The global electric vehicle power inverter market size was valued at USD 3,670 million in 2021. It is estimated to reach USD 18,980 million by 2030, growing at a CAGR of 22.8% over the forecast period (2022–2030). An electrical device called an inverter can be used in the engine of an electric car to convert direct current (DC) sources to alternating current (AC). Inverters significantly aid the electronic powertrain's control. Inverters come in various forms, including traction inverters and soft-switching inverters, and they are utilized in electric vehicles for several reasons. The electric vehicle power industry is primarily driven by elements like many domestic automakers and the consolidation of well-known battery manufacturers.
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Increased Sales of Electric Vehicles
The automobile industry has embraced electric vehicles as a necessary component, offering a method to improve energy efficiency and reduce emissions of pollutants and other greenhouse gases. The rising environmental concerns and supportive government initiatives are vital elements fueling market expansion. The market is further driven by the increasing sales of BEVs and PHEVs and reduced cost of inverter components due to advancements in materials and improved packaging arrangement. Moreover, the high price associated with batteries has necessitated the improvement of inverters and other power electronics, along with improving the performance of vehicles.
Governments worldwide have also initiated various schemes and policies that encourage buyers to choose electric vehicles over conventional ones. California ZEV program, which aims at having 1.5 million electric vehicles on the road by 2025, is one such initiative that promotes the purchase of electric vehicles. Countries like India, China, the United Kingdom, South Korea, France, Germany, Norway, and the Netherlands, are other countries that have various incentives for people willing to buy electric vehicles. Rapid global sales expansion and the ongoing technological developments in power inverters of electric vehicles are expected to fuel the market's growth over the forecast period.
Improved Investments in Electric Vehicles
The electric vehicle market is growing, likely accelerating further over the forecast period. This is because most vehicle manufacturers and the associated industries see electric vehicles as an investment opportunity. This growth is driving the electric vehicle and EV charging station market. China is the most promising market for electric buses globally, likely driving the e-bus demand over the forecast period. The overall bus purchases in the country are expected to remain stable, with more than 400,000 new purchases expected by 2025. Sales of electric buses are anticipated to rise due to ongoing government initiatives to foster e-mobility. By 2040, the global adoption of e-buses is expected to account for 40% of all new bus purchases.
Thailand is the 11th largest automotive producer in the world and the leading producer of vehicles in the ASEAN (Association of Southeast Asian Nations) area. In March 2020, the Thailand Board of Investment announced that Thailand received significant foreign direct investments supporting the country's growing electric vehicle production system. The Electric Vehicle Association of Thailand reports a sharp increase in the number of businesses involved in Thailand's electric vehicle market since 2015. Increasing focus on electric vehicles bring more opportunities for spare part manufacturers, and the ongoing technological developments in power inverters of electric vehicles are expected to fuel the growth of the market studied over the forecast period.
Lack of Sufficient Infrastructure for Electric Vehicles
For electric car adoption, a robust infrastructure for charging EVs is required. Despite their advantages from an environmental and financial standpoint, electric vehicles have not yet become mainstream. A lack of charging outlets constrains the electric vehicle business. For instance, a survey by Grant Thornton-Bharat and the Federation of Indian Chambers of Commerce & Industry (FICCI) predicted that by June 2021, India would need 4 lakh public charging stations to support the estimated 2 million electric vehicles that would be driving in Indian roads by that year. India only has 1,028 public electric vehicle charging points as of December 2021.
In addition, a report from the International Energy Agency (IEA) in 2021 stated that the number of electric vehicles worldwide reached 10 million in 2020, up 43% from 2019 and acquiring a 1% market share. In 2020, battery electric vehicles (BEVS) accounted for two-thirds of the stock and new electric car registrations. As a result, electric vehicle growth is slowed, making it difficult for the market for electric vehicle power inverters to thrive. Consequently, this has a negative effect on the production and acceptance of electric vehicles, which in turn restrains the expansion of the market for EV power inverters. Therefore, such an imbalance between the need for charging and the distribution of infrastructure discourages the manufacture of electric vehicles and further impediments the market's expansion.
Increased Government and Consumer Spending
Governments across the globe are incentivizing electric car purchases with tax deductions. In 2020, globally, the governments spent USD 14 billion on direct investment and incentives and tax deductions for electric cars, an increase of 25%. Significant government spending took place in Europe. Spending decreased in China to lower incentive schemes rolled out earlier to boost sales. Electric cars witnessed a slight price decline due to price caps introduced for subsidies. This resulted in a 3% decrease in the price of BEVs and an 8% fall in the price of PHEV cars in Europe and China. In December 2021, India announced a tax exemption of INR 1,50,000 to increase the sales of electric vehicles.
Improving business sentiments, post-COVID recovery, and increasing awareness about green vehicles have increased consumer spending on electric vehicles. The uptick in EV sales offers excellent opportunities for EV parts manufacturers, including power inverter manufacturers. In 2020, there was overall spending of USD 120 billion on electric cars, which was a 50% increase from 2019. Sales increased despite the hike of 6% in the average price of electric vehicles. Such spending provides lucrative market growth opportunities.
The global electric vehicle power inverter market is segmented by propulsion type, vehicle type, and region.
By propulsion type, the global electric vehicle power inverter market is segmented into Hybrid Electric Vehicles, Plug-In Hybrid Electric Vehicles, Battery Electric Vehicles, and Fuel Cell Electric Vehicles.
Battery Electric Vehicle accounts for the largest market share and is estimated to grow at a CAGR of 24.3% over the forecast period. Growth in the sales of battery electric vehicles and the high cost of batteries (USD 156/kWh in 2020) has necessitated the improvement of inverters and other power electronics, along with improving the performance of vehicles. Due to the rapidly expanding use of electric mobility worldwide, companies that transport goods are also replacing their current fleets of vehicles with those powered by electric propulsion. Governments all across the world have taken the initiative to develop laws that will promote the use of electric vehicles. With the increasing demand for battery electric vehicles globally, the need for power inverters is expected to grow over the forecast period.
The Hybrid Electric Vehicle is the second-largest segment. Hybrid electric vehicle sales have been gradually growing across the world. For instance, 454,890 unit hybrid vehicle sales in the United States compared to 380,794 unit hybrid electric vehicle sales in 2019. In 2019, 0.5 million units of hybrid vehicles were sold, witnessing a growth of over 20% Y-o-Y. Many luxury car manufacturers worldwide are also launching their automobiles with hybrid systems. For instance, BMW series 7, Lexus ES, Volvo XC90, Toyota Vellfire, and Porsche Cayenne, among others, have hybrid-electric systems. Growing luxury car sales in this segment across the world are expected to boost the segment's growth during the forecast period.
By vehicle type, the global electric vehicle power inverter market is segmented into Passenger Cars and Commercial Vehicles.
Passenger Cars account for the largest market share and are estimated to grow at a CAGR of 22.3% over the forecast period. Within an electric drivetrain, the inverter controls the electric motor. This inverter is a crucial component in the car, like the engine management system (EMS) of combustion vehicles, as it determines the efficiency of the vehicle. The global demand for hybrid, electric, and fuel cell passenger cars has been witnessing growth for the past few years, owing to the demand from North America, Europe, and Asia-Pacific (especially China). The electrification of cars is expected to continue during the forecast period, owing to upcoming models from automakers across the global market. These developments related to electric passenger cars are anticipated to offer new opportunities for players in the power inverter market.
APAC Reigns Supreme Over Others
By region, the global electric vehicle power inverter market is segmented into North America, Europe, Asia-Pacific, and the Rest of the World.
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Asia-Pacific accounts for the largest market share and is estimated to grow at a CAGR of 22.2% over the forecast period. China is a crucial player in the global electric vehicle industry. Moreover, the government of China is encouraging people to adopt electric vehicles. The country is planning to ban diesel and petrol vehicles entirely by 2040. The Chinese electric passenger car market is also one of the largest worldwide and has been growing rapidly over the last few years. It is expected to grow in the forecast period, affecting the demand for the electric vehicle power inverter as the need for electric cars increases. Contracts and agreements between Chinese automobile manufacturers and other countries for the export of electric buses are expected to drive the demand for electric vehicle power inverters in China. An increase in vehicle production to export to other countries and adopting electric mobility are the key factors expected to boost the demand for electric vehicle power inverters in China.
Europe is estimated to account for USD 6,500 million by 2030, growing at a CAGR of 23.6%. Germany is one of the major automobile markets in Europe. It represents one of the largest markets for electric trucks globally. The demand for electric cars has been growing continuously in Germany over the past few years, which paved the way for electric vehicle power inverters. For instance, passenger car sales have grown tremendously over the past few years. Electric cars showed a yearly growth of 207%, with 194.4 thousand units sold in 2020 compared to 63.2 units in 2019. The electric vehicle power inverter market is anticipated to gain from several collaborations, partnerships, and joint ventures between component makers. For instance, on May 22, 2020, VIC, an Israeli technology startup, and ZF Friedrichshafen AG partnered. The production of inverters for electric vehicles is the primary goal of the collaborative effort. The factors mentioned earlier create opportunities for electric vehicle components and parts manufacturers, as the demand for components such as electric vehicle power inverters is expected to rise during the forecast period.
North America is the third largest region. The demand for electric vehicle power inverters has been growing significantly over the past few years due to the increase in electric adoption and demand for electric vehicles in the United States. For instance, Despite the pandemic, the need for electric cars has grown positively. The registrations in the passenger cars segment increased from 1.45 million units in 2019 to 1.78 million units in 2020, a yearly growth rate of 22.56%. Growing demand for passenger vehicles, such as electric cars, is expected to drive the demand for electric vehicle power inverters. Various automobile manufacturers are working on the concepts and prototypes that will be available soon in the market for sale in the near future, along with preorders. All the above factors create opportunities for the electric power inverter, expected to boost the electric vehicle power inverter market in the United States.