The global vehicle electrification market was valued at USD 89.26 billion in 2022 and is projected to grow at a compound annual growth rate (CAGR) of 9.9% from 2023 to 2030. The growth of this market is largely driven by the automotive industry's increasing demand for alternatives to petroleum-based fuels and the growing government initiatives aimed at promoting environmentally sustainable transportation options worldwide. Governments across various nations are launching green initiatives and setting ambitious emission reduction targets to curb pollution and combat climate change. At the same time, environmentally conscious consumers are increasingly shifting toward electric vehicles (EVs) to reduce their carbon footprint, contributing to the rising demand for vehicle electrification products.

Several advantages associated with vehicle electrification are further fueling the market growth. Electrified vehicles offer enhanced performance, new features, and benefits like reduced vehicle weight, fewer emissions, better fuel economy, and improved driving comfort and safety. These factors are leading to increased consumer adoption of electric vehicles and contributing to the overall growth of the market. Furthermore, as the automotive industry focuses on providing cleaner transportation alternatives, electrification is becoming a central strategy for automakers worldwide.

Although the financial challenges posed by global crises have impacted some vehicle programs, including EVs, the drive toward electrification remains strong within the industry. The ongoing demand for cost-effective solutions and the growing trend of electrification in commercial vehicles and fleets are expected to provide significant opportunities for market expansion over the forecast period. As more manufacturers and countries embrace electrification, the demand for electric vehicle components such as batteries, charging infrastructure, and energy-efficient systems will continue to grow, contributing to the long-term success of the market.

Gather more insights about the market drivers, restrains and growth of the Vehicle Electrification market

Regional Insights

Asia Pacific

The Asia Pacific region led the vehicle electrification market in 2022, accounting for a substantial 52.2% of the total revenue share. Several key factors contribute to this dominance, including government initiatives promoting the adoption of electric vehicles (EVs) through incentives, subsidies, and policy support. Governments in this region are heavily investing in infrastructure to facilitate the shift towards EVs, particularly through the expansion of charging stations and the development of sustainable transportation systems.

The region’s rapid population growth, particularly in countries like China and India, alongside rising per capita incomes, is further driving the demand for personal transport. This trend is expected to sustain the growing need for automobiles, with an emphasis on eco-friendly, sustainable options like electric vehicles. As urbanization continues to accelerate and environmental concerns mount, consumers are increasingly adopting electric mobility solutions to reduce their carbon footprints.

In addition to governmental initiatives, rising awareness of climate change and air pollution is also contributing to the market's expansion, as consumers look for cleaner alternatives to traditional internal combustion engine vehicles.

Europe

In Europe, the vehicle electrification industry is poised for significant growth due to the region’s focus on sustainable infrastructure development. Many European countries are pushing forward with ambitious green energy policies, aiming to meet climate targets by reducing vehicle emissions and promoting the transition to electric mobility. As part of this effort, the European Union (EU) and individual countries are offering subsidies and tax incentives for electric vehicle purchases and manufacturing. These government-backed initiatives are expected to boost demand for electric vehicles and related infrastructure in the region.

Furthermore, investment in charging infrastructure, particularly fast-charging networks, is anticipated to be a key growth driver for the European market. As governments and private enterprises collaborate on future-proof infrastructure, the market for vehicle electrification is expected to see sustained growth over the forecast period, with a focus on electric mobility solutions that complement Europe’s green energy goals.

North America

The North American market is expected to grow at the fastest compounded annual growth rate (CAGR) of 11.0% during the forecast period. Several key factors contribute to this rapid growth, including expansion of EV charging infrastructure, major investments by original equipment manufacturers (OEMs), and government support through incentives like federal tax credits and rebates for EV purchases.

In the U.S., the electrification of vehicles is gaining momentum, with the Biden administration placing significant emphasis on the transition to electric mobility. Federal tax incentives are making electric vehicles more affordable to the average consumer, and major manufacturers are responding with increased investments in EV production and battery technology.

For example, in 2021, General Motors (GM), one of the largest automakers in the U.S., unveiled plans to launch a range of electric vehicles (EVs) for personal use in the coming years. GM's goal is to release 30 new EVs globally by 2025, with two-thirds of those models set to be available in North America. The expanding EV portfolio of traditional automakers like GM, alongside increasing demand for sustainable transportation, is expected to further accelerate the vehicle electrification market in North America. This expansion is not limited to passenger vehicles but is also extended to electric commercial vehicles, such as delivery trucks and buses.

The increasing adoption of electric trucks and battery-electric vehicles (BEVs), especially in California, which has strict emissions standards, is pushing other states and provinces to follow suit. Additionally, tax credits and incentives for the construction of EV charging stations are further facilitating the transition to a more electrified transportation system in the region.

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• The global commercial vehicles market size was estimated at USD 1.35 trillion in 2022 and is projected to register a compound annual growth rate (CAGR) of 3.7% from 2023 to 2030.

• The global electric vehicle market size was estimated at USD 1,070.77 billion in 2023 and is anticipated to grow at a CAGR of 33.6% from 2024 to 2030.  

Key Companies & Market Share Insights

Market players are focusing on inorganic growth strategies, such as acquisitions & mergers, and collaborations to augment their market share. For instance, in 2020, CATL, a Chinese EV battery manufacturer, is extending its relationships with Coach B.V. & VDL Bus in the Netherlands and Quantron AG in Germany to advance commercial vehicle electrification in Europe by improving local services and product solutions. Such partnerships, mergers, and acquisitions have created an environment for all contemporaries to employ ideas and innovation for enhanced manufacturing and technologies.

The following companies are prominent players in the vehicle electrification space and are driving the ongoing transformation in the industry:

• Robert Bosch GmbH

• Continental AG

• DENSO CORPORATION

• Aptiv

• Johnson Electric Holdings Limited

• Mitsubishi Electric Corporation

• BorgWarner Inc.

• Magna International Inc.

• AISIN CORPORATION

• Johnson Controls

• ZF Friedrichshafen AG

• Valeo SA

• JTEKT Corporation

• Hitachi Astemo, Ltd.

• Wabco Holdings Inc.

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