Automotive Alternative Fuel Vehicle Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

Automotive Alternative Fuel Vehicle Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The Automotive Alternative Fuel Vehicle Market was valued at USD 330 Billion in 2021 and is expected to reach USD 784.45 Billion by 2027, registering a CAGR of 15.5% during the forecast period, 2022-2027.

The Automotive Alternative Fuel Vehicle Market was severely impacted by the manufacturing shutdowns, lockdowns, and trade restrictions during the COVID-19 pandemic. Furthermore, the fall in automotive production, the steep decline in automobile sales due to work-from-home policies and travel restrictions, and lack of labor significantly impacted the market. Since automotive manufacturers have resumed operations due to steadily rising automobile sales in countries with a limited number of COVID-19 cases, the market is likely to recover during the forecast market. Furthermore, the manufacturers are implementing contingency plans to mitigate future business uncertainties to retain continuity with clients in the critical sectors of the automobile industry.

Over the long term, increasing investments in R&D and production capacity by major industry players and a rise in sales of electric and hybrid vehicles as well as rising demand for electric commercial vehicles from the E-commerce sector for last mile delivery operations are creating demand in the automotive and transportation industry with a surge in sales of alternative fuel vehicles.

Key players in the market are expanding their production capacity and launching new products to cater to the increased demand for alternative fuel vehicles. For instance, In May 2022 Hyundai Motor Group announced to invest USD 5.54 billion to set a dedicated electric vehicle and battery manufacturing plant at Bryan County, Georgia, United States.In March 2022 Vietnamese EV manufacturer VinFast announced to invest USD 6.5 billion to set a manufacturing plant in North Carolina, United States with an annual capacity of 150000 units by 2024.

Asia-Pacific is the largest region for alternative fuel vehicles due to the adoption of strict automotive emissions norms and stringent fuel efficiency standards, higher taxation on fossil fuels and government incentives to promote elctric vehicles. Europe and North America are expected to play key role in the development of the market owing to rising amount of supervisory guidelines and implementation of cleaner fuels and supportive strategies adopted by key players in the market.

Key Market TrendsStringent Government rules and regulations and growth in sales of electric vehicles will drive growth in the market

Electric vehicles segment of the market anticipated to play key role in the development of the market over the forecast period in wake of supportive government measures and growing adoption of electric vehicles across major countries in the world. Countries such as the United States, Germany, France, China, and India have enforced government laws and regulations for vehicular emission, and have mandated automobile manufacturers to use advanced technologies to combat high emission levels in vehicles.

• According to Environmental Protection Agency, the permissible levels of CO is 3.4g/mi and NOX is 0.4 g/mi for light-duty vehicles. The California Air Resources Board launched the California vehicle emissions program, which includes requirements for manufacturers to produce and deliver zero-emission vehicles. The current ZEV regulations mandate a substantial annual increase in the production and sale of battery-electric, fuel cell, and plug-in hybrid vehicles.
• EU countries announced to ban new ICE vehicle sales between 2030 and 2035. The government of Norway is providing benefits like no road tax, no import tax for electric vehicle buyers and spending heavily on improving the infrastructure for charging stations and technology to reduce charging time, with an aim to become 100% eco-drive zone by 2025.
• In October 2021, the European Commission officially unveiled the "Alternative Fuels Infrastructure Facility." which will further boost the adoption of electromobility in Europe. The USD 1.5 billion funding are used to create infrastructure with zero emissions, including rapid charging and hydrogen filling facilities. The fund helps European nations get closer to achieving their targets of 3.5 million and 1 million charging stations, respectively, by 2030.

Such government incentives and active developments occuring in the market currently are expected to further expand the sales of alternative fuel vehicles in across the world in coming years. Such developments are encouraging key OEMS to adopt new launches and capacity expansion around the world. For instance,

• In September 2022, Ford Motor Co. officially broke ground on BlueOval City electric truck and battery plant in Stanton, Tennessee , Unites States with an investment of USD 5.6 billion and an annual output of 2 miilion units ,which will be operational by 2026.
• In September 2022, Zhejiang Geely Group owned Volvo Cars Ltd. announced its new full size electric SUV EX90 which will replace the flagship SUV XC90. EX90 will be revealed in November 2022.

Asia-Pacific Region is expected to be the largest market during the forecast period

The Asia -Pacific region expected to dominate the market during the forecast period. Asia -Pacific is a huge market for vehicles, such as heavy trucks, construction machinery, and agricultural machinery. India and China are some of the largest markets for automobiles in the world which contribute to almost 20% of the worldwide commercial vehicle sales thus making Asia-Pacific the most lucrative market for alternative fuel vehicles. For instance,

• In 2022, till August, 3.66 million electric vehicles were sold in China posting a YoY increase of 119%. In FY 2022, 429217 electric vehicles including two and three-wheelers were sold in India with a year on year increase of 218%.

In order to achieve the goal of net zero emissions, numerous countries are taking numerous actions.Electric and plug-in hybrid vehicles are two examples of alternative fuel vehicles that are being encouraged by various governments worldwide and are being offered a variety of benefits in order to encourage the adoption of electric vehicles. For example, in 2022 the Indian government increased subsidies for electric vehicle purchases and have also extended the deadline of implementation of fame scheme.

On the other hand, Europe and North America is estimated to be the fastest-growing regional market due to the large presence of electric vehicle manufacturers, government incentives provided to purchase electric vehicles, and the adoption of stringent automotive emissions norms which leads to high electricvehicle sales in these geographies. Thus, with companies coming up with new innovation and launches s in this segment, the market for electric vehicles is expected to grow over the forecast period for the fuel type segment. For instance, In September 2022, Steyr Automotive announced to present the first prototypes of e-transportres and e-buses at IAA Transportation , 2022.

Competitive Landscape

The automotive alternative fuel market is highly fragmented. The market is characterized by the presence of considerably large global players as well as regional, and national players. Many startups are also entering particularly in the electric and hydrogen vehicle industry. These players also engage in joint ventures, mergers and acquisitions, new product launches, and product development to expand their brand portfolios and cement their market positions.

Some of the major players dominating the global market are Tesla Inc., Toyota Motor Corp., BYD, General Motors, and VW Group. Key players are launching new products to secure their market position and stay ahead of the market curve. For instance,

• In September 2022, BYD introduced its new eBus range, eBus Blade battery platform, and two new battery electric trucks for the European market at IAA Transportation in Germany.
• 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.

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