Hybrid Vehicle Market Size, Share & COVID-19 Impact Analysis, By Electric Powertrain (Parallel, Series), By Degree of Hybridization (Full, Mild, Micro), By Vehicle Type (Passenger Car, Commercial Vehicle) and Regional Forecast, 2020-2027

The global hybrid vehicle market size was USD 157.48 billion in 2019. The global impact of COVID-19 has been unprecedented and staggering, with hybrid vehicles witnessing a negative impact on demand across all regions amid the pandemic. Based on our analysis, the global market exhibited a negative growth of -8.34% in 2020 as compared to the average year-on-year growth during 2016-2019. The market is projected to grow from USD 144.34 billion in 2020 to USD 280.75 billion in 2027 at a CAGR of 10.0% in the 2020-2027 period. The rise in the CAGR is attributable to this market’s demand and growth, returning to pre-pandemic levels once the pandemic is over.

Hybrid vehicles are powered by a combination of an electric motor (one or more), which uses energy stored in batteries (produced via regenerative braking), along with an ICE (internal combustion engine).

The demand for hybrid electric vehicles has increased significantly in recent years, owing to the benefits offered by these vehicles, such as high power and range, like that of a conventional vehicle. However, the increasing adoption of pure electric and fuel cell electric vehicles is anticipated to hamper these vehicles sales. Hence, these factors are expected to influence the hybrid vehicle market growth.

Production Delay of New Models and Reduced R&D Funding amid COVID-19 to Hinder Market Growth

The COVID-19 pandemic has had a severe impact on the automotive industry, with the extended lockdown across major economies resulting in the shutdown of large automotive assembly units across the globe. The halt in production activities and a significant drop in the demand for vehicles have led to a shortage of funds for R&D activities, as companies are more focused on survival than on research & development activities in the current scenario. Research initiatives aimed at reducing the cost of electric vehicles are expected to be delayed due to the aforementioned reasons. Furthermore, trade restrictions during the first quarter of 2020 owing to the pandemic have further compounded the lack of flexibility of the supply chain networks of major manufacturers.

For instance, owing to the pandemic-induced lockdown, several manufacturers (particularly US-based automakers) were forced to delay the production of their upcoming hybrid models. The production of the 2021 Ford F-150 (the first to be equipped with a hybrid powertrain), the 2021 Acura MDX, and the 2021 Toyota Sienna have all been delayed because of the pandemic. However, the demand for these vehicles has remained steady, particularly in Europe, which can be attributed to the stringent government regulations over vehicular carbon emissions. For instance, according to the European Automobile Manufacturers Association (ACEA), hybrid car sales in Germany increased 91.2% in the third quarter (Q3) as compared to Q3 2019.

Hence, reduced funding for R&D initiatives over the short term, delays in the production of new vehicle models, and an increase in the total hybrid vehicles market share, especially in developed countries, are some of the most prominent impacts of COVID-19 on the automotive industry.

LATEST TRENDS

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Automobile Electrification in Emerging Markets to be the Design Direction for Carmakers

In developing economies such as China and India, the increased focus on reducing vehicular emissions along with the increased government support (for example, tax rebates, custom duty exemption on lithium-ion battery components, manufacturing incentives, and greater adoption of hybrid commercial vehicles) will lead to a rise in the adoption of hybrid type of vehicles. For instance, the Indian government is providing tax incentives of up to USD 3,423 for the purchase of hybrid & electric vehicles. Similarly, the Brazilian government is providing tax incentives for the purchase of hybrid & electric vehicles under its Rota 2030 program.

Hence, the increased focus on the deployment of eco-friendly vehicles will positively influence the growth of the market over the forecast period.

DRIVING FACTORS

Increasing Stringency of Emission Norms to Drive the Growth of the Market

Governments of various countries are coming up with stringent vehicular carbon emission regulations, considering the severe impacts of pollutants on the environment and human health. For example, in July 2019, the US Department of Transportation implemented a USD 5.50 penalty rate for auto manufacturers that fail to comply with the Corporate Average Fuel Economy (CAFÉ) standards. Such regulations have compelled manufacturers to increase funding for the development & production of electric and hybrid vehicles.

Hybrid vehicles enable improved fuel economy without sacrificing performance. Hence, stringent emission standards are expected to drive the growth of the market over the forecast period.

Positive Environmental Impact to Augment Growth

Hybrid vehicles combine the benefits of electric motors and gasoline engines. These vehicles offer greater power and fuel efficiency compared to conventional vehicles. For instance, fuel consumption can be reduced by up to 35% by using hybrid systems, which is equivalent to an increase in fuel economy by more than 50%. The majority of the hybrids use advanced technologies such as automatic start/stop, reducing the idling of the vehicle via automatic shutdown of the engine when the vehicle stops and immediate acceleration during restart.

Furthermore, the electric motor provides power using energy recaptured via regenerative braking. This can be used to assist the engine during passing, hill-climbing, or accelerating. Moreover, the electric motor can also be used to drive the vehicle independently at low speeds, the range at which combustion engines are least efficient. Hence, the positive environmental effects of hybrid systems are driving the growth of the market.

RESTRAINING FACTORS

Increasing Adoption of FCEV and BEV to Restrain Growth

Major automobile manufacturers, such as Volkswagen, BYD, and Tesla, are heavily focused on the development of battery electric vehicles (BEV) or pure electric vehicles. These vehicles eliminate the dependency on the combustion engine and conventional fuel, among other advantages. Similarly, fuel cell electric vehicles (FCEV) also offer benefits such as net-zero emissions, high driving range, easy refueling, & quiet operation. Hence, governments are actively encouraging the sale of BEVs and FCEVs through various initiatives. For instance, the Clean Vehicle Rebate Program (CVRP), as implemented by the California Air Resources Board (CARB), offers rebates of up to USD 7,000 for the purchase or lease of FCEVs and BEVs. Thus, the increased adoption of BEVs and FCEVs is expected to restrain the growth of the market.

SEGMENTATION

By Electric Powertrain Analysis

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

By electric powertrain, the global market is segmented into parallel and series. Parallel hybrids offer better flexibility to switch between ICE and electric motor power along with higher power efficiency during long-distance driving and cruising. Furthermore, as compared to series hybrids, only one electric motor is required and it can be designed to be less powerful than the combustion engine. Hence, these factors are fueling the growth of this segment.

The series hybrid segment is anticipated to show significant growth in the market owing to the high efficiency for city driving and the ability to operate the ICE in the narrow rpm range (which is the most efficient range) of these hybrids.

By Degree of Hybridization Analysis

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Full Hybrid Segment Dominated in 2019 Fueled by Flexible Operation

Based on the degree of hybridization, the market is segmented into a full hybrid, mild hybrid, and micro-hybrid. The full hybrid segment held the largest market share in 2019. These vehicles can operate on just batteries, or the combustion engine, or a combination of both. Additionally, the majority of the hybrid models manufactured by key players such as Toyota and Lexus are also full hybrids and continuous improvements have been achieved over the last few years in terms of fuel efficiency. Hence, these factors are aiding the dominance of the full hybrid segment.

The mild-hybrid vehicle segment is expected to grow at a higher CAGR over the forecast period as these vehicles offer benefits, such as more powerful acceleration, reduced engine load especially in an urban driving situation, and are generally more affordable than full hybrids.

By Vehicle Type Analysis

Passenger Car Segment Dominated in 2019 Supported by Fuel-Efficient Operations

Based on vehicle type, the market is segmented 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 government initiatives across the globe aimed at increasing the hybridization of public transit vehicles and the increased adoption of hybrid heavy-duty vehicles in land-based freight operations.

REGIONAL INSIGHTS

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The market in Asia Pacific is characterized by government initiatives to promote the manufacturing and sale of eco-friendly vehicles. In India, for instance, the second phase of the FAME (Faster Adoption & Manufacturing of Hybrid & Electric Vehicles) scheme commenced in April 2019, with a budget of INR 10,000crore. Similarly, in China, owing to the New Energy Vehicle mandate, the share of hybrid buses in public transit has increased exponentially over the last few years. Hence, these factors are anticipated to fuel the growth of the Asia Pacific market at a higher CAGR over the forecast period.

The North America market is expected to show good growth over the forecast period. The US accounted for the majority of the market share, with 400,746 hybrid vehicles sold in 2019. This represents a 15% increase over 2018. Benefits such as state incentives for vehicle purchase & infrastructure development, parking incentives, and fuel savings, among others, have boosted the sales of these vehicles in this region. Hence, these factors are propelling the growth of the regional market.

The market in Europe is also expected to show healthy growth in the market owing to the highest stringency of permissible emission limits and government policies aimed at increasing the share of alternative fuel commercial vehicles.

KEY INDUSTRY PLAYERS

Automotive Giants to be the Leading Players in the Market

Key players in the market include Volkswagen AG, AB Volvo, Toyota Motor Company, Honda Motor Co., Ltd., Hyundai Motor Company, and BYD Company Ltd., among others. The majority of the market players are focused on diversifying supply chain networks and strategic partnerships with regional players, with a focus on increasing product penetration in emerging economies. For example, in February 2020, Toyota Kirloskar Motor launched the Vellfire, a new luxurious self-charging hybrid electric vehicle (SHEV) in India. The Vellfire offers superior performance via dual motors yet providing a quieter drive and high efficiency. Moreover, it can operate 60% of the time in electric mode with the engine off. Thus, the launch of new eco-advanced vehicles will boost the demand for these vehicles over the forecast period.

LIST OF KEY COMPANIES PROFILED:

• Toyota Motor Corporation (Toyota City, Japan)


• Honda Motor Co., Ltd. (Tokyo, Japan)


• BYD Company Ltd. (Shenzhen, China)


• Lexus (Nagoya, Japan)


• Ford Motor Company (Michigan, United States)


• Hyundai Motor Company (Seoul, South Korea)


• Kia Motors Corporation (Seoul, South Korea)


• Nissan Motor Corporation (Kanagawa, Japan)


• Daimler AG (Stuttgart, Germany)


• Volkswagen AG (Wolfsburg, Germany)


• AB Volvo (Gothenburg, Sweden)

KEY INDUSTRY DEVELOPMENTS:

• In July 2021, a leading global supplier of semiconductors, STMicroelectronics, and French automotive manufacturer, Renault Group, recently announced their strategic partnership. The partnership involves designing, producing, and supplying power electronic systems for improved electric and hybrid vehicle performance.


• In July 2021, XL Fleet announced a partnership with NFI’s ARBOC, one of the leading global bus manufacturers. The partnership involves XL Fleet to electrify ARBOC Freedom low floor buses with XL Hybrid electric propulsion system.


• In June 2021, a global automotive engine product and drive system manufacturer Dayco has entered a strategic partnership with Ningbo Physis Technology Co., Ltd., a leader in the design and manufacture of products and solutions for fields of energy conservation and energy management. The partnership will develop hybrid solutions for light & heavy duty automotive manufacturers worldwide.


• In July 2021, Japanese automaker Mitsubishi has revealed its plans to introduce Plug-in hybrid models of its new Outlander with a fully evolved new–generation PHEV system. The vehicle is expected to roll out in the USA in the second half of 2022.

REPORT COVERAGE

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The global hybrid vehicle market research report covers a detailed analysis of the market and focuses on key aspects such as leading companies, product types, and leading applications of the product. Besides this, the report offers insights into the current market trends and highlights key industry developments. In addition to the aforementioned factors, the report delivers an in-depth market analysis of several factors that have contributed to its growth over recent years.

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