Vehicle Fuel Tank Market

Market Overview

The global vehicle fuel tank market revenue was valued at USD 19.10 billion in 2023. It is estimated to reach USD 28.62 billion by 2032, growing at a CAGR of 4.6% during the forecast period (2024–2032). The global vehicle fuel tank industry is driven by rapid urbanization worldwide and the rising disposable income of people in urban areas, increasing the demand for the production of new vehicles and thereby increasing their sales. This is anticipated to drive the global market. Moreover, there has been a growing demand for lightweight materials used in the fuel tank industry as these materials offer improved fuel efficiency, lower emissions, and enhanced performance of the vehicle, in turn boosting the global market expansion.

A vehicle fuel tank is a container specifically engineered to contain and retain the fuel (such as gasoline, diesel, or alternative fuels) that provides the energy to propel the vehicle's engine. It is an essential component of all vehicles powered by internal combustion engines, such as cars, trucks, motorbikes, and other vehicle variants. The fuel tank is usually situated in a designated region of the vehicle, commonly towards the back, and is engineered to possess durability, impermeability, and resistance to corrosion.

The fuel system establishes a connection between the engine and the fuel, including fuel lines, a fuel pump, and fuel injectors (or a carburetor in older vehicles). The fuel tank includes several components, including a fuel filler neck, fuel cap, and vent system, which regulate pressure and emissions related to fuel storage. Modern automobiles frequently use fuel tanks composed of steel or high-density polyethylene to guarantee safety and longevity. In addition, fuel tanks are provided with safety mechanisms, such as rollover valves and baffles, to prevent fuel leakage.

Highlights

• Passenger vehicles dominate the application segment
• Asia-Pacific is estimated to be the largest shareholder in the market

Market Dynamics

Market Drivers 

Rapid Growth in Urbanization and Middle-income Population 

The vehicle fuel tank market is propelled by the surging global demand for vehicles, resulting from growing populations, enhanced socio-economic circumstances, economic expansion, and infrastructure development. According to the World Bank, over 75% of the world's population lives in middle-income nations, and the population in these countries is growing at an annual rate of 1%. Due to rapid urbanization, cities now account for over 80% of the world's Gross Domestic Product (GDP).

Urbanization's rapid progression has bolstered the spending power of the middle-class demographic, resulting in a favorable impact on diverse markets, including the automobile industry. The OICA 2020 report estimates that sales of automobiles worldwide, including passenger and commercial vehicles, reached about 25.3 million units. Passenger vehicles accounted for 80.0% of the total sales, while commercial vehicles comprised 20.0%. Due to the vehicle fuel tank being an essential component of the vehicle, the increasing production and sales of vehicles are anticipated to drive the demand for the vehicle fuel tank market.

Growing Adoption of Lightweight Materials

The growth of the vehicle fuel tank market is fueled by the rising use of lightweight materials, such as plastic and aluminum, in the sector. The utilization of lightweight materials provides benefits such as decreased mass, greater fuel economy, fewer emissions, and improved vehicle performance. Industry experts assert that a 10% reduction in vehicle weight can lead to a nearly 6% to 8% improvement in mileage and fuel economy.

Furthermore, the utilization of lightweight materials also aids in complying with the stringent environmental restrictions implemented by the government to mitigate escalating air pollution. From 1990 to 2015, pollution control regulations have progressively become more rigorous. They are expected to become even more resilient between 2016 and 2024. Moreover, automotive OEMs are allocating resources toward research and development efforts to create novel and economical lightweight fuel tanks. This initiative is expected to propel the expansion of the global market.

Market Restraint

Shift Towards Electric Powered Vehicle

The projected decline in battery costs will drive the demand for electric vehicles in the foreseeable future. Electric vehicles (EVs) are more cost-effective than diesel and gasoline cars and are becoming more accessible due to recent advancements in EV technology. The electric car market relies predominantly on early adopters who seek to mitigate emissions and embrace novel technologies.

Moreover, the growing accessibility of cost-effective electric car models in the international market is anticipated to boost the sales of electric vehicles. The global electric vehicle market is experiencing rapid growth. The increasing adoption of electric engines in internal combustion engines (ICEs) is predicted to negatively impact the growth of the vehicle fuel tank industry in the foreseeable future.

Market Opportunities

Technological Innovations in the Fuel Tank Industry

The vehicle fuel tank market presents opportunities for technological advancements within the fuel tank sector. The technical advancements aim to improve the safety, efficiency, durability, and performance of the fuel tank and the vehicle. The automotive sector is currently investigating the application of self-sealing fuel tank technology, first used in aviation, to mitigate fuel leakages resulting from accidents or punctures.

Furthermore, the self-sealing gasoline tank incorporates a robust combination of unprocessed natural rubber and reinforced cloth, effectively sealing any punctures and preventing further fuel leakage. Leading car manufacturers are prioritizing the development of this technology to secure a competitive advantage in the market. The technical advancements in the fuel tank sector are projected to generate fresh opportunities for the vehicle fuel tank market.

Regional Analysis

Based on region, the global vehicle fuel tank market is bifurcated into North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa.

Asia-Pacific's vehicle fuel tank market share is expected to expand substantially during the forecast period. The regional vehicle fuel tank market is expected to experience the most significant growth due to the rapid increase in vehicle production and sales. The region is distinguished by the inclusion of rising markets like China and India, where there is a substantial demand for automobiles due to population growth, enhanced socio-economic circumstances, and infrastructural development. India's dynamic market is drawing the attention of domestic and foreign investors, thanks to its lenient government rules, initiatives like "Make in India," and its robust manufacturing sector, which encompasses textile, transportation, mining, and food processing industries. Moreover, the presence of cheap labor and reduced production expenses have contributed to the rise of India as a prominent market for vehicle fuel tanks.

Furthermore, the region is implementing environmental rules to decrease car emissions and fuel usage. This is leading to an increased need for lightweight and efficient fuel tanks. The Indian government announced in 2016 that the country would adopt the Bharat Stage VI emission standards by 2020 in lieu of the Bharat Stage V emission regulations. The Supreme Court rendered a verdict in 2020 that prohibited the sale and registration of automobiles adhering to BS-IV standards in the country starting from April 1, 2020. The combination of these factors is anticipated to create an enormous opportunity for the vehicle fuel tank market in the region.

North America is expected to significantly increase demand for materials used in vehicle fuel tanks over the forecast period. This is primarily due to numerous major automobile manufacturing businesses in countries such as the U.S., Canada, and Mexico. As per data released by the International Organization of Motor Vehicle Manufacturers in 2019, these countries ranked among the top 15 global automotive manufacturers, collectively producing over 16.78 million vehicles in 2019. Various European and Asia Pacific businesses have established their factories largely in Mexico because of the country's low labor costs and proximity to the U.S. market.

Furthermore, the nation has established free trade agreements with more than 40 nations globally, reducing costs for transporting components and supplies. Moreover, corporations such as Ford, GMC, Jeep, and Lincoln are allocating resources to augment their manufacturing capabilities. The rigorous environmental rules the regional governments implement will incentivize automobile manufacturers to invest substantially in research and development endeavors. For example, companies like Ford Motors (USA) and General Motors (USA) have allocated more than USD 34.5 billion towards research and development initiatives.

Segmental Analysis

The global vehicle fuel tank market is segmented by type and application.

Based on type, the global market is divided into type 4 CNG, hydrogen tanks, and others.

Type 4 CNG vehicle fuel tanks are currently made solely from composite materials. This aims to mitigate the risk of sudden metal tank explosions and exploit the benefits of gas leaks in composite materials. The segment of type 4 CNG tanks is expected to experience the most rapid growth because of their enhanced fatigue strength, lightweight nature, non-corrosive properties, and resistance to leaks.

Hydrogen tanks find utility in several applications, including automotive, transit buses, bulk haulage, and stationary storage, owing to their lightweight nature, efficiency, durability, and ease of replacement. However, the sales growth of hydrogen-powered vehicles is currently experiencing a slowdown due to their exorbitant cost, limited public knowledge, and the lack of hydrogen refueling infrastructure. Currently, manufacturers of hydrogen-powered vehicles are hesitant to develop cars due to the insufficient availability of hydrogen. In contrast, hydrogen producers are reluctant to supply without substantial demand.

Based on application, the global market is segmented into passenger vehicles and light commercial vehicles. 

The passenger vehicles segment dominates the global market. Passenger automobiles accounted for almost 71% of total vehicle manufacturing in 2020. In 2019, the ACEA reported an automobile ownership rate of 569 vehicles per 1,000 individuals in Europe. Emerging nations such as China and India are anticipated to further accelerate market growth during the forecast period. Moreover, in 2020, Tata Motors allocated USD 406.79 million to research and development for passenger vehicles, whereas Hyundai's expenditure in the same category amounted to USD 3.93 billion. These research and development endeavors will allow these companies to introduce passenger cars, boosting the demand for vehicle fuel tanks.

The commercial vehicles segment is projected to experience the highest CAGR. The increase might be attributed to the high demand for large trucks in the logistics and transportation sectors. Logistics is a key industry that heavily relies on commercial trucks. The utilization of trucks and trailers for the delivery of goods is experiencing rapid growth. The growing trend of urbanization and changing lifestyles has led to a high demand for the delivery of products and items, resulting in a significant boost to this industry segment's growth.

Recent Developments

• September 2023- WAE Technologies unveiled its most recent advancement in hydrogen fuel cell electric vehicles. The EVRh platform has been created to showcase the capabilities of hydrogen fuel cell electric vehicle powertrain systems.
• August 2023- Toyota Motor Corporation declared that it will be the first car manufacturer in the world to introduce an all-ethanol vehicle. The model, derived from Toyota's highly popular MPV Innova, will be inaugurated by Union Minister Nitin Gadkari on August 29th. The Innova will be the world's first model equipped with a Bharat Stage VI (Stage II) vehicle with an electric flex-fuel certificate.