Published Date : 27 Sep 2023
The global vehicle electrification market size surpassed USD 91.73 billion in 2022 and is projected to rise to USD 271.2 billion by 2032, anticipated to grow at a CAGR of 11.5 percent during the projection period from 2023 to 2032.
The vehicle electrification market is a growing trend that replaces internal combustion engines (ICE) with electric vehicles or hybrid vehicles (HVs), which use internal combustion engines and electric propulsion systems. Electric vehicles need a regular supply of battery energy to operate. There are different kinds of batteries to use, such as lithium-ion, molten salt, zinc-air, and others. These electric vehicles are designed to replace internal combustion engines, which help reduce environmental pollution. The electric vehicle provides higher fuel economy, easy charging at home, smooth drive and reduced sound from the engine.
Factors that support the growth of the global vehicle electrification market include fuel efficiency, high performance, and lower-emission transportation options offered by electrified vehicles. Government rules and regulations for reducing the cost of electric batteries are helping to drive the vehicle electrification market.
In terms of regional insight, Asia-Pacific holds the largest electric vehicle market share. The governments in the region support the adoption of electric vehicles and also provide subsidies for the purchase of electric vehicles, which are the factors increasing demand in this region. India is robustly adopting electric mobility, focusing on two-wheelers and three-wheelers for urban mobility. This element is expected to promote the electrification of existing vehicles in the upcoming period.
North America is expected to witness a significant growth rate in the vehicle electrification market during the forecast period. The United States plays a significant role in the electric verification market with the presence of market players that help to increase electric vehicle sales, such as Tesla. Various manufacturers, including General Motors, Ford, and others, are investing in the electrification of vehicles. Multiple governments in North America support the expansion of the charging infrastructure, major expenditures by OEMs in the development of vehicle electrification, and government incentives, such as tax credits for EV buyers, are the factors that help to drive the market growth.
Europe is another attractive marketplace expected to grow in the electric vehicle market over the upcoming years. Multiple European governments have announced their plans to reduce the effects caused by internal combustion of engine, this promotes the electrification of vehicles in the region while pushing manufacturers to invest heavily in the electric vehicle market. European countries are currently planning to expand the charging infrastructure across the continent, this will accelerate the adoption of electric vehicles in the upcoming years.
|Market Revenue in 2023||USD 101.82 Billion|
|Projected Forecast Revenue by 2032||USD 271.2 Billion|
|Growth Rate from 2023 to 2032||CAGR of 11.5%|
|Largest Market||Asia Pacific|
|Forecast Period||2023 to 2032|
|Regions Covered||North America, Europe, Asia-Pacific, Latin America, and Middle East & Africa|
An electric motor is more efficient compared to an internal combustion engine, resulting in lower energy consumption per kilometer traveled. Electric vehicles can store the energy during the braking and improve the energy efficiency. High-energy batteries based on lithium-ion technology have become standard in electric vehicles due to their efficiency and energy storage capabilities. Electric vehicle can recover their energy through the regenerative braking system. Regenerative braking systems can improve overall energy efficiency and extend the range of vehicles. Rolling resistance of tires can affect the energy efficiency. Low rolling resistance tires can reduce the energy required to move the vehicle and improve efficiency. As people focus on energy efficient options for transportation, the market for vehicle electrification is observed to grow in the upcoming period.
Electric vehicles typically have a limited range compared to gasoline or diesel vehicles. However, the range is developed with the advancement in technology. Although, the limited range factor remains a concern for long-distance travel in some regions with limited charging infrastructure. The range of the EVs depends on the battery of the vehicle. Although automakers have improved the battery technologies. Limited range is a psychological barrier faced by some electric vehicle owners. It refers to the fear of running out of battery before reaching the charging station. Thus, the factor associated with the range of electric vehicle often creates a restraint for the market.
The production of electric vehicles or electrifying the existing vehicles includes batteries, motors, and other components. The process requires an excellent supply chain, where job creation is not alone in electric vehicle assembly, even presented in the manufacturers of batteries, electric drivetrains, and associated technologies. Economic growth and development are interconnected with environmental sustainability to meet their climate and greenhouse gas reduction targets.
Economic growth fosters an environment where companies can invest in these emerging sectors, creating employment opportunities and contributing to economic development. Economic growth also offers the necessary resources and funding to invest in the development of EV charging infrastructure. Thus, the element is observed to act as a driver for the market.
The electric vehicle cost is generally high compared to the internal combustion engine. The upfront cost can be a barrier to the adoption of EVs. Battery costs will be reduced in the coming years, but the battery represents a whole proportion of overall vehicle cost. Electric vehicles need electric motors and electronics for propulsion, and they have manufacturing and material costs. Electrification of vehicles require research and development investment. These costs are passed on to the customers. The cost of materials and components used in the electric vehicle, such as lightweight materials for improved efficiency and advanced safety features, often impact the vehicle's overall price. Thus, the high cost investment in the electrification of vehicles is observed to create a restraint for the market.
Based on the product, the electric power steering segment is expected to sustain its position during the forecast period. The segment is expected to grow at a robust rate, due to increased consumer adoption, prioritize fuel efficiency and environmental concerns. Regulatory bodies and governments of many countries have pushed automakers to adopt these types of solutions to electrify vehicles in order to meet industry requirements. These systems help to automakers to reduce the carbon from the vehicle.
On the other hand, the start and stop system is another lucrative segment of the market. These start-and-stop technologies are increasingly common in new vehicles, including internal combustion engines and electric vehicles. This is a low-cost way for automakers to represent environmental credentials for vehicles. These technologies are smooth and have less visibility, leading to higher consumer acceptance.
The battery electric vehicles segment hold a significant share of the vehicle electrification market. Increasing consumer acceptance, fuel efficiency, and lower emission is the factor that helps to grow in the electric vehicle battery. There are fully electric vehicles that move alone on electricity for propulsion.
The micro hybrid vehicle segment influences the global vehicle electrification market and is expected to grow at a notable rate in the predicted timeframe. A micro hybrid is a simple form of electrification. It includes the small electric motor or generator used to assist the internal combustion engine. This electric motor can slightly boost acceleration, generate energy during braking, and enable start and stop to save fuel.
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