Global Alternative Fuel Vehicles Market Report and Forecast 2024-2032

Global Alternative Fuel Vehicles Market Outlook

The global alternative fuel vehicles market is expected to grow at a CAGR of 11.6% during the period 2024-2032.

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Global Alternative Fuel Vehicles Market Likely to be Driven by Regulations Seeking to Reduce Emissions and Oil Imports, and Promote Cleaner Fuels

The global alternative fuel vehicles market is expected to be driven by efforts to reduce dependence on fossil fuels, reduce imports of oil, and seek and develop cleaner sources of energy to power vehicles. Individual consumers also are showing increasing interest in such vehicles. While North America and Europe are major markets, the market is expanding to developing nations such as India also. In 2021, Minister of Road Transport and Highways of India, announced that India was framing policies to promote the use of clean fuels, including electric vehicles, and strengthening emission norms to meet carbon reduction targets, and that the aim was to slowly shift to fuels that were import substitutes, cost effective, indigenous and pollution free. The Government of India is making efforts to promote electric vehicles as well as considering other alternative fuel options.

Use of alternative fuel vehicles helps conserve fuel and lessen vehicle emissions. Examples of alternative fuels are given below.

• Biodiesel: Can be produced from vegetable oils, animal fats, or recycled cooking grease for use in diesel vehicles.
• Electricity: Used to power plug-in electric vehicles. Hybrids use electricity to boost efficiency.
• Ethanol: Widely employed renewable fuel produced from corn and other plant material. Mixed with gasoline for use in vehicles.
• Hydrogen: A potentially emissions-free alternative fuel.
• Natural gas:  Gaseous fuel with potentially significant fuel cost advantages over gasoline and diesel fuel.
• Propane: Readily available gaseous fuel. Has been widely used in vehicles across the world for decades.

Other alternative fuels include biobutanol, dimethyl ether, methanol and renewable hydrocarbon biofuels (renewable diesel, renewable gasoline, and sustainable aviation fuel).

Examples of alternative fuel vehicles are given below.

• Fuel Cell Electric Vehicles (FCEVs): These vehicles are powered by hydrogen, more efficient than traditional internal combustion engine vehicles and release no tailpipe emissions. Car manufacturers are increasingly offering FCEVs to customers. Examples include Toyota Mirai and Hyundai Nexo.
• Natural Gas Vehicles (NGVs): Due to their potential to give similar fuel range support for applications that stay within a region supported by dependable CNG fueling, NGVs are suited for high-mileage, centrally-fueled fleets. Liquefied natural gas (LNG) has a higher energy density than compressed natural gas (CNG), making its range equivalent to that of conventional gasoline. Thus, LNG is more suitable for vehicles travelling long distances. There are three types of NGVs:
  • Dedicated: Run only on natural gas.
  • Bi-fuel: Such vehicles carry two distinct fueling systems enabling them to run on natural gas or gasoline.
  • Dual-fuel: Such vehicles carry fuel systems that run on natural gas but use diesel fuel for ignition assistance. This arrangement is generally restricted to heavy-duty vehicles.
• Propane Vehicles: Several propane vehicles are employed in fleet applications, such as school buses, shuttles, and police vehicles. While original equipment manufacturers (OEMs) provide propane vehicles, such vehicles can be developed via a conversion. Propane engines and fuelling systems are also available for heavy-duty vehicles.

Government Efforts, Increased Electric Vehicle Adoption Across the Goble Expected to Boost the Market

In 2023, the Washington DC Auto Show particularly emphasized showcasing electric vehicles. The US government aims to achieve 50% zero-emission vehicles on the road by 2030. The auto show sought to reflect the increased adoption of electric vehicles on a global scale. The event also highlighted that there was an expanding market for electric vehicles in the USA.

Europe also is pushing to do away with combustion engines in passenger vehicles by 2035. The first such ban would be enforced in Norway in 2025. In 2021, electric cars explained over 60% of Norway’s vehicle sales. In light of the above, it is expected that the market for alternative fuels will likely be driven by increased adoption of electric vehicles.

Lack of Current Infrastructure May Hinder the Market

The incompatibility of current petroleum and natural gas pipeline networks and refuelling stations with alternative fuels is one of the primary issues facing the alternative fuel vehicle market. Such infrastructure is necessary for the expansion of the market.

Global Alternative Fuel Vehicles Market Segmentation

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By fuel type, the market is segmented into:

• Compressed Natural Gas (CNG)
• Hydrogen 
• Electric
• Others

By vehicle type, the market is classified into:

• Passenger Vehicles
• Light Commercial Vehicles
• Medium and Heavy-duty Commercial Vehicles

By region, the market is segmented into:

• North America
• Europe
• Asia Pacific
• Latin America
• Middle East and Africa

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Key Industry Players in the Global Alternative Fuel Vehicles Market

The report presents a detailed analysis of the following key players in the market, looking into their capacity, and latest developments like capacity expansions, plant turnarounds, and mergers and acquisitions:

• Tesla, Inc.
• Bayerische Motoren Werke AG (BMW) 
• Audi AG
• Suzuki Motor Corporation  
• Ford Motor Company
• Honda Motor Company 
• Others

The EMR report gives an in-depth insight into the industry by providing a SWOT analysis as well as an analysis of Porter’s Five Forces model.

Key Highlights of the Report