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.

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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.

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.