Vehicle Electrification Market Size, Share, Trends Analysis (By Product, By Hybridization: ICE & Micro-Hybrid Vehicle, BEV, PHEV, and HEV) - Global Industry Analysis, Growth, Segment Forecasts, Regional Outlook 2020 - 2027
The global vehicle electrification market size was valued at USD 76.20 Billion in 2019 and expected to reach USD 150.72 Billion by 2027, with a compound annual growth rate (CAGR) of 8.9% during the forecast period 2020 to 2027.
The concept of mild hybrids or 48V architecture is increasingly gaining traction across the globe that is consequently expected to fuel the demand for vehicle electrification in the coming years. Full hybrid vehicles offer higher fuel efficiency as compared to mild hybrid. As per the International Council on Clean Transportation, fuel consumption is reduced by 30-35% by the application of full hybrid vehicles. However, due to high cost and increased weight of the vehicle, mild hybrid vehicles are the preferred choice by Original Equipment Manufacturers (OEMs) and consumers.
On the other hand, difficulty in achieving an optimum power-to-weight ratio in an electric vehicle hinders the market growth. As the weight of the vehicle reduces consequently the power of vehicle improves, thus OEMs and Tier 1 companies are working significantly on implementation of light weight components and advanced products that improves the power-to-weight ratio.
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COVID Impact Analysis:
The epidemic has placed more pressure on the vehicle electrification technology manufacturing for its business model transformation, as the industry is facing demand shock with an uncertain recovery timeline. The cash burn rate in the industry is currently less than 2 months. Many original equipment manufacturers (OEM) will likely soon face liquidity issues as operating cash flow diminishes during the crisis. Moreover, the consumer confidence is low in 2020 which impact the end use industries sales of the vehicle electrification market.
- In 2019, the Asia Pacific captured the maximum revenue share in the global vehicle electrification market and experience attractive growth during the forecast period. High demand for vehicle supplements in China and India propels the market growth in the region. Further, rapid adoption of green transportation in Asian countries triggers the adoption of battery-powered vehicles such as BEV, HEV, and PHEV again contributes positively towards the market growth.
- Europe holds second largest position in the global vehicle electrification market in terms of revenue in the year 2019. The governments of France, Germany, UK, Italy, and other European countries focus on sustainable development in infrastructure growth, this offers significant opportunity for the market players to flourish their business.
- Internal Combustion Engine (ICE) & Micro-Hybrid Vehicle dominated the global vehicle electrification market in the year 2019 and expected to witness a substantial growth in the coming years. However, Plug-in Hybrid Electric Vehicle (PHEV) registered the highest growth of nearly 16% over the analysis period.
- Electric Power Steering (EPS) witness high demand in 2019 and expected to grow at a significant rate during the forecast period. Extra comfort offered by the EPS system to the driver is the one of the potential driving factors that significantly boosts the market growth. On the other hand, electric oil pump exhibit the fastest growth over the forecast period.
Surge inadoption of fuel-efficient mobility solutions
In the recent years, the automotive industry has witnessed drastic change in terms of technological evolution. To cater to the changing demands of consumers, OEMs are relying on electrical components, owing to their output efficiency and lightweight, thus making vehicle electrification a fuel economic solution. Moreover, emission from vehicles is a crucial factor, as harmful greenhouse gases are released, which increase environmental and health concerns. Thus, governments across the globe are implementing vehicle emission norms to control greenhouse emissionand maintain environmental balance. Manufacturers need to comply with these regulations to control the emission level. For instance, from April 2020, the Government of India implemented the BS6 emission standard to control the outflow of air pollutants from vehicles. In addition, end consumers/drivers are demanding for technologically advanced electrical components and systems to ease the driving experience and to facilitate efficient operations of the vehicle. Thus, all these factors collectively escalate the demand for vehicle electrification in the near future.
Decline in price of batteries per KWH
Batteries are the significant part of the vehicle that supplies the electricity input to various electrical components required for effective functioning. Increase in penetration of electrical components in the automotive sector is expected to boost the demand for automotive batteries. Furthermore, increase in integration of electrical components in vehicles increase the need for automotive batteries, which, in turn, supplements the growth of the vehicle electrification market. Moreover, the price of automotive battery is decliningsignificantly. For instance, according to a research study published by Bloomberg New Energy Finance (BNEF) on the automotive battery, the battery prices has witnessed significant fall from last decade. In 2010, the automotive battery prices was $1,100 per KWh, whereas itwas $156 per Kwh in 2019. Moreover, these prices are expected to fall in a same momentum in the upcoming years, thereby augmenting the growth of the vehicle electrification market.
Decrease inproduction and sale of automotive
The automotive industry has witnessed declinein the overall growth from the last two years, which results in reduced sales as well as production of automotive. This is majorly attributed to changes inmanufacturing standard of the automotive and low consumer confidence for buying the vehicles due to uncertainty in the government regulations regarding emission and safety, which, in turn, increases the prices of automotive. According to International Monetary Fund (IMF), the industry represented around 20% of GDP slowdown in 2018 and around 30% of the year's drop in global trade. The growth of the vehicle electrification market movement is completely dependent on vehicle production and sales activities. Thus, decline in sales and production of automotive is expected to hamper the growth of the overall market. Moreover, the automotive industry is witnessing slower growth than expected, which is likely to downturn the demand for vehicle electrification in the upcoming years.
Increase in need for cost-effective solutions
Vehicle electrification serves as an ideal solution for effective vehicle operations, due to less fuel cost, reduced emissions, and improved fuel economy. However, electrification of vehicle is associated with high cost of vehicle components, which impact the overall costing of automotive. Thus, end consumer are demanding cheaper solutions; thus, manufacturers are focusing on development of cost-effective solutions to gain competitive advantage in the global market. Moreover, decrease inprices of automotive batteries is a positive aspect that supports the growth of the vehicle electrification market. Thus, cost-effective product development is expected to gain momentum during the forecast period.
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Several noteworthy market participants contributing to the market revenue are as follows:
- Robert Bosch GmbH
- Mitsubishi Electric Corporation
- Johnson Electric
- Delphi Automotive PLC
Segments Covered in the Report
- 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
- Electric Water Pump
By Regional Outlook
- Internal Combustion Engine (ICE) & Micro-Hybrid Vehicle
- Battery Electric Vehicle (BEV)
- Plug-in Hybrid Electric Vehicle (PHEV)
- Hybrid Electric Vehicle (HEV)
- North America
- Asia Pacific
- South Korea
- Rest of the World