Vehicle Electrification Market

Market Overview

The global vehicle electrification market revenue was valued at USD 82.13 billion in 2021, and it is anticipated to reach USD 186.8 billion by 2030 at a CAGR of 9.56%. Public transit is predominant in Europe and Asia-Pacific, while North America relies heavily on private vehicles. Rising urban populations strain existing transportation infrastructure, fueling the demand for public transportation. OEMs advocate electric vehicles to cut carbon emissions. Taxis and cars are embracing greener tech amid the rise of mobility-on-demand. 

The increasing electrification of motor vehicles is the primary engine behind the enormous shift in the automotive industry. This demand for vehicle electrification is driven by a surge in automobile production and a global increase in vehicle sales. It's gaining popularity as an alternative to more traditional hydraulic and mechanical systems. It results in increased fuel efficiency and a reduction in the vehicle's pollution level. Because of the growing trend of electrifying vehicles, original equipment manufacturers (OEMs) have seen a considerable drop in the weight of automotive components. It, in turn, helps reduce fuel consumption and improves the vehicle's operating efficiency.

The electrification of internal combustion engines is a revolutionary breakthrough since it reduces the fuel that must be used. Additionally, electric vehicles outperform traditional vehicles in terms of carbon emission and maintenance, the convenience of charging and refuelling, smoother driving, reduced noise from the engine, and improved fuel economy. The global market for vehicle electrification is anticipated to expand due to several factors, including a surge in the adoption of fuel-efficient mobility solutions, practical performance requirements, and a drop in the price of batteries per KWH.

Market Dynamics

Market Drivers

The increasing number of charging stations has been driving the market growth.

The automobile industry's drive toward electrification remains strong, even though the crisis has left a large cash vacuum and delayed several new vehicle initiatives, including EVs. On the other hand, during the forecast period, increased demand for cost-effective solutions and the growing trend of electrification of commercial vehicles and fleets are expected to provide lucrative opportunities for global market advancement.

The increased focus on products in recent years has resulted in high demand for car electrification and associated infrastructure. A growth in the number of charging stations, combined with government financial incentives, is emerging as a critical element driving demand for electric vehicles. Electric vehicles have lower operating costs than conventional ICE-powered vehicles, which is projected to propel the vehicle electrification market forward. Vehicle electrification is in high demand due to rising consumer demand for fuel-efficient automobiles.

Increasing demand for architecture using 48V

It is anticipated that the notion of 48 V architecture or mild hybrids would soon drive demand for vehicle electrification since it is fast gaining acceptance globally. Compared to mild hybrids, the fuel efficiency of total hybrid vehicles is significantly superior. The International Council on Clean Transportation estimates that total hybrid vehicles reduce their owners' reliance on fossil fuels by 30 and 35 per cent. However, makers of complete hybrid vehicles face significant hurdles, not the least of which are posed by the increased cost and weight of their products. The mild-hybrid systems that use a 48 V battery are not as efficient as the complete hybrid systems but are more cost-effective. As a result, original equipment manufacturers favour the mild hybrid approach. In this configuration, a traditional internal combustion engine (ICE) is used, and an electric motor with a maximum power output of 15 kW is also installed. The cost of the electric motor is the only thing that will increase, but this will be offset by the elimination of the starter motor and the alternator from the traditional internal combustion engine (ICE).

Government emission regulations are too strict

Due to the adverse effects of car emissions on both the environment and human life, strict emission standards for vehicles have been enforced by various governmental agencies worldwide because of strict government laws that have been put in place. As a result, automotive manufacturers have been pushed to create vehicles that emit less pollution. Governments in developing nations are implementing new policies, such as tax exemptions, to encourage people to buy hybrid and electric cars.

Market Restraints

Obtaining and sustaining an optimal power-to-weight ratio is problematic

The power-to-weight ratio is widely used for engines and power sources to facilitate vehicle comparisons. Calculating a vehicle's kW/kg weight ratio is a simple matter of dividing the vehicle's kW output by its kilo weight. The lower the vehicle's weight, the greater its power, efficiency, and range. Advanced, lightweight components and materials are necessary to obtain the best power-to-weight ratio. OEMs and Tier I firms are working hard to enhance the power-to-weight ratio by incorporating lightweight materials and innovative products such as e-CVT and e-axles; however, they are still in the early stages of development.

Market Opportunities

Commercial vehicle electrification

Buses and trucks are utilized for public transit and logistics worldwide. Public transit is used more than private transportation in Europe and Asia-Pacific. In North America, however, private vehicles are the primary mode of mobility. The expanding population in metropolitan areas, where the existing transportation infrastructure is proving insufficient, is driving the demand for public transportation. Each OEM is encouraging the usage of electric vehicles as a means of decreasing the global carbon footprint. Taxis and passenger cars focus more on greener technologies as the trend toward mobility-on-demand grows. The majority of vehicle electrification efforts are focused on passenger cars. Because of the increased loads, very few electrical systems and components can replace traditional mechanical systems in commercial vehicles. For commercial vehicles, developing electric drivetrains is a time-consuming process requiring significant investment in research and development. By granting incentives and tax breaks, governments worldwide are trying to encourage the use of electric vehicles in public transit to reduce CO2 emissions. The Mercedes-Benz electric truck, the BYD K9, and the Tata Starbus Hybrid e-buses are examples of electric vehicle models. Only a few commercial vehicle manufacturers have introduced electric buses as of yet. On the other hand, the electric driveline for trucks and buses remains a difficulty for system designers.

With the widespread adoption of these vehicles, there will be greater demand for more reliable and high-performing systems. It is where e-drive systems come in handy for reducing vehicle weight. It presents an excellent opportunity for electric component and driveline makers to develop and launch products for the commercial vehicle market.

Regional Analysis

The market has been split by region into North America, Europe, Asia-Pacific, and the Rest of the World.

Over the projected period, Asia-Pacific is anticipated to maintain its position as the most significant market. It is anticipated that government initiatives in countries such as China, India, and South Korea for the utilization of electric vehicles and offering consumers tax exemptions for purchasing these vehicles would drive market growth in this region. These initiatives are likely to offer consumers tax exemptions to purchase these vehicles.

In the global market for vehicle electrification, Europe has the second-largest market share, and it is also anticipated to show respectable growth in the industry throughout the projection period. The Early adoption of innovative technologies and hybrid automobiles in this region is one of the fundamental causes sustaining Europe's second-largest position in this industry.

Over the projected period, North American vehicle electrification market is expected to rise gradually. This region's growth is fueled by the development of charging infrastructure and significant investments made by OEMs in the development of vehicle electrification. Federal tax credits and rebate incentives have expedited the development of the automotive electrification sector, particularly in the United States.

For instance, a significant American automaker, General Motors, stated plans to release electric cars intended for personal use during the following years in 2021. The company aims to launch 30 electrified vehicles by 2025, with around two-thirds available in North America. The market's predicted profitability is expected to encourage more conventional vehicle makers to enter the sector, accelerating the demand for vehicle electrification.

Segmental Analysis

The global vehicle electrification market is broken down into three parts: hybridization, product, and region.

The market is divided into Start/Stop Systems, Electric Power Steering, Liquid Heater Ptc, Electric Air Conditioner Compressors, Electric Vacuum Pumps, Electric Oil Pump, Electric Water Pump, Starter Motor & Alternators, Integrated Starter Generator, and Actuators based on product.

In 2021, the electric power steering (EPS) segment had the third-largest market share, accounting for roughly 12.0%. End-users prefer the EPS steering system over alternative steering systems. It has several benefits, including lower energy consumption, fewer mechanical problems, and the opportunity to modify a more straightforward interface. Because EPS is smaller and lighter than HPS, it is a more fuel-efficient vehicle alternative. The market's growth is aided by hydraulic power steering's lack of dependability.

The electric vacuum pump segment is anticipated to grow significantly during the projection period. Because engines are becoming more energy-efficient, technological advancements in the vehicle sector are being made to save fuel. By providing the vacuum necessary for the brake booster, the dependable functioning of electric vacuum pumps in vehicles aids automakers in meeting new pollution standards. Electric vacuum pumps' increased popularity can be linked to their capacity to give users a consistent and supple break-pedal experience.

The market is divided into Internal Combustion Engine (ICE) & Micro-Hybrid Vehicle, Hybrid Electric vehicles (HEV), Plug-in Hybrid Electric Vehicle (PHEV), and Battery Electric Vehicle (BEV) based on hybridization.

In 2021, the ICE category had the most significant market share of roughly 60.0 percent. Battery electric vehicles have been introduced due to technological breakthroughs in the automobile industry. Agriculture, construction, mining, and power generation are increasing demand for the product. The penetration of the ICE market is also due to a lack of global EV infrastructure availability. Additionally, gasoline-powered automobiles' rising popularity and shale gas production are boosting market expansion.

During the projected period, the PHEV segment is expected to grow fastest. Plug-in hybrid electric car demand is predicted to rise due to collaborations between commercial and government entities to construct smart cities across the country and expand charging infrastructure. Plug-in hybrid electric vehicles have also seen significant growth in technologically advanced countries. Government agencies worldwide encourage integrated electrification systems for all transport vehicles, such as freight delivery vehicles, public transportation, and 2-wheelers, minimizing reliance on fossil fuels. All of these elements contribute to the market's expansion.

Recent Developments

• In January 2023, Mitsubishi Electric will construct a factory in India for compressors and room air conditioners.
• In December 2022, A Basic Agreement was Reached Between Mitsubishi Electric and Mitsubishi Heavy Industries to Begin Detailed Studies for Business Integration for Power Generator Systems
• In December 2022, Mitsubishi Electric will broaden its lineup of Ku-band GaN-HEMTs.
• In January 2023, Continental Displays Innovative Driver Identification and a Curved Display with Invisible Control Panel.
• In December 2022, Continental announced that The Future of Mobility would be brought at CES 2023.