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Alternative Fuel Vehicles Market Size, Share & COVID-19 Impact Analysis, By Fuel Type (BEV, HEV, PHEV, FCV, CNG, Biofuels, Other Gaseous Fuels), By Vehicle Type (Passenger Cars, Commercial Vehicles), and Regional Forecasts, 2021-2028

Report Format: PDF | Latest Update: Feb, 2023 | Published Date: Dec, 2021 | Report ID: FBI102518 | Status : Published

The global alternative fuel vehicles market size was USD 293.45 billion in 2020 and is projected to grow from USD 330.45 billion in 2021 to USD 1,681.80 billion by 2028, exhibiting a Compound Annual Growth Rate (CAGR) of 26.2% during the forecast period. The global impact of novel coronavirus disease 2019 has been unprecedented and staggering, with alternative fuel vehicles witnessing a positive impact on demand across all regions amid the COVID-19 crisis. Based on our analysis, the global market will exhibit a stellar growth of 25.6% in 2020. Alternative fuel vehicles (AFVs) run on fuels other than conventional fuels such as diesel and gasoline. These alternate fuels are biofuels, such as electricity and solar batteries, ethanol and biodiesel, biogas, LPG, CNG, fuel cells, and hydrogen gas.

Shifting auto manufacturers from conventional vehicle to emission-free vehicle production to grab the early revenue growth opportunities by providing future clean mobility solutions is anticipated to create lucrative opportunities for the alternative fuel vehicles market growth.

Moreover, the development of pure electric or alternate fueled automotive manufacturers such as Tesla Inc. is further expected to influence the market growth in years to come. Further, growing consumer preference for emission-free vehicles motivates the manufacturers to accelerate and increase their alternative fueled vehicle (AFV) production capacity.

Increasing government investment to improve the availability of alternate fuels such as CNG, LNG, and others at refilling stations and developing a charging service infrastructure for a strong EV charging service network is anticipated to propel the adoption of AFVs worldwide.

For instance, in December 2020, California Energy Commission (CEC) approved the investment of up to USD 115 million to boost the number of fueling stations in the state that support hydrogen fuel cell electric vehicles (FCEVs) to achieve its goal to deploy 200 public hydrogen refueling stations.

COVID-19 had a Drastic Impact on Vehicle Markets During the First Half of 2020 Owing to Lower Supply Chain and Sales

According to the International Energy Agency, Electric car sales experienced rapid growth of 60% per year over the last decade except after 2019. In 2019, the growth slowed down to 6%. Moreover, in the first half of 2020, global electric car sales were an average of 15% lower than sales in the first half of 2019 due to disruption in the supply chain activities, regulatory changes in China, and decreasing passenger car sales in major markets. Moreover, restrictions enforced by the government on import-export activities, travel, and other lockdown measures substantially disrupted the supply chain, resulting in a halt in production as most of the raw material for automotive production was supplied from Asian countries. Additionally, decreasing demand for automotive owing to government-enforced lockdown has affected overall global car sales. Further, closed dealership stores worldwide amid covid-19 further hampered the alternative fuel vehicle sales.

Moreover, in May 2020, in response to the Covid19 pandemic, the European Commission proposed the recovery plan in which it focuses on developing alternate fuel infrastructure, hydrogen technology, electric vehicles, and renewable energy, repeating its intentions to review the 2014 directive.

In addition, AFVs such as natural gas vehicles may witness eye-catching growth after the significant recovery of the automotive industry. For instance, in the aftermath of the Covid19 pandemic, the public sector budget is expected to be decimated. Hence, it would be hard for the government to justify spending hundreds of billions of dollars on EV subsidies resulting in subsidy cuts. Moreover, reduced subsidies are anticipated to fuel the demand for natural gas vehicles in upcoming years.


Stringent Regulation Enforced by Government Worldwide for Emission Control from Automotive is Driving Market Growth

Rising pollution levels, global warming, and declining air quality in urban regions have become an international concern. Hence, governments worldwide are introducing various strict regulations to reduce carbon emissions from automobiles. Government bodies introduced various emission standards for the manufacturers to restrict the emission of pollutants from automotive exhaust. Along with regulations government’s initiatives to invest in electric and hybrid fleet for the public transportation system is anticipated to drive the market growth over the forecast period.

Moreover, European Union (EU) has introduced various emission standards for automotive emission control. For instance, in September 2015, the EU introduced Euro VI for light-duty and heavy-duty vehicles to reduce harmful pollutants generated from the automotive exhaust, such as NOx. All the automakers need to meet Euro VI emission standards to sell a car in Europe. In addition, countries like the U.S., Japan, India, and others are also implementing their emission policies for automotive emission control. Moreover, governments undertake several initiatives to phase out fossil fuel-powered vehicles and achieve clean mobility. These regulations are anticipated to create a surge in demand for alternative fuel and renewable fuel vehicles worldwide.


Increasing Fossil Fuel Prices and Heavy Dependence on Foreign Countries for Crude Oil is Driving Market Growth

Rising fossil fuel prices such as gasoline & diesel and heavy dependence on foreign countries to import fossil fuels significantly increase the pressure on the emerging economies worldwide, resulting in a boost in demand for AFVs. According to the U.S. Energy Information Administration, in November 2020, Brent crude oil prices averaged USD 43 per barrel, increasing significantly to an average price of USD 67 per barrel in March 2021 (One barrel contains 42 gallons). This increase in crude oil prices significantly affected the prices of petroleum products such as fossil fuels.

Moreover, developing and underdeveloped economies suffered high impact due to the rising prices of petroleum products; hence developing countries worldwide are taking the initiative to increase the adoption of vehicles running on alternate fuel as a future mobility solution.

To reduce the fossil fuel dependency and emission from the automotive, governments worldwide are taking the initiative to encourage the populace to propel the adoption of alternative fuel vehicles by providing various tax benefits and generous subsidies. For instance, the U.K. government offers a grant of GBP 2,500 for electric cars priced at or below GBP 35,000.


Low Utilization Rate of Commercial Charging Stations and Charging Cost is a Key Restraint for Growth of this Market

DC fast-charging stations that are organized into multi-charger stations can provide considerable returns on capital costs. However, these returns are highly dependent on the percentage of time in which the electric vehicle supply equipment supplies electricity. This factor can lower supply chain and sales, thereby maintaining a high utilization rate. For instance, the average usage rate of conventional fuel stations in the United States, many of them with multiple pumps, is around 34%. However, the utilization rate of commercial EV charging stations is approximately 5-10%.

A 10% utilization rate for such stations, which cost around USD 160,000, is not a monetarily feasible proposition. Additionally, vehicles that have finished charging continue to charge idly while being plugged into the equipment and consume space without creating revenue. Hence, even a modest daily target of a twenty percent usage rate can be difficult to achieve even in regions with high electric vehicle penetration. EVs' charging costs are expected to additionally restrain the market's growth with the growing size of vehicle batteries.


By Fuel Type Analysis

BEV Segment Expected to Dominate Market Owing to Increasing Adoption of Battery Electric Vehicles for Reducing Carbon Footprint

Based on fuel type, the market is segmented into Battery Electric Vehicle (BEV), Hybrid Electric Vehicle (HEV), Plug-In Hybrid Electric Vehicle (PHEV), Fuel Cell Vehicle (FCV), CNG, biofuels, and other gaseous fuels.

The battery-electric vehicle segment holds the major share in the market and is expected to retain its dominance in the coming years due to the increasing adoption of battery electric vehicles for reducing the carbon footprint. OEMs are adopting electrification by shifting from conventional vehicle production to electric automobile production to cater to the demand for emission-free automobiles.

For instance, in March 2021, Volkswagen, one of the leading German automakers, announced that 70% of its brand’s European sales would be EV by 2030. Additionally, in the U.S. and China, half of the company’s sales were generated from electric vehicles by that time frame. Similarly, other premium brands such as Ford, Lincoln, and others have pledged to convert their vehicle production volume into EV by 2030. Moreover, almost all the premium automakers are investing in electrification to stay ahead in the intense competition. This factor is anticipated to boost the demand for BEVs.

By Vehicle Type Analysis

Growth of Commercial Vehicles Segment Due to Reduced Fuel Consumption of Heavy-Duty Application Vehicles

Based on the vehicle type, this market is segmented into passenger cars and commercial vehicles.

The passenger cars segment accounts for the major market share in 2020 and is projected to dominate the market over the forecast period. Passenger cars include vehicles such as sports utility vehicles (SUV), hatchbacks, sedans, electric cars (battery electric vehicle (BEV), multi-utility vehicles (MUV), and hybrid electric vehicles (HEV)).

Growing penetration of alternative fuel commercial vehicles in industrial sectors such as logistics and transportation is expected to create new market growth opportunities for the commercial vehicle segment over the forecast period. Moreover, logistics & transportation companies invest in vehicles running on alternate fuels to achieve an emission-free fleet as a future transportation solution.

Additionally, these advanced vehicles further enable efficient fleet management owing to their internet connectivity and cloud services. For instance, in June 2018, UPS Inc., an American multinational shipping and supply chain management company, announced the investment of USD 130 million in CNG vehicles, including fueling stations, to achieve the long-term goal of reduced carbon emission.


Based on the geography, this market is segmented into EMEA, Asia Pacific, and the Americas. In 2020, the Asia Pacific region will dominate the market due to the high number of vehicles.

Asia Pacific region includes South Korea, Japan, India, China, and other countries. Moreover, the increasing number of regulatory policies and adoption of cleaner fuels are mainly driving the regional growth over the forecast period. Further, this region offers lucrative opportunities for developing low-cost fuel-efficient automobiles and the upsurge in alternate fuel stations and public charging infrastructure in the market.

On the other hand, EMEA is estimated to be the fastest-growing regional market from 2020 to 2028. This factor is due to increasing government technological advancement and positive initiatives taken by the government, such as investment in electric buses for public transport.

Moreover, major alternative fuel vehicles market players are also using strategic partnerships and acquisitions as a strategy to support the demand for alternative fuel vehicles. For instance, in June 2020, Ford and Volkswagen AG signed an agreement to expand their global alliance and meet the evolving requirements of their customers in Europe and other regions by providing complementary strengths in commercial & electric vehicles and midsize pickup trucks.

In addition, the Americas region is one of the most attractive markets for AFVs. Several regulations by organizations such as Alternative Fuels Data Center and the U.S. government to control the vehicular emissions and import of fuels have substantiated the advantages for the alternate fuels. Thus, the Americas’ alternative fuel vehicle market is witnessing a substantial growth rate of 25.5% over the forecast period.


Key Market Players Focus on Collaborations Strategies to Gain Competitive Edge

The alternative fuel vehicles market is highly competitive and fragmented, with the presence of key players such as the Honda Motor Co., Ltd., Toyota Motor Corporation, Nissan Motor Corporation, Daimler AG, Tesla, BYD Company Ltd., and Ford Motor Company, among others.

Intensifying competition in the industry to meet the emission-free automotive requirement and increasing automakers’ focus on investment in AFVs such as electric or natural gas vehicles is driving the market. Moreover, the number of automakers committing to achieve zero-emission is rapidly increasing.

For instance, in February 2021, Ford Motors Company announced that its European division would soon phase out of internal combustion engines (ICE) vehicle production, and by 2026 Ford will only offer plug-in hybrid and electric models. Furthermore, automakers such as Volkswagen, Lincoln, Jaguar Land Rover, and others have also committed to turn their vehicle volume emission-free in years to come.



  • June 2021: Jaguar Land Rover to Develop Hydrogen-Powered Defender Fuel Cell Vehicles Prototype Jaguar Land Rover Automotive PLC announced the development of a hydrogen-powered defender fuel cells prototype. The company will start testing Hydrogen fuel cell electric vehicles (FCEV) in 2021. The project is part of the company’s aim to achieve zero tailpipe emissions by 2036 and zero carbon emissions across the supply chain, operations, and products and services by 2039.

  • October 2020: BYD and Hino sign an agreement to establish a joint venture for Commercial Battery Electric Vehicles development Hino Motors, Ltd. (Hino) and BYD Company Ltd. signed a joint venture agreement to establish a new company for commercial BEVs development.


The market research report provides a detailed analysis of the market and focuses on key aspects such as leading companies, fuel types, and vehicle types. Besides this, the report offers insights into the market trends and highlights key industry developments. In addition to the factors above, the report encompasses several factors that have contributed to the growth of the market over recent years.

Report Scope & Segmentation



Study Period


Base Year


Forecast Period


Historical Period



Value (USD Billion) & Volume (Units)


By Fuel Type

  • BEV

  • HEV

  • PHEV

  • FCV

  • CNG

  • Biofuels

  • Other Gaseous Fuels

By Vehicle Type

  • Passenger Cars

  • Commercial Vehicles

By Geography

  • Americas (By Fuel Type, By Vehicle Type)

    • Central & South America (By Fuel Type, By Vehicle Type)

    • North Americas (By Fuel Type, By Vehicle Type)

      • U.S. (By Fuel Type, By Vehicle Type)

      • Canada (By Fuel Type, By Vehicle Type )

      • Mexico (By Fuel Type, By Vehicle Type )

  • Europe Middle East & Africa (By Fuel Type, By Vehicle Type)

    • MEA (By Fuel Type, By Vehicle Type)

    • Europe (By Fuel Type, By Vehicle Type)

      • U.K. (By Fuel Type, By Vehicle Type)

      • Germany (By Fuel Type, By Vehicle Type )

      • France (By Fuel Type, By Vehicle Type )

      • Rest of Europe (By Fuel Type, By Vehicle Type )

  • Asia Pacific (By Fuel Type, By Vehicle Type)

    • China (By Fuel Type, By Vehicle Type)

    • India (By Fuel Type, By Vehicle Type)

    • Japan (By Fuel Type, By Vehicle Type)

    • South Korea (By Fuel Type, By Vehicle Type)

    • Rest of Asia Pacific (By Fuel Type, By Vehicle Type)

Frequently Asked Questions

What is the projected market value of the global alternative fuel vehicles market?

Fortune Business Insights says that the global alternative fuel vehicles market size was USD 293.45 billion in 2020 and is projected to reach USD 1,681.80 billion by 2028.

Which region has the highest alternative fuel vehicles market share?

The Asia Pacific dominated the alternative fuel vehicles market share in 2020.

What is the CAGR of this alternative fuel vehicles market?

The alternative fuel vehicles market is projected to grow at a CAGR of 26.2% and will exhibit exponential growth in the forecast period (2021-2028).

What are the major industry drivers?

Increasing government investment for deployment of alternative fuel refilling infrastructure and stringent norms and regulations enforced by the government worldwide for emission control are expected to propel the market growth.

  • Global
  • 2020
  • 2017-2019
  • 260
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