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The global electric vehicle market size was valued USD 384.65 billion in 2022 and is projected to grow from USD 500.48 billion in 2023 to USD 1,579.10 billion by 2030, exhibiting a CAGR of 17.8% during the forecast period.
The environmental impact of conventional gasoline vehicles and the rise in fuel prices have paved the way for alternative fuel vehicles in the market. Buyers are gradually getting inclined to use battery-powered or hybrid automobiles, which is anticipated to drive the EV market. In recent years, the demand for BEVs has increased considerably among consumers because these vehicles do not use traditional fuels, such as gasoline or diesel. The maintenance cost of EVs is also considerably less, which gives it an advantage over conventional fuel-based vehicles.
All models use one or more electric motors for propulsion. Electricity is the main energy source for EVs. There is no internal combustion engine installed in them. A sudden rise in the market’s CAGR can be attributed to the robust demand for alternative fuel vehicles. Fossil fuel-based vehicles are one of the main causes of air pollution across the world. Therefore, it has forced many governing bodies to impose strict emission regulations on car manufacturers to curb vehicle emissions.
Market Showed Signs of Recovery Post-COVID-19 Owing to Positive Steps from Governments to Boost EV Adoption
The COVID-19 pandemic had a major impact on the market during 2020 and 2021. The pandemic severely affected the aviation and automotive industries. There was a sudden decline in the number of on-road vehicles. However, the sales of all types of EVs improved post-June 2020 as the lockdowns were lifted in most countries. The sales of BEVs and HEVs, in particular, were dominant during the post-pandemic period. The 2023-2025 period is predicted to be a booming period for EV sales as OEMs are planning to launch new EV models in the coming years. Furthermore, the robust support from governments for vehicle electrification and the decline in battery prices are expected to keep the market growth buoyant during the forecast period.
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Rising Investment in EVs to Boost Market Growth
Electric vehicle market growth is anticipated to be fueled by increasing investment in the field of electric mobility. Notable industry players including Daimler AG, Ford Motor Company, BYD, and Renault Group are spending more money on their plans to manufacture EVs. For instance, BYD said in September 2022 that it will begin EV production in Thailand in 2024 with a capacity of 150,000 electric vehicles per year. With assistance from the Thailand Board of Investment, BYD will also construct a facility for EVs with cutting-edge right-hand drive technology at WHA Rayong 36 Industrial Estate. Major corporations are spending extensively on the creation of EVs, including Daimler AG and Mercedes Benz. As a result, during the forecast duration, the market is anticipated to record notable growth.
Favorable Government Subsidies and Policies to Augment Market Growth
Increasing demand for EVs will likely accelerate the market growth during the forecast period. Governments are offering attractive incentives and policies to encourage the sales of EVs. Some of these incentives include reduced selling prices, zero or low registration fees, and free charging infrastructure of EVs at multiple charging stations. Additionally, a number of governments around the world exclude import, purchase, and road taxes based on various subsidies. The production of EVs has increased due to these subsidies for the auto industry. Governments have also made significant infrastructure investments and developed helpful policies. For instance, over the next five years, the U.S. government intends to spend USD 287 billion on building new highways. In order to support the development of these vehicles, the government will also be putting up EV charging stations all around the United States. In the future years, it is anticipated that these activities will increase the market share of electric vehicles.
Strict Government Regulations on Vehicle Emissions to Boost Market Growth
To reduce the amount of greenhouse gas emissions in the atmosphere, governments of many countries have implemented strict vehicle emission regulations. For instance, in 2022, the European Union formed a regulation to reduce the CO2 emissions of light and medium commercial vehicles by 15% before 2025. The Petroleum Ministry of India mandated all automotive manufacturers to start producing BS-VI vehicles after 1 April 2020. The decision was aimed at reducing air pollution in the country. These stringent steps taken by several regulatory bodies to curb air pollution are expected to boost this industry’s growth in the coming years.
Higher Manufacturing and Battery Costs to Restrain Market Progress
EVs are superior to fossil fuel-based automobiles, but their cost is higher than that of the latter. These vehicles have not yet achieved economies of scale as they are not mass-produced. In addition, the absence of EV charging infrastructure has proven to be a negative factor, which has affected the market's growth. The manufacturers also need a lot of investment and assets, which may hamper the market's progress. However, owing to the production of EV batteries in large volumes and technological advancements, the cost of batteries is expected to decrease in the coming years.
Passenger Vehicles to Hold Maximum Market Share Due to Increasing Demand for PEVs
Based on vehicle type, the market is segmented into passenger and commercial vehicles. The passenger vehicle segment holds the maximum market share due to increasing sales in China, India, Norway, and Germany. The adoption rate of EVs in Asia Pacific is high owing to the presence of EV manufacturers, original equipment manufacturers (OEMs), and other automakers in the region. These factors will help promote the growth of this segment during the forecast period. Further, the commercial vehicle segment is estimated to be the fastest growing in the coming years owing to the ever-increasing innovations in EV batteries to improve commercial vehicle load capacity.
BEVs to Hold Top Market Position Due To Innovations from Key Operating Players
Based on the propulsion type segment, the market is segmented into Battery Electric Vehicles (BEVs) and Hybrid Electric Vehicles (HEVs). The BEV segment is expected to hold a notable market share and grow further due to the vast advantage of an electric vehicle. The growth is attributed to the rising production of EVs by OEMs. For Instance, In April 2023, BYD introduced a new technological system for stabilizing car rides through rugged terrain, sharp turns, and even shallow water. The shock absorption tech is set to be a feature of the company’s recently launched premium brand Yangwang. The HEV segment is the second dominant segment as this vehicle provides the dual option of working as a fuel-based and electric automobile, particularly in regions with inadequate charging infrastructure.
Affordability of Front-wheel Drive Vehicles to Drive Component Segment Growth
Based on the drive type, the market is divided into all-wheel drive, front-wheel drive, and rear-wheel drive. The front-wheel drive segment accounted for the largest market share in 2022. This segment is also expected to record the fastest CAGR during the forecast period. This growth is attributed to the cost efficiency of the vehicle. Front-wheel drive systems are generally less expensive to manufacture and maintain as compared to rear-wheel drive or all-wheel drive systems. This makes front-wheel drive vehicles more affordable for customers, thus fueling the segment’s growth. The all-wheel drive segment accounted for a significant market share in 2022. The growth can be credited to the increasing popularity of all-wheel drive systems in the global automotive industry. The rear-wheel drive segment held a considerable market share in 2022. The growth is due to technological advancements in vehicle systems.
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151-300 Segment Dominates the Market Due to Increasing Adoption of Passenger Vehicles
Based on range, the market is divided into Up to 150 miles, 151-300 miles, and above 300 miles. The 151-300-mile range segment holds the maximum market share as most passenger vehicles deliver this range. The rising sales of passenger EVs are expected to augment the segment’s growth. The up to 150 Miles segment holds the second largest due to the adoption of light commercial vehicles and electric vans. The adoption of electric vans is still in its nascent stage. Thus, the growing demand for EVs will drive segmental growth during 2023-2030.
Battery Pack & High Voltage Component Holds Maximum Market Share Due to Major Cost Contribution
Based on components, the market is divided into battery pack & high voltage components, motor, brake, wheel & suspension, body & chassis, and low voltage electrical components. The traction battery pack holds the maximum share due to major cost contributions and is a main supply for the vehicle functioning. Also, the price/value of these packs will decrease significantly in the upcoming years. Moreover, the major manufacturers are focused on developing traction batteries & high-voltage components that help to enhance performance and reduce cost, which will drive the market growth during the forecast period. Further, the motor holds the second largest share due to its adoption as an EV. Rising EV demand among major countries coupled with technological advances by OEMs will augment the market growth.
Asia Pacific Electric Vehicle Market Size, 2022 (USD Billion)
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The market is analyzed across North America, Asia Pacific, Europe, and the Rest of the World.
Asia Pacific is expected to grow significantly in this market due to the growing demand for passenger cars in developing nations. China accounts for the largest share in terms of passenger cars and other automobiles. North America is also expected to witness the highest growth in the market. The regional market’s growth can be attributed to rising initiatives by the Department of Energy (DoE) to build EV charging infrastructure throughout the U.S. to support the growing number of EVs in the region.
Furthermore, Europe is expected to hold a prominent market share. The steps taken by governments to reduce carbon emissions have been driving the market’s growth in Europe. The U.K., Germany, and France are important countries contributing to the region's growth. Besides, the rapid adoption of fuel-efficient vehicles will augur well for the European market. Countries in the Rest of the World region hold a smaller market share due to the lack of charging infrastructure and capital.
Companies Focus on Acquisitions, Partnerships, and Developments to Gain Competitive Edge
The market is highly competitive and fragmented with the presence of key players, such as General Motors Company, Nissan Motors Co. Ltd., Tesla, Inc., Toyota Motor Corporation, BYD Company Ltd., Daimler AG, and Ford Motor Company, among others.
Tesla Inc. is a California-based EV manufacturing company, and its cars are well known for their autopilot mode and semi-autonomous features. The company is also known for its innovative product design, technological enhancements, and quality assurance. To fulfill the charging station gap in North America, Tesla constructed a network of charging stations across the U.S. and Canada. The company also built solar power generation plants to make green energy available for these charging stations.
Daimler AG is one of the world's leading manufacturers of commercial vehicles and high-end automobiles. The company has launched a range of passenger cars and commercial vehicles to support the growing EV demand. A few prominent EVs launched by the company include EQC, Smart EQ, GLC F-Cell, and Concept EQV. Moreover, Daimler AG also provides financing, insurance, fleet management, leasing, and innovative electric mobility services.
An Infographic Representation of Electric Vehicle Market
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The market report provides a detailed analysis and focuses on key aspects, such as leading market players, vehicle type, and leading applications of the product. Besides, the report offers insights into the latest market trends and highlights key industry developments. In addition to the abovementioned factors, the report encompasses several factors that have contributed to the market’s growth in recent years.
CAGR of 17.8% from 2023 to 2030
Value (USD Billion)
By Vehicle Type
By Propulsion Type
By Drive Type
As per the Fortune Business Insights study, the market size was USD 384.65 billion in 2022.
The market is likely to register a CAGR of 17.8% during the forecast period of 2023-2030.
The Battery Electric Vehicle (BEV) segment is expected to lead the market due to the adoption of pure EVs across the world.
The market size in Asia Pacific stood at USD 196.06 billion in 2022.
BYD, Tesla, and Daimler AG are some of the top players in the market.
China dominated the market in terms of sales volume in 2022.
Asia Pacific held the largest share of the market in 2022.
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