vehicle electrification market is estimated to be valued at USD 110.78 Billion in 2024, exhibiting a CAGR of 10.8% over the forecast period 2024-2031. Governments across various countries are supporting electric vehicle adoption through incentives and subsidies to reduce dependency on fossil fuels. Furthermore, rising fuel costs and stringent emission norms are compelling automakers to focus more on electric vehicles.
Market Dynamics:
Rising environmental concerns around the globe coupled with stringent emission norms imposed by regulatory bodies are boosting the electrification of vehicles. Governments are promoting electric vehicles through subsidies, tax rebates and charging infrastructure development to reduce pollution levels. This is encouraging automakers to develop electric vehicles aggressively. Moreover, high fuel prices along with improved driving range and widespread charging infrastructure availability are prompting consumers to adopt electric vehicles. However, high manufacturing costs and lack of standardization continue to challenge the electric vehicle industry. Ongoing investments in battery technologies and lowering battery prices will be crucial for wider consumer acceptance.
Market Drivers
- Increasing Stringent Emission Regulations: Governments across the world have been implementing stringent emission regulations to curb air pollution and reduce carbon emissions from vehicles. The European Union has introduced stricter Euro emission standards while countries like China and India have also brought in norms like BS-VI and Bharat Stage Emission Standards that are at par with developed markets. These regulations are driving more automakers to develop electric vehicles that produce zero tailpipe emissions.
- Rising Fuel Costs and Volatility: Fuel costs, especially for gasoline and diesel, have been rising significantly over the past decade. Volatility in global oil prices also makes fuel costs uncertain for consumers. Meanwhile, the per-mile cost of driving electric vehicles continues to decrease as battery technology improves. Consumers are increasingly finding electric vehicles to be more affordable to own and operate in the long run compared to internal combustion engine vehicles. Falling battery prices are also helping accelerate electric vehicle adoption.
Market Restraints
- Insufficient Charging Infrastructure: Lack of widespread public charging infrastructure remains one of the biggest barriers in adoption of electric vehicles. As long as consumers lack a dependable means to charge their vehicles away from home, concerns about range anxiety will persist. While several companies and governments are working to build more chargers, the current infrastructure is still far from meeting anticipated future demand as more electric vehicles hit the roads. Standardization of fast charging technologies is another issue that needs to be addressed.
- Higher Upfront Purchase Costs: Electric vehicles still have significantly higher upfront purchase costs as compared to similar gasoline vehicles, even after available subsidies and incentives, due to high battery costs. While total ownership costs are lower in the long run, most consumers are unable or unwilling to bear the steep initial premium. Therefore, bringing battery costs down and further incentivizing purchases are important to make electric vehicles more affordable and accessible to mainstream buyers.
Market Opportunities
Shared Mobility and Fleet Electrification: The growth of shared mobility services like ride-hailing and rental fleets provides an opportunity to deploy electric vehicles at a larger scale. Fleet operators are keen to electrify their vehicles since these cover high annual mileages and benefit greatly from reduced fuel and maintenance costs. Companies like Uber have already committed to fully electric fleets in some cities in the coming years.
Increased Collaboration Between OEMs and Battery Makers: Growing collaboration between automotive companies and battery manufacturers holds promise to significantly advance battery technologies and drive down costs. For instance, automobile majors are investing in or forming joint ventures with battery cell producers to ensure a stable supply of high-quality, affordable batteries. Strategic partnerships will enable joint research on next-gen batteries and synergize manufacturing expertise.
In summary, the adoption of electric vehicles is being propelled by emission regulations and increasing fuel prices. However, the limited charging infrastructure and higher initial costs remain significant barriers to achieving widespread market penetration. However, opportunities around shared mobility fleets electrification and partnerships across the automotive and battery value chain will help further accelerate the vehicle electrification market growth in the coming years.
Key Developments:
- In July 2021, Suzuki Motor Corporation and Daihatsu Motor Co., Ltd has collaborated for Japan commercial vehicle project, aiming to advance their carbon neutrality efforts in mini-vehicles. The collaboration focuses on spreading CASE technologies and services to accelerate the electrification of mini-vehicles.
- In June 2021, XL Fleet Corp., a leader in fleet electrification solutions, partnered with Rubicon, a software platform specializing in smart waste and recycling solutions. This partnership allows XL Fleet to offer its fleet electrification solutions to Rubicon's waste and recycling hauler partners.
- In June 2021, Ford an American multinational automobile manufacturer acquired Electriphi, a U.S.-based provider of charging management and fleet monitoring software for electric automobiles. The integration of Electriphi's team and services into "Ford Pro" is expected to positively impact Ford's vehicle electrification efforts.
- In February 2021, Ford Motors Company announced the afossil fuel-powered vehicle production in its European division. By 2026, Ford plans to offer only plug-in hybrid and electric models, with a goal for all passenger vehicles to be battery-powered by 2030.
Link: https://www.coherentmarketinsights.com/market-insight/vehicle-electrification-market-1144
Key Players:
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 are the major players.
