Vehicle Electrification Market

The global Vehicle Electrification Market is valued at USD 91.3 Billion in 2023 and is projected to reach a value of USD 223.2 Billion by 2032 at a CAGR (Compound Annual Growth Rate) of 10.44% between 2024 and 2032.

Key Highlights of Vehicle Electrification Market

• By the segmentation of the Product, the Safety and Electric Power Steering (EPS) segment dominated the global market with 14.1% of market revenue in 2023,
• Furthermore, by the Hybridization segmentation, the Internal Combustion Engine (ICE) & Micro-Hybrid Vehicle segment captured the highest market share of 59.1% in 2023,
• The US Vehicle Electrification market, with a valuation of USD 19.81 Billion in 2023, is projected to increase to approximately USD 51.1 Billion by 2032,
• The market for Vehicle Electrification, driven by an increased focus on sustainable transport and the need to limit greenhouse gas emissions, has seen a significant increase over the last few years,
• By Region, Asia Pacific dominated the market in 2023, gaining the major market share above 47.3%,
• In 2023, North America is witnessing an extensive market share with 11.3% market growth.

Vehicle Electrification Market: Regional Overview

In 2023, the Asia Pacific Vehicle Electrification market took the lead, capturing 47.3% of the revenue share. This was driven by strong demand for vehicle supplements in China and India. Factors such as high per capita income and a growing population also played a role in boosting Vehicle Electrification in the region. Government initiatives, including subsidies for electric vehicle purchases, further fuelled market growth. China alone witnessed a significant increase in new electric vehicle sales, reaching 13.1 million units in 2022. Projections suggest continued growth, with an expected annual increase of 17.15% from 2023 to 2032. This trend is supported by the rising demand for sustainable transportation solutions across the Asia Pacific region.

U.S. Vehicle Electrification Market Overview

The Vehicle Electrification market in the U.S., with a valuation of USD 19.81 Billion in 2023, is projected to reach around USD 51.1 Billion by 2032. This forecast indicates a substantial Compound Annual Growth Rate (CAGR) of 11.1% from 2024 to 2032. In the U.S., the car electrification sector is booming thanks to federal tax credits and rebates. Tesla Inc. leads the charge, capturing a whopping 42.4% share in luxury electric vehicles, with sales soaring by 44% last year. With major players in the game and high adoption rates of electric components in various vehicle types, the U.S. is set to dominate North America's electrification market. Expect significant growth in the region as electric vehicle adoption surges, making North America the fastest-growing market for Vehicle Electrification.

Vehicle Electrification Market: Product Overview

In 2023, the global Vehicle Electrification market saw significant growth, particularly in the Electric Power Steering (EPS) segment, which held a dominant 14.1% share. The Type segment is separated into Electric Power Steering (EPS), Integrated Starter Generator (ISG), Start/Stop System, Electric Air Conditioner Compressor, Liquid Heater Ptc, Electric Oil Pump, Electric Vacuum Pump, Starter Motor & Alternator, and Electric Water Pump, Actuators. End-users favor EPS for its energy efficiency, reduced mechanical issues, and user-friendly interface. Auto manufacturers are increasingly adopting EPS due to its fuel economy benefits, especially in conventional ICE vehicles. Additionally, EPS provides enhanced driver comfort, further driving market growth. Compared to Hydraulic Power Steering (HPS), EPS is preferred for being lighter, smaller, and more energy-efficient, thanks to computer-controlled electric motors. This trend is fueled by eliminating conventional components, making EPS a dependable choice for Vehicle Electrification.

Vehicle Electrification Market: Hybridization Overview

In 2023, the global Vehicle Electrification market saw significant growth, especially driven by the Internal Combustion Engine (ICE) & Micro-Hybrid Vehicle segment, which claimed a substantial 59.1% share. The Application segment is categorized into Internal Combustion Engine (ICE) & Micro-Hybrid Vehicles, Battery Electric Vehicles (BEV), Plug-in Hybrid Electric Vehicles (PHEV), and Hybrid Electric Vehicles (HEV). These vehicles incorporate electric motors alongside ICEs, enabling instant shutdown during stops or braking and enhancing fuel efficiency by replacing traditional alternators and starters. Advancements in automotive tech also introduced battery electric vehicles, increasingly sought after in agriculture, construction, mining, and power generation. The limited availability of global EV infrastructure further boosts the ICE market. Additionally, rising gasoline vehicle popularity and booming shale gas production contribute to market expansion.

Key Trends

1. Due to environmental concerns and government initiatives supporting fuel-efficient vehicles, there has been an increased demand for EVs worldwide. Due to the need to reduce CO2 emissions and improve operational efficiency, there is a growing preference for electric vehicles over conventional vehicles.
2. Emphasis on weight reduction in automotive components to reduce fuel consumption and improve vehicle performance. Advanced technologies like e-axle in EVs are being adopted to enhance operational efficiency and meet consumer demands for eco-friendly transportation options.
3. Governments and OEMs worldwide are investing in building new charging infrastructure to meet the rising demand for electric power. Implementing smart-grid charging systems in regions like the US and Europe enables remote management of EV charging loads.
4. Increasing adoption of engine shutdown systems in vehicles, particularly during heavy traffic or at signals, to reduce fuel consumption. Integrated starter generator systems automatically shut off the engine when the vehicle stops, providing additional power through electric motors without compromising performance.

Premium Insights

In the global Vehicle Electrification market, despite facing financial setbacks and delays in new vehicle programs, particularly EVs, the industry remains committed to electrification. Opportunities abound with the rising demand for cost-effective solutions and the trend of electrifying commercial vehicles and fleets. Increasing product focus has spurred demand for Vehicle Electrification and supportive infrastructure. Government incentives and a growing charging outlet network drive EV demand. While electric vehicles offer lower operating costs and meet consumer demand for fuel efficiency, their high initial costs, battery expenses, and limited charging infrastructure pose challenges. Additionally, issues arise with long-distance travel and in areas with power shortages. Despite high replacement and maintenance costs, market growth is fueled by escalating fuel prices and environmental concerns.

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Market Dynamics

Vehicle Electrification, driven by electricity instead of traditional fuels, is revolutionizing the automotive industry. This technology, relying on electric powertrains and supporting systems like charging infrastructure and wireless power transfer, is transforming the way vehicles operate. It provides several benefits, such as improving the sustainability of the environment by reducing emissions and operating costs resulting from decreased maintenance requirements or increased efficiency in distribution, field services, and long-distance transport.

Despite its advantages, challenges persist in achieving optimal performance, notably in the power-to-weight ratio of electric vehicles. Manufacturers actively address this obstacle by developing advanced, lightweight components such as e-axles and e-CVT. While these innovations show promise, they are still in the early stages of development, indicating ongoing opportunities for growth and improvement in the global Vehicle Electrification market.

Competitive Landscape

The global Vehicle Electrification market is fiercely competitive, with a few top players dominating a large share. Leading companies like Bosch, Continental, Denso, BorgWarner, and Mitsubishi Electric are focused on improving their products, developing new ones, and expanding their reach worldwide. Strategies such as new product launches, expansions, collaboration, and agreements will keep them in the lead. These players focus on organic growth, such as product development, and inorganic growth, such as mergers and acquisitions, to strengthen their market position. With a wide product range and a strong distribution network, they constantly strive to consolidate their global position.

Recent Market Developments

• In April 2024, The IKEA Foundation, a strategic philanthropy funded by IKEA owner INGKA Foundation, announced that it would invest USD 100 million to support the Leapfrogging Partnership, a new project launched by Vehicle Electrification-focused initiative Drive Electric Campaign, aimed at advancing decarbonized road transportation in emerging markets.
• In April 2024, Valeo announced its green bond issue for 850 million euros, which will mature in April 2030. The green bonds are issued under Valeo’s Green and Sustainability-linked Financing framework, established in September 2023. By 2050, Valeo aims to achieve Net Zero, covering all its operating activities, supply chain worldwide, and entire value chain in Europe. To achieve its objectives, Valeo will continue developing its portfolio of technologies that promote low-carbon mobility and are accessible to the most significant number.
• In March 2024, Nissan Motor Co., Ltd. (Nissan) and Honda Motor Co., Ltd. (Honda) announced today that the two companies have signed a memorandum of understanding under which they will begin a feasibility study of a strategic partnership in the fields of Vehicle Electrification and intelligence.
• In November 2023, Rheinmetall achieved a significant milestone by securing three orders from one of the world's largest automakers. These orders, valued in the upper two-digit million-euro range, underscore the Düsseldorf-based tech enterprise's prowess in the forward-looking market for Vehicle Electrification, particularly in the United States.
• In October 2023, SME Launches Training and Electric Vehicle Certification to Address High and Unmet Demand for Electrification Skills.

The global Vehicle Electrification market can be categorized as Product, Hybridization, and Region.