Global Vehicle Electrification Market Size, Share, Growth, Report and Forecast 2024-2032

Vehicle Electrification Market Analysis

The increasing sales of electric vehicles owing to the rising disposable income, rising number of options, growing efforts to reduce the dependence of customers on fossil fuels, and stringent government regulations aimed at reducing carbon emission levels are driving the demand of the vehicle electrification market.

The increasing inclination of the private transportation sector towards vehicle electrification due to economic and climate concerns is anticipated to bolster the market in the forecast period. Moreover, the rising demand for 48 V systems owing to their ability to enhance the power transmission to components is likely to be a key driving factor in the industry growth.

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Vehicle Electrification Market Trends

Technological Innovations in the Electrification Sector

Advancements in battery technology and electric drivetrains drive efficiency and performance, making electric vehicles (EVs) more attractive. The Federal Chamber of Automotive Industries reported that in the first quarter of 2023, the total sales of electric vehicles in Australia were estimated at 34,958 units. The figure surged to 63,899 units in the first quarter of 2024, driving up the vehicle electrification market revenue, as advances in battery technology and electric drivetrains improve EV efficiency, performance, and range, making them more attractive to consumers.

According to the Open Government Data Platform India, 2,877 EV chargers have been sanctioned across various states and union territories in India by Sept 2023, with Maharashtra and Tamil Nadu leading with 317 and 281 EV chargers sanctioned. These high-capacity chargers are expected to offer fast charging services, aiding the growth of EV vehicles.

Rising Trend of Sustainability

EVs offer reduced emissions and better fuel efficiency, aligning with global sustainability goals and attracting environmentally conscious consumers. Several government initiatives across the world are readily supporting the deployment of EVs and eventually contributing to sustainability goals and boosting the growth of the vehicle electrification market. For instance, the federal government in the United States offers tax credits of up to USD 7,500 for people buying electric vehicles and, in some states, like California, the state government provide additional rebates to reduce the total cost further.

Several EU countries, including Germany and France, on the other hand, offer subsidies and tax incentives for electric vehicle buyers. In Germany, for instance, buyers can receive subsidies of up to €6,000. The Chinese government is offering financial assistance for electric vehicle purchases and has extended tax exemptions on EV sales through initiatives like the New Energy Vehicle (NEV) program.

Industry News

October 2024

Kia Motors announced the launch of its flagship electric vehicle ( EV), the EV9, in India to expand its reach in the EV market.

October 2024

EDF and Pod Point announced the launch of the industry-first electric vehicle (EV) home charger and tariff bundle which can reduce the upfront costs of transitioning towards EVs.

Opportunities in Vehicle Electrification Market

Innovations in fast charging and wireless charging can enhance convenience and drive adoption. According to the China Passenger Car Association, in the first quarter of 2024, global electric car sales substantially increased, with sales nearing 3.5 million units, Notably, China retained its leading position, selling nearly 1.9 million electric cars from January to March, signifying a 35% surge compared to the same period in 2023.

As per the vehicle electrification market dynamics and trends, as per the China Passenger Car Association, in Europe, EV sales increased from 0.65 million units in Q1 2022 to approximately 1.2 million units in Q1 2024. In the United States, sales rose to approximately 0.75 million units in Q1 2024 from 0.35 million units in Q1 2022. This surge in the production of EVs has fuelled the necessity of fast-charging equipment that can supplement the rising demand for EVs, leading manufacturers to come up with innovative equipment to stay ahead of their competitors.

Vehicle Electrification Market Restraints

The rapidly growing market attracts numerous competitors, potentially leading to price wars and reduced profit margins. For instance, in 2024, Tesla introduced substantial price cuts for its electric vehicle lineup, including the Model Y, Model S, and Model X, leading to intense price competition in the industry. This approach, aimed at strengthening its market position, has forced other automakers to adopt similar measures, impacting their profit margins as they strive to maintain competitive pricing, which can impact the vehicle electrification demand forecast.

Supply chain issues and shortages of critical battery materials can impact production and cost. Disruptions in the supply chain, particularly concerning crucial battery materials such as lithium and nickel, have posed considerable challenges. For example, recent shortages of cobalt have resulted in higher costs, influencing both the production and pricing of electric vehicles (EVs). This instability in supply may affect overall production levels and pricing structures within the EV sector, which depends significantly on a reliable supply of these key materials.

Market Dynamics

Subsidies, tax incentives, and regulatory support enhance market adoption and lower the financial impact on consumers, driving up vehicle electrification demand. The UK provides a range of incentives, such as grants for the purchase of electric vehicles and the installation of home charging stations. Furthermore, under the Zero Emission Bus Program, the UK government is allocating GBP 129 million (around USD 160 million) to enhance electric bus infrastructure and facilitate the introduction of zero-emission buses.

Increasing consumer interest and demand for clean energy solutions also present significant growth opportunities in the market.  As per the European Automobile Manufacturers Association, in 2023, the European Union had 632,423 public charging points, including 153,027 new installations within the year, reflecting rapid expansion efforts. Germany and France emerged as leaders, with 120,625 (19.1%) and 119,255 (18.9%) charging points respectively. This robust growth in infrastructure development supporting clean energy solutions is driving the market growth.

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Global Vehicle Electrification Industry Segmentation

“Global Vehicle Electrification Market Report and Forecast 2024-2032” offers a detailed analysis of the market based on the following segments:

Vehicle electrification is defined as a process in which a vehicle is powered through electricity. The conventional systems in a vehicle are replaced by electrical systems and all the components of the vehicle system are electrified, thereby propelling the engine. The use of vehicle electrification reduces the dependence on fossil fuels.

Market Breakup by Product Type

• Electric Oil Pump
• Alternator
• Electric Car Motors
• Electric Water Pumps
• Electric Fuel Pump
• Actuators
• Electric Power Steering
• Electric Vacuum Pump
• Start/Stop System

Market Breakup by Sales Channel

• Aftermarket
• Original Equipment Manufacturers (OEM)

Market Breakup by Vehicle Type

• Micro and Full Hybrid Vehicle
• Internal Combustion Engine Vehicle
• Plug-in Hybrid Electric Vehicle (PHEV) and Battery Electric Vehicle (BEV)

Market Breakup by Region

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

Vehicle Electrification Market Share

By Product Type Insights

Electric oil pumps boost engine efficiency by maintaining optimal oil pressure at different speeds, enhancing performance, fuel economy, and reducing noise, while also allowing precise oil flow control for greater engine reliability. Alternators deliver a consistent power supply for vehicle systems and recharge the battery, which prolongs battery life and supports advanced electrical accessories, thereby driving vehicle electrification demand growth.

More efficient than conventional systems, they reduce engine load and emissions, thus optimizing vehicle performance. Together, these components contribute to smoother operation, improved fuel efficiency, and quieter, more dependable vehicle performance, driving growth in the vehicle electrification market.

By Sales Channel Insights

OEMs account for a significant vehicle electrification market share as they are heavily investing in electrification to produce fully electric vehicles (BEVs) and plug-in hybrids (PHEVs) across various vehicle categories. Companies like Ford, General Motors, and Volkswagen are not only expanding their EV model lineups but are also developing proprietary electrification technologies, such as battery systems, in-house to reduce costs and secure their supply chains. Additionally, many OEMs are forming strategic partnerships with suppliers to innovate in areas like thermal management and high-voltage inverters, which are critical for the efficiency and performance of EVs.

By Vehicle Type Insights

Micro and full hybrid vehicles are anticipated to witness high demand in the forecast period and are likely to take-over the conventional fossil fuel-driven vehicles. This can be attributed to the significant advantages offered by micro and full hybrid vehicles, which include affordability, environment-friendliness, regenerative braking system, lightweight, automatic start and stop systems, and higher resale value, among others. These benefits are expected to aid the market growth industry in the forecast period.

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Vehicle Electrification Market Regional Insights

North America Vehicle Electrification Market Dynamics

North America, especially the United States, is experiencing rapid advancements in vehicle electrification, driven by federal tax credits, state incentives, and substantial investments in charging infrastructure. As per the vehicle electrification industry analysis, in 2023, electric vehicle sales surged to 1.4 million units, representing a 40% increase from 2022, largely supported by incentives from the Inflation Reduction Act. Major automotive manufacturers, including General Motors, are making significant investments and aim to launch 30 new electric vehicle models by 2025. This region is expected to enhance its charging networks and sustain its incentive programs, further encouraging the adoption of electric vehicles.

Asia Pacific Vehicle Electrification Market Drivers

Asia Pacific boosts the vehicle electrification market opportunities, with China and India leading the market growth. For instance, India's FAME II initiative provides financial incentives to encourage the purchase of electric vehicles, particularly two- and three-wheelers that are commonly used for transportation. The government has committed to improving EV infrastructure, with a goal of deploying 50,000 electric buses by 2027. Additionally, tax benefits are offered for loans used to buy electric vehicles, and reduced import duties help make EV ownership more affordable for consumers.

Europe Vehicle Electrification Market Outlook

Europe accounts for a significant market share due to stringent emissions regulations and the growth of sustainable infrastructure. In 2023, electric car registrations in Europe reached 3.2 million, reflecting a 20% increase from the previous year, which increased the vehicle electrification industry revenue. Countries like Germany, France, and the Netherlands show notable sales figures for electric vehicles (EVs), with around 25-30% of newly sold cars being electric. Additionally, policies in some nations aimed at banning internal combustion engines (ICE) by 2035 are further aiding the market growth. The European Union is also making significant investments in public charging networks, aiming to establish one million charging points by 2025.

Middle East and Africa Vehicle Electrification Market Growth

The Middle East and Africa are experiencing a rise in vehicle electrification, driven by a growing commitment to sustainable alternatives that reduce dependence on oil. For instance, the UAE has introduced initiatives like free charging for electric vehicles and aims to convert 20% of its government fleet to electric by 2030, which can boost the growth of the vehicle electrification industry. Similarly, South Africa is creating incentives to boost electric vehicle adoption and is increasingly interested in local assembly of EVs to meet regional demand. The region is focusing on building infrastructure to attract more investments in electric vehicles and promote cleaner transportation options.

Latin America Vehicle Electrification Market Trends

Latin America is expected to occupy a substantial share of the market due to government initiatives and investments in charging infrastructure. Brazil and Mexico lead the region in electric vehicle sales, supported by policies that encourage cleaner transportation alternatives, boosting the vehicle electrification market value. The market for electric buses and commercial vehicles is seeing significant growth, thanks to local subsidies and initiatives aimed at reducing urban air pollution. Furthermore, Chile and Colombia are actively developing policies that promote electric vehicles, especially in public transportation.

Innovative Vehicle Electrification Startups

As electric vehicle (EV) adoption continues to rise, startups are making significant advancements in EV charging infrastructure to expand their market reach. For instance, they are developing extensive open networks for EV charging as well as offering mobile charging solutions that incorporate battery storage. This innovation enables flexible charging options that can be deployed in diverse locations without the need for extensive infrastructure.

Rivian

Rivian, headquartered in Michigan, specialises in all-electric trucks and SUVs designed for outdoor and adventure enthusiasts. The R1T pickup and R1S SUV from Rivian provide impressive range capabilities and are engineered to run on tough terrains. The company has gained major backing from major investors, including Ford and Amazon, which has led them to develop a fleet of electric delivery vans.

Arrival

Arrival, established in the United Kingdom, is dedicated to manufacturing electric commercial vehicles, including delivery vans and buses, specifically designed for urban environments. By using modular electric vehicles produced in small, decentralised micro factories, Arrival effectively lowers costs and enhances production adaptability. This strategy also facilitates localised manufacturing, which can help minimise emissions related to logistics. Arrival has attracted investments from firms such as BlackRock and Hyundai and has formed partnerships with companies like UPS to develop future electric delivery vehicle fleets.

Competitive Landscape

The companies specialise in advanced motion subsystems, such as electric motors and actuators, enhancing vehicle performance and efficiency. They focus on precision engineering and reliable solutions for various industries. Automakers in the vehicle electrification market are making significant investments in lithium iron phosphate (LFP) batteries, which are more cost-effective and do not depend on cobalt, a material that is both rare and expensive. This transition allows these market players to reduce production expenses and provide more affordable electric vehicles, thereby increasing accessibility to EVs for a wider customer base. The movement towards LFP and other economical battery technologies is anticipated to drive mass-adoption by enhancing the financial feasibility of EVs.

Key Industry Players

Continental AG

The company expanded its electric powertrain systems portfolio to meet the growing demand of the market. It has also launched advanced battery management systems to improve safety.

Hitachi Automotive Systems, Ltd.

The company is focused on developing high-efficiency electric vehicle components. It has also introduced advanced energy management solutions to optimise performance.

Aisin Seiki Co., Ltd.

The company has developed new drive units for ultra-small electric vehicles. It is also committed to supporting sustainable mobility to capture market opportunities.

Denso Corporation

The company has partnered with leading automotive companies and developed new components for electric vehicles.

Other major vehicle electrification market players are Delphi Technologies, Robert Bosch GmbH, ZF Friedrichshafen AG, Johnson Electric Holdings Limited, and Magna International Inc., among others.

Recent Developments

October 2024

Uber announced that it is aiding the vehicle-electrification efforts by making changes to the ride-hailing platform which can aid both riders and drivers in transitioning towards EVs.

August 2024

Allison Transmission, a provider of automatic transmissions and electrified propulsion systems, announced its partnership with Cummins Inc. which has chosen Allison's Vehicle Electrification + Environmental Test Center to conduct tests on multiple trucks which contain Cummins' powertrains.