Hybrid Car Market

The global Hybrid Car Market is valued at USD 230.4 Billion in 2023 and is projected to reach a value of USD 598.4 Billion by 2032 at a CAGR (Compound Annual Growth Rate) of 11.2% between 2024 and 2032.

Key highlights of Hybrid Car Market

• The Asia Pacific dominated the Hybrid Car market with revenue share of 48.2% in 2023 and is expected to maintain its dominance during the forecast period,
• The Parallel Hybrid segment asserted largest revenue share of 45.3% in 2023,
• In 2023, HEV segment accounted to have largest revenue share of 58.3% in Hybrid Car Market,
• The Fully hybrid segment dominated the Hybrid Car market with revenue share of 45.5% in 2023,
• Governments across various regions are majorly focusing on lowering emission limits to reduce the greenhouse gas effect and improving vehicle fuel economy. For instance, the United Kingdom committed to achieving net-zero emissions by 2050 and proposed a 2035 ban on selling all polluting vehicles. Germany intends to reduce greenhouse gas emissions by 40% by the end of 2020, 55% by the end of 2030, and up to 95% by the end of 2050, supporting market growth.

Hybrid Car Market: Regional Overview

Asia Pacific dominated the Hybrid Car Market with revenue share of 48.2% in 2023. Increased demand for hybrid vehicles in China, Japan, and South Korea are driving market growth in this region. China is a significant global hybrid electric vehicle market player due to its essential production capabilities and consumer demand. Following the pandemic, China gained momentum, and demand for hybrid and plug-in hybrid electric vehicles started seeing positive trends. For instance, in October 2022, the wholesale volume of NEV passenger cars was 676,000 units, up 85.8% yearly. Battery electric vehicle (BEV) volumes increased by 69.6% year on year to 508,000 units; plug-in hybrid electric vehicle (PHEV) volumes increased by 161.6% year on year to 167,000 units, and ICE-powered hybrid passenger vehicle volumes increased by 9% year on year to 67,362 units.

Increasing environmental awareness, government support, rising income levels, and urbanization are significant factors augmenting the growth of the Hybrid Car Market in this region. According to the source, the emerging Asian economy is encouraging a subsidy program to propelled hybrid vehicle adoption in the country. Indonesia is supporting to provide subsidy up to $5,000 for each electric vehicle in the country in 2022. This subsidy program covers Hybrid Cars and not only pure electric vehicles.

Japan Hybrid Car Market Overview

The Japan Hybrid Car market, valued at USD 28.3 Billion in 2023 to USD 71.1 Billion in 2032, is anticipated to grow at a CAGR of 10.8% from 2024 to 2032. There is rapid transition from traditional gasoline-powered vehicles to electric and plug-in electric vehicles because of rising fuel prices and increasing environmental awareness. Japan, the world's third-largest automaker, is expected to lead the global Hybrid Car market. According to the Japan Automobile Dealers Association, around 88,535 electric vehicles were sold in Japan in 2023. Additionally, increasing government encouragements for offering subsidies for CEVs, including BEVs, PHEVs, and FCEVs helps in adopting the growth of the Hybrid Car market and helps in reducing the cost of purchasing these vehicles. For instance, Japan has assured to reach net-zero greenhouse gas emissions by 2050 and minimize emissions by 46% by 2030, recognizing the transition to electric cars as a means of assisting the country's decarbonization efforts.

The global Hybrid Car market can be categorized as Electric Powertrain Type, Component Type, Propulsion, Degree of Hybridization, Vehicle Type, and Region.

Hybrid Car Market: Electric Powertrain Type Overview

In 2023, Parallel Hybrid generated a maximum revenue share of 45.3% in Hybrid Car Market. The Electric Powertrain Type segment is divided into Series Hybrid, Parallel Hybrid, and Combined Hybrid. The ability of this segment allows the driver to switch between the engine and electric motor at any given time. This makes it popular in performance and luxury cars, which in turn, boosts the segmental growth of the market. The parallel hybrid system offers various benefits such as flexibility and efficiency and allows the vehicle to be powered by the internal combustion engine (ICE), electric motor, or a combination of both. For example, Toyota Prius uses a power-split or series-parallel hybrid configuration. This vehicle lower greenhouse gas emissions and lower environmental impact and making it a strong competitor in this segment. The demand for fully hybrid vehicles is increasing as it allows users to shift to an electric motor or ICE mode at any time.

Hybrid Car Market: Propulsion Overview

The HEV segment held a significant revenue share of 58.3% in Hybrid Car Market 2023. The Propulsion segment covers HEV, PHEV, and NGV. Technological advancement by improving fuel efficiency and reduced emissions is a major reason for the growth of HEV segment in Hybrid Car Market. The growing environmental concerns such as air pollution and climate change have led consumers to seek more environmentally friendly transportation options. For example, Ford's leading car maker decided to take a different route and shift their primary focus towards Hybrid Cars. The company aims to enhance the overall hybrid range by 2030 and will offer more options for customers. This segment is more appealing to a broader range of consumers by offering various features such as enhanced battery technology, more efficient electric motors, and sophisticated powertrain management systems.

Hybrid Car Market: Degree of Hybridization Overview

The Fully hybrid segment held a significant revenue share of 45.5% in Hybrid Car Market 2023. The Degree of Hybridization segment is classified into Fully hybrid, Mild hybrid, and Plug-in-Hybrid. The growth of this segment is accounted by the advancement in hybrid technology which is offered by Toyota Prius. The company's extensive advancement and offering of different vehicle type is accelerated the consumer confidence and helps in the market expansion. Furthermore, other automakers such as Honda, Ford, and BMW have also made significant developments in this segment by introducing fully hybrid models like the Honda Accord Hybrid, Ford Escape Hybrid, and BMW 330e. The fully hybrid segment is anticipated to propel in the coming years because of the increasing consumer demand for sustainable mobility solutions, technological improvement, and infrastructural development.

Key Trends

• The integration of hybrid systems into various vehicle types, including sedans and SUVs are accelerating the growing consumer preferences towards Hybrid Car Market. For example, the Ford Escape Hybrid combines the benefits of hybrid technology with the practicality of a compact SUV.
• Recently, performance hybridization trends are majorly utilized in hybrid technology which helps in enhancing vehicle performance and its efficiency. For example, BMW 330e combines a turbocharged engine with an electric motor to deliver power and efficiency.
• The integration of advanced connectivity features and infotainment systems into Hybrid Cars is a revolutionizing trend in the Hybrid Car Market growth. For example, the Honda Accord Hybrid offers smartphone integration, touchscreen displays, and voice recognition technology, providing drivers with seamless connectivity and entertainment options.
• Some Hybrid Cars incorporate autonomous driving features, paving the way for semi-autonomous and eventually fully autonomous vehicles. For example, Tesla's Autopilot system offers advanced driver assistance features like adaptive cruise control and lane-keeping.

Premium Insights

Increased environmental concerns are one of the primary drivers for the increasing demand of Hybrid Cars. The U.S. Environmental Protection Agency estimates that the average passenger car generates 4.6 metric tons of CO2 each year. This assumes that the typical gasoline-powered car on the road today gets roughly 22.2 miles per gallon and travels 11,500 miles a year. Approximately 8,887 grams of CO2 are produced for every gallon of gasoline consumed. Compared to conventional gasoline-powered cars, hybrid vehicles are more environmentally friendly since they produce fewer greenhouse emissions and pollutants. Manufacturers of Hybrid Cars are deciding to lessen their carbon footprint as more people become more conscious about carbon emissions impact on the environment by introducing advanced technology in the market.

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Market Dynamics

The Hybrid Car market is driven by the Advancements in Hybrid Technology

Technological advancement in hybrid vehicle fuels the market growth by making vehicle more economical friendly. The latest trends in this technology are regenerative braking, dual-clutch transmissions, lithium-ion batteries, fuel-cell technology, and predictive energy management. For example, the UK fuel cell developer and manufacturer has developed a brand-new hydrogen fuel cell system that is smaller and more powerful than any other solution on the passenger car market. This has created a robust opportunity in order to unlock a zero-emission future for this industry. Fuel-cell vehicles use hydrogen fuel cells to generate electricity, which powers an electric motor. The only byproduct of the process is water, making fuel-cell vehicles one of the cleanest forms of transportation.

Government Incentives and Policies Propelling the growth of Hybrid Car Market

The government has been implementing various incentives and policies to support market growth. These incentives and guidelines aim to encourage using hybrid vehicles to lessen carbon emissions and promote a sustainable future. One of the most common government incentives for Hybrid Cars is tax credits. In the United States, the federal government offers tax credits of up to 7,500 for eligible hybrid vehicles. This tax credit is applicable to battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs). In addition, the government promotes using hybrid vehicles through fuel economy standards. The CAFE (Corporate Average Fuel Economy) standards require automakers to meet specific fuel economy standards for their fleet of vehicles. The CAFE standards promote the use of Hybrid Cars, as they encourage automakers to produce more fuel-efficient vehicles.

Competitive Landscape

The Hybrid Car market has grown more competitive due to the activities of companies such as Mitsubishi and the widening range of options from well-established manufacturers like Honda. For instance, in November 2022, Mitsubishi Motors Corporation entered the competitive landscape of the Hybrid Car market by announcing the plug-in hybrid electric vehicle (PHEV) model of the all-new Outlander crossover SUV in Canada and the United States. On the other hand, Honda Motor Co., Ltd. made significant strides in the Hybrid Car market with the launch of the hybrid electric car City in the Indian market in May 2022. This vehicle marks Honda's entry into the mainstream market category with standard powerful hybrid electric technology, making it a noteworthy competitor in the Indian automotive market.

The key players in the global Hybrid Car market include - Toyota Motor Company (Japan), Honda Motor Company (Japan), BYD Company Ltd. (China), Lexus (Japan), Ford Motor Company (U.S.), Kia Motors Company (South Korea), Nissan Motor Company (Japan), Volkswagen AG (Germany), AB Volvo (Sweden) among others.

Recent Market Developments

• In February 2024, Chinese electric vehicle giant BYD introduced an updated version of its plug-in hybrid sedan, the Qin Plus DM-i, with a reduced initial price, reinforcing its commitment to competitive pricing strategies in the world's largest automotive market. The latest model is priced at 79,800 yuan ($11,090).
• In May 2023, Kia Corporation unveiled its latest range of hybrid electric vehicles (HEVs) during a launch event held in Saudi Arabia. The showcased models include the K5, K8, Sorento, and Niro Plus. Kia emphasizes that these new HEV models boast impressive fuel efficiency, with the capability to achieve up to 40% better mileage.
• In April 2023, Lexus revealed the fifth-generation RX hybrid SUV during the 2023 Auto Expo, and now the Japanese luxury brand has officially introduced it in the Indian market. The RX is offered in two variants: the RX 350h Luxury, priced at Rs 95.80 lakh, and the RX 500h F-Sport+, priced at Rs 1.18 crore, ex-showroom India.
• In January 2023, TOYOTA MOTOR CORPORATION introduced the brand-new Prius HEV in Japan. The latest Prius is outfitted with the cutting-edge fifth-generation hybrid system, available in both 2.0-liter and 1.8-liter models. Achieving impressive fuel efficiency of 32.6 km/L, the Prius (U and X grades) incorporates a high-output motor and various enhancements, enhancing its uphill performance on low-friction road surfaces like snowy roads, and improving stability during turns.