehicle manufacturing in its European division, aiming to offer only plug-in hybrid and electric models by 2026.

*Definition:The vehicle electrification market involves technologies that use electric power to partially or fully power vehicles. This includes hybrid electric vehicles (HEVs) that have both an electric motor and an internal combustion engine (ICE), plug-in hybrid electric vehicles (PHEVs) that can be charged externally and have a larger electric-only range, battery electric vehicles (BEVs) that run solely on battery power, and fuel cell electric vehicles (FCEVs) that use hydrogen fuel cells to power electric motors.

Market Segmentation

• Product Type Insights (Revenue, USD Bn, 2019 - 2031)
  • Start/Stop System
  • Electric Power Steering (EPS)
  • Electric Air-Conditioner Compressor
  • Electric Vacuum Pump
  • Electric Oil Pump
  • Electric Water Pump
  • Liquid Heater PTC
  • Integrated Starter Generator (ISG)
  • Starter Motor
  • Alternator
  • Actuator Start/Stop System
• Degree of Hybridization Insights (Revenue, USD Bn, 2019 - 2031)
  • Battery Electric Vehicle (BEV)
  • Plug-In Hybrid Electric Vehicle (PHEV)
  • Hybrid Electric Vehicle (HEV)
  • Micro-Hybrid Vehicle & Internal Combustion Engine (ICE)
• Regional Insights (Revenue, USD Bn, 2019 - 2031)
  • North America
    • U.S.
    • Canada
  • Latin America
    • Brazil
    • Argentina
    • Mexico
    • Rest of Latin America
  • Europe
    • Germany
    • U.K.
    • Spain
    • France
    • Italy
    • Russia
    • Rest of Europe
  • Asia Pacific
    • China
    • India
    • Japan
    • Australia
    • South Korea
    • ASEAN
    • Rest of Asia Pacific
  • Middle East & Africa
    • GCC Countries
    • South Africa
    • Israel
    • Rest of Middle East & Africa
• Key Players Insights
  • AISIN CORPORATION
  • Aptiv
  • BorgWarner Inc.
  • Continental AG
  • DENSO CORPORATION
  • Hitachi Astemo, Ltd.
  • Johnson Controls
  • Johnson Electric Holdings Limited
  • JTEKT Corporation
  • Magna International Inc.
  • Mitsubishi Electric Corporation
  • Robert Bosch GmbH
  • Valeo SA
  • Wabco Holdings Inc.
  • ZF Friedrichshafen AG