Hybrid Vehicle Market Size, Share, COVID-19 Impact Analysis, By Vehicle Type (Passenger Car & Commercial Vehicle), By Electric Powertrain (Parallel & Series-Parallel), By Degree of Hybridization (Mild, Full & Plug-in Hybrid), By Components (Body, Chassis, Powertrain, Electronics, and Others) and Regional Forecast, 2023-2030

The global hybrid vehicle market size was valued at USD 227.94 billion in 2022. The market is projected to grow from USD 271.80 billion in 2023 to USD 443.91 billion by 2030, exhibiting a CAGR of 7.3% during the forecast period.

Hybrid vehicles are driven by a combination of one or more electric motors that use energy stored in batteries (produced by regenerative braking) and an Internal Combustion Engine (ICE). The demand for Hybrid Electric Vehicles (HEVs) has increased significantly in recent years due to the advantages of these vehicles, such as high power and range compared to conventional cars. However, the increased use of environmentally friendly and fuel-cell electric vehicles is expected to make it challenging to sell these vehicles. Thus, these factors are expected to influence the hybrid vehicle market growth.

COVID 19 IMPACT:

Production Delay of New Models and Reduced R&D Funding Amid COVID-19 Hindered Market Growth

The automotive industry was severely affected by the COVID-19 pandemic, and the prolonged shutdown of major economies led to the closure of key auto assembly plants across the globe. The shutdown of manufacturing and significant drop in demand for vehicles resulted in lack of funding for R&D operations as companies were focusing more on survival than R&D at the time. Research projects aimed at reducing the cost of electric vehicles were also delayed. In addition, trade restrictions imposed by governments due to the pandemic in the first quarter of 2020  further exacerbated the flexibility issue in major manufacturers' supply chain networks. The containment of the COVID-19 virus and the economic recovery of several nations contributed to a strong and evolving electric vehicle ecosystem. Many electric car startups are now launching new and locally designed models.

LATEST TRENDS

Trend of Automobile Electrification in Evolving Markets to Catch Up With Car Manufacturers

In emerging countries, such as India and China, the focus on reducing vehicle emissions is rising. Also, government support in the form of tax credits, tax-free lithium-ion battery components, production incentives, and broader adoption of hybrid commercial vehicles is increasing. For example, the Indian government offers a tax rebate of up to USD 3,423 on purchasing hybrid and electric vehicles. The Brazilian government also provides tax incentives for buying hybrid and electric vehicles under its Rota 2030 program. Hence, the increased focus on deploying eco-friendly vehicles will positively influence the market's growth over the forecast period.

DRIVING FACTORS 

Positive Environmental Impact of Hybrid Vehicles to Fuel Its Demand

Hybrid cars combine the advantages of electric and gasoline engines. These vehicles offer better power and fuel efficiency compared to conventional vehicles. For example, using hybrid systems can lessen fuel consumption by up to 35%, corresponding to an increase in fuel economy of more than 50%. Most hybrids use advanced technologies, such as automatic start/stop, reduced vehicle downtime by automatically shutting off the engine when the vehicle stops, and instant acceleration when restarted.

In addition, the electric motor produces energy through regenerative braking using renewable energy. This can help the engine when overtaking, climbing hills, or accelerating. In addition, the electric motor can drive the vehicle autonomously at low speeds where internal combustion engines are least efficient. Thus, the positive environmental effects of hybrid systems are driving the market's growth.

RESTRAINING FACTORS

Increasing Adoption of FCEV and BEV to Restrain Market Growth

Major car manufacturers, such as Volkswagen, BYD, and Tesla are focusing on developing Battery Electric Vehicles (BEVs) or purely electric vehicles. These vehicles eliminate dependence on internal combustion engines and conventional fuel, and offer other advantages. Similarly, Fuel Cell Electric Vehicles (FCEVs) offer benefits, such as zero-emission, long-range, easy refueling, and quiet operation.

Therefore, governments actively encourage the sale of BEVs and FCEVs through various initiatives. For example, the California Air Resources Board's (CARB) Clean Vehicle Rebate Program (CVRP) offers a rebate of up to $7,000 on purchasing or leasing FCEVs and BEVs. Thus,  the increased adoption of BEVs and FCEVs is expected to curb the market growth.

SEGMENTATION 

By Vehicle Type Analysis

Higher Fuel Efficiency of Passenger Cars to Augment Their Sales

The market, based on vehicle type, is fragmented into passenger cars and commercial vehicles. Hybrid cars are best suited for stop-and-go driving, where intermittent use of the electric motor can enable significant fuel cost savings. Hence, the passenger car segment is expected to hold the largest share of the market over the forecast period.

The commercial vehicle segment is also anticipated to show considerable growth in the market. This growth can be attributed to global government initiatives to increase public transit vehicles' hybridization and adopt hybrid heavy-duty vehicles in land-based freight operations.

By Electric Powertrain Analysis

Parallel Hybrids to Hold Largest Share Backed by Lower Costs and Higher Efficiency 

Based on electric powertrain, the global market is segmented into parallel and parallel-series combinations. Parallel hybrids offer better flexibility to switch between ICE and electric motor power and higher power efficiency during long-distance driving and cruising. In addition, compared to older hybrids, only one electric motor is required, which can be designed to be more efficient than an internal combustion engine. Hence, these factors will help the parallel hybrid segment hold a leading share of the market.

The parallel-series hybrid segment is anticipated to show a major growth rate in the market as it offers more efficient urban driving and has the ability to function in a constrained rpm range, which is the most effective range of these hybrids. Most of the newly launched vehicles are upgrading their powertrain to parallel-series combinations. This system requires larger battery packs and a generator, which can incur higher costs than a pure parallel hybrid system. Vehicles incorporated with this system will perform better and be more fuel efficient than others. Thus, this segment is expected to contribute majorly to the market’s progress during the forecast period.

By Degree of Hybridization Analysis

Full Hybrid Segment Dominated in 2022 Fueled by Flexible Operation and Fuel Economy

The market is divided into mild, full, and plug-in hybrids based on the degree of hybridization. In 2022, the full plug-in hybrid segment held the largest hybrid vehicle market share. Batteries, internal combustion engines, or a combination of these can power these vehicles. In addition, most hybrid models produced by key players, such as Toyota and Lexus are full hybrids, and fuel efficiency has steadily improved in recent years.

Thus, these factors are contributing to the dominance of the full plug-in hybrid segment. The organic hybrid and plug-in hybrid segments are expected to record a higher CAGR during the forecast period. These vehicles offer advantages, such as more efficient acceleration and lower engine load, especially in urban driving, and generally more affordable than full hybrids. The mild hybrid also indicated a noticeable rise in its demand in the market.

By Components Analysis

Active Developments and Continuous Research For Efficient Drivig Experience Are Driving The Powertrain Demand In The Market

Based on components, the market is categorized into body, chassis, powertrain, electronics and others. A powertrain is a set of components that generate power to move the vehicle. This component in hybrid vehicles encompasses the IC engine, battery & electric motor. It transmits power that is further utilized to drive or move the vehicle. The powertrain segment is dominant in the market as it is a crucial component due to its performance, comfort, and safety.

The electronics or controlling electronics is the second fastest-growing segment. It consists of converters, sensors, and ICs responsible for managing the flow of electrical energy in the vehicle system. The growing trend of connected vehicles is accelerating this segment’s growth. Body, chassis, and other segments also showed significant growth in the market.

REGIONAL INSIGHTS

The market is divided into North America, Europe, Asia Pacific, and Rest of the World. Asia Pacific’s market is characterized by government initiatives to promote the production and sales of environmentally friendly vehicles. For example, in India,  the second phase of the FAME system (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) started in April 2019 and has a budget of $1 billion. Similarly, with the New Energy Vehicle mandate in China, the share of hybrid buses in public transport has grown exponentially in recent years. Consequently, these factors are expected to drive the Asia-Pacific’s market share at a higher CAGR during the forecast period.

The North American market is expected to grow well during the forecast period. The U.S. has the largest market share. Benefits, such as government incentives for vehicle purchase, infrastructure development, parking concessions, and fuel savings have increased the sales of these vehicles in the region. Thus, these factors are contributing to the growth of the regional market.

The European market is also expected to succeed due to strict emission limits and the governments’ policy to increase the share of commercial hybrid vehicles with alternative fuels.

KEY INDUSTRY PLAYERS

Vast & Continuous Upgrading of Products made Toyota Leading Market Player

Key players in this market include Volkswagen AG, AB Volvo, Toyota Motor Company, Honda Motor Co., Ltd., Hyundai Motor Company, and BYD Company Ltd. Most of the market players are focused on diversifying their supply chain networks and strategic partnerships with regional players. They are also focusing on increasing the product penetration in emerging economies.

• For instance, in February 2020, Toyota Kirloskar Motor launched Vellfire, a new luxurious Self-Charging Hybrid Electric Vehicle (SHEV) in India. Vellfire offers superior performance via dual motors yet provides a quieter drive and high efficiency. Moreover, it can operate in electric mode 60% of the time.

Thus, introducing new efficient and eco-friendly vehicles in the market will increase the demand for hybrid vehicles during the forecast period.

LIST OF KEY COMPANIES PROFILED:

• Toyota Motor Corporation (Japan)


• Honda Motor Co., Ltd. (Japan)


• BYD Company Ltd. (China)


• Ford Motor Company (U.S.)


• Hyundai Motor Company (South Korea)


• Kia Motors Corporation (South Korea)


• Nissan Motor Corporation (Japan)


• Daimler AG (Germany)


• Volkswagen AG (Germany)


• AB Volvo (Sweden)

KEY INDUSTRY DEVELOPMENTS:

• June 2023: Toyota Motor North America, Inc. announced investing around USD 50 million to construct a new laboratory facility in Michigan, the company’s North American R&D headquarters. This new facility will evaluate batteries for North American electric and electrified/hybrid vehicles.


• April 2023 - MG Motor launched a plug-in hybrid SUV model in Mexico. The rising opportunity for a hybrid market in the region was identified for this launch by the company. MG Motor's eHS model will be sold in Mexico for USD 45,610.


• March 2023 - Nissan Motor Co Ltd announced its plan to decrease its hybrid vehicle prices in line with those of petrol-powered cars by 2026. The company plans to modify its powertrain to achieve this aim.


• January 2023 - Toyota Motor Corporation (Toyota) launched all-new Prius Series Parallel Hybrid (HEV) models and Plug-in Hybrid (PHEV) models in Japan. The new model will be equipped with a fifth gen hybrid system with a company-claimed fuel efficiency of 28km/lit.


• October 2022 - Ashok Leyland, a leading commercial vehicle manufacturer in India, and the Indian Institute of Technology’s (IIT-Madras) National Centre for Combustion Research and Development (NCCRD) collaborated to develop hybrid electric vehicles using micro gas turbine technology.

REPORT COVERAGE

The market report provides detailed market analysis and focuses on key aspects, such as leading companies, product types, end-users, design, and technology. Besides this, the report offers in-depth analysis & insights into the latest market trends and highlights key industry developments. In addition to the factors above, the report encompasses several factors that have contributed to the market's growth in recent years.

Report Scope & Segmentation