The Global Zero Emission Vehicle (ZEV) Market is valued at USD 287.36 Billion in 2022 and is projected to reach a value of USD 1648.20 Billion by 2030 at a CAGR of 24.40% over the forecast period.
The increasing demand for zero-emission vehicles is attributed to environmental factors such as global warming, air pollution, deforestation, and climate change. Governments worldwide are increasingly favoring ZEVs as they are key to mitigating these environmental concerns. Additionally, technological advancements such as better batteries and fuel cell vehicles are helping increase the attractiveness of ZEVs. In terms of government initiatives, several countries across the Asia Pacific have announced plans to initiate comprehensive green transportation pathways – such as China’s 16 million EV Project and India’s Bharat Stage-III Roadmap – which would support the flourishing ZEV market. Meanwhile, governments across Europe are allocating considerable funds towards implementing clean vehicle programs such as Germany’s KFW Investment Bank Framework Program for Low Emission Mobility Infrastructure and Sweden’s Vattenfall Investment Plans for Sustainable Transport Infrastructure containing provisions for both public transport and electric cars. The increasing demand for clean air is likely to drive the growth of the ZEV market. In addition, government mandates and subsidies are also likely to induce the growth of this market. The benefits of having a ZEV include mitigating climate change, reducing traffic congestion, and creating new job opportunities. ZEVs also have lower emissions than gasoline vehicles, which makes them more environmentally friendly.
Zero Emission Vehicle (ZEV) Market Size, 2022 To 2030 (USD Billion)
Furthermore, battery EVs offer motorists an extended driving range due to their bigger storage capacity than plug-in hybrids. However, automakers need help selling EVs, such as high initial costs and limited infrastructure availability. The increasing demand for cleaner air is one of the key drivers of the growth in the ZEV market. Governments are encouraging people to switch to electric vehicles, believing this will improve air quality and save on fuel costs. This trend is expected to continue as more and more people adopt greener transportation options. With rising awareness and concern over climate change, the automotive industry is looking to make alternately zero-emission vehicles a reality. To that end, numerous automakers invest billions of dollars in developing ZEV technology. Some of the main drivers behind this investment include improving air quality and creating new jobs in renewable energy. Improvements in electric motors and batteries are two key factors driving the growth of the ZEV market. Electric motors provide greater power and efficiency than traditional gasoline engines, while batteries have increased capacity, longevity, and density. This translates into battery-powered vehicles becoming increasingly affordable, with early models typically costing $30,000 or less.
The level of investment being made into ZEV technology also speaks to growing impatience amongst consumers when it comes to automotive emissions. Improvements in fuel economy and emissions regulations have created a clear demand for more environmentally friendly cars. This shift from traditional combustion-engine automobiles presents major challenges for automakers but also represents an outstanding opportunity for companies working on ZEV technologies. Cleaner air is one of the key benefits of investing in renewable energy. Air pollution, especially from cars and trucks, is a leading cause of heart disease, respiratory problems, and even death. The pollutant emissions from vehicles are increasingly becoming a problem for the world’s environment and public health. Major economies like China, Germany, and the United States mandate that all new cars sold in 2025 must be zero-emission vehicles (ZEVs). In addition to driving cleaner air, ZEVs also have the potential to create widespread economic benefits. These benefits include $380 billion in avoided climate change costs by 2050, $2 trillion in total economic output by 2050, global industries supporting ZEV infrastructure will employ up to 10 million people worldwide as direct or indirect employees, and global investment into ZEV technology could reach $5 trillion over the next decade. Several factors are responsible for these impressive figures. For example, battery costs have fallen dramatically in recent years, which has helped drive down the cost of electric cars--making them more affordable for consumers. And governments around the world are investing large sums of money into encouraging the uptake of ZEVs through tax breaks and subsidies. As the Federal government's Advanced Technology Vehicles Manufacturing Program (ATVM) winds down, concerns are mounting about the future of the ZEV market. In 2021, less than 10% of new car sales in the US were electric vehicles, despite being vastly more affordable and easier to operate than petrol or diesel cars. This low market share is likely due to several barriers to growth, including limited range and performance batteries, high cost per mile of ownership, and a lack of charging infrastructure. One key reason for this lack of growth is that electric vehicles currently have lower operating ranges than their traditional counterparts.
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Tesla's Model S has a range of about 240 miles on a single charge, considerably less than the 500-mile range offered by many petrol or diesel cars. Lower operating ranges are more common among premium models, as customers are willing to pay more for enhanced features such as superior acceleration and braking performance. Hopefully, advances in battery technology will overcome this limitation and make electric vehicles more economically viable for mainstream consumers. In addition to the limited operating range, another key limitation of the ZEV market is its cost per mile of ownership. Fossil fuel-powered cars typically last longer before needing major repairs or replacements than electric cars, which can add up over time. For example, a Nissan LEAF costs €3400 per year to own in terms of fuel costs alone – almost three times as much as a typical petrol or diesel car!
Top Market Trends
- Increasing awareness and commitment to climate change objectives: As businesses become increasingly aware of the impact of climate change on their bottom line, they are committed to finding ways to reduce their emissions footprint. This has led to a surge in demand for green transportation solutions, including ZEVs.
- Increased investment in R&D: Many companies are investing in R&D efforts to improve the technology in producing ZEVs. This includes research into alternative energy sources and fuel cells as well as vehicle aerodynamics and handling improvements.
- Growing consumer interest: The rapid growth of electric car adoption encourages consumers to explore the benefits associated with ZEV ownership. According to data from Jato Limited, there was an increase of 132% in registrations for electric cars globally in the past few years.
- Another such advancement is the increasing use of electric powertrains in vehicles. This has made zero-emission vehicles more affordable and feasible to produce, contributing to their increased market share.
- A recent development has been the increased use of autonomous car technologies. This allows drivers to focus on other tasks, such as driving, while the car takes care of steering and braking. The increasing popularity of these technologies is also contributing to the growth of the zero-emission vehicle market.
The market is segmented by Vehicle Type, Application, Price, Vehicle Drive Type, Top Speed, Source of Power, and Region. Based on Vehicle Type, the market is segmented into Battery Electric Vehicles (BEV), Plug-in Hybrid Electric Vehicles (PHEV), and Fuel Cell Electric Vehicles (FCEV). Furthermore, based on Application, the market is segmented into Commercial Vehicles, Passenger Vehicles, and Two Wheelers. In addition, based on the Price, the market is segmented into Mid-Priced and Luxury. Additionally, based on the Vehicle Drive Type, the market is segmented into Front Wheel Drive, Rear Wheel Drive, and All Wheel Drive. Furthermore, the market is segmented based on Top Speed into Less Than 100 MPH, 100 to 125 MPH, and More Than 125 MPH. Moreover, based on the Source of Power, the market is segmented into Gasoline, Diesel, CNG, and Others.
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Based on Vehicle Type
The fuel cell electric vehicle (FCEV) segment dominated the market with a market share of around 50% in 2021. Increasing awareness about climate change and its impacts on human well-being has increased demand for environmentally friendly and efficient transportation solutions. The increasing concern about air quality and the environment makes consumers choose FCEVs over other types of vehicles. Improvement in fuel cell technology is essential for commercializing FCEVs commercially. Advanced engineering efforts are ongoing to achieve higher power and efficiency from fuel cells, which are expected to increase these vehicles' adoption. Fuel cells have a lower cost profile than gasoline/diesel vehicles when comparing running costs such as fuel, emissions, maintenance, and insurance.
Moreover, the installation costs associated with FCEVs are also lower when compared to conventional internal combustion engine (ICE) vehicles. This enables mass adoption of FCEVs at lower socio-economic levels. Another key factor driving FCEV sales is global efforts to reduce greenhouse gas emissions. The hydrogen economy is one possible solution to this problem, as it does not produce harmful pollutants when converted into energy. There are also concerns about oil supplies becoming limited in the future, which could lead to higher prices for gasoline and other fuels. If this were to happen, FCEVs could be a key factor in helping us transition away from traditional vehicle technology.
Based on Application
Commercial Vehicles dominate the market. This is evident from the fact that ZEVs account for only a little over 1% of all vehicles on the road. Yet, this small share is expected to proliferate in the coming years as manufacturers move towards producing more zero-emission commercial vehicles. Rising concerns over air pollution and increased awareness about ZEVs’ benefits motivate manufacturers to adopt this segment. The increasing use of trucks, buses, and heavy-duty vehicles has increased the demand for ZEVs. Passenger cars make up the second largest share of the ZEV market, with a neck-and-neck share of about 15%. This segment is growing at a faster rate due to government policies favoring eco-friendly transportation options and growth in ride-sharing services such as Uber and Lyft. Consumers are also more interested in buying eco-friendly vehicles as they perceive them to be safer and more reliable.
Based on Price
In terms of revenue, the Mid-Priced segment was the largest market in 2021, with a revenue of USD 2.4 billion. The Luxury segment was second, with a revenue of USD 1.6 billion. The Small and Mid-Size Segments were smaller than the other two segments and had a combined revenue of USD 457 million in 2021.
Based on Vehicle Drive Type
During the review period, the All-Wheel Drive segment dominated the market from Front Wheel Drive, Rear Wheel Drive, and Zero Emission Vehicle (ZEV). While Zero Emission Vehicle sales are still in their early stages, this growth is expected to continue as consumers become more aware of the environmental benefits ZEVs offer. Front Wheel Drive accounted for a smaller share of the overall market due to its older technology and relatively low demand. All-Wheel Drive vehicles provide greater traction and stability in multiple terrains, making them a preferred choice for those seeking maximum versatility. They are also typically less expensive than other drive types, making them a good option for customers on a budget. Rear Wheel Drive cars tend to be more powerful and comfortable than Front Wheel Drives, but they can be less efficient in off-road conditions.
Based on the Source of Power Gasoline continues to dominate the market share for zero-emission vehicles (ZEV) as the largest segment of this market. This can be attributed to the increasing adoption of electric vehicles (EVs) and their high prices, challenging some consumers to consider ZEV options. The growth of the hybrid vehicle segment has been moderate thus far. Alternative fuel vehicles such as compressed natural gas (CNG) and liquefied petroleum gas (LPG) have yet to be able to make significant inroads into the ZEV market, mainly because these sources of power do not have a large share in general transportation.
Based on Region
North America currently dominates the Zero Emission Vehicle (ZEV) market. The region accounted for more than two-thirds of the global sales in 2021 and is expected to maintain its lead through 2028. North America's high EV adoption rates and stringent regulations and government initiatives favoring the technology are key factors driving this market growth. Asia Pacific will likely emerge as a major ZEV market in the coming years, thanks to increasing regional investments and favorable policies such as subsidies for electric vehicles. However, due to limited battery capacity and higher EV prices, the Asia Pacific market will remain small compared to other regions. Europe is also expected to witness growth over the next few years owing to increased awareness about environmental issues and growing demand for sustainable automotive technologies. However, bearish sentiment on the world economy could hamper this market growth in the medium term.
The key players in the Global Zero Emission Vehicle (ZEV) market include- Fiat (Italy), Hyundai (South Korea), BMW (Germany), Kia (South Korea), Chevrolet (US), Toyota (Japan), BYD (China), Tesla (US), Nissan (Japan), Volkswagen (Germany) and others.
Recent Market Developments
● Stellantis, a Fiat subsidiary, revealed in November 2022 that the all-electric Fiat 500e would arrive in North America in early 2024.
● BMW declared that its next-generation lithium-ion cell would have 30% greater range in December 2022.
● The leading market players employ a number of different marketing methods, including mergers and acquisitions, partnerships, new product development, business expansion, collaborations, supply contracts, agreements, and contracts, to ensure they maintain their dominant position. For instance, in 2016, BMW introduced the BMW X5 plug-in hybrid electric vehicle.
Segmentation of the Global Zero Emission Vehicle (ZEV) Market
- Vehicle Type (Battery Electric Vehicle (BEV), Plug-in Hybrid Electric Vehicle (PHEV), Fuel Cell Electric Vehicle (FCEV))
- Application (Commercial Vehicle, Passenger Vehicle, Two Wheelers)
- Price (Mid-Priced, Luxury)
- Vehicle Drive Type (Front Wheel Drive, Rear Wheel Drive, All Wheel Drive)
- Top Speed (Less Than 100 MPH, 100 to 125 MPH, More Than 125 MPH)
- Source of Power (Gasoline, Diesel, CNG, Others)
- Region (North America, Europe, Asia Pacific, Latin America, Middle East & Africa)
|Regions & Countries Covered
- North America - (U.S., Canada, Mexico)
- Europe - (U.K., France, Germany, Italy, Spain, Rest Of Europe)
- Asia Pacific - (China, Japan, India, South Korea, South East Asia, Rest Of Asia Pacific)
- Latin America - (Brazil, Argentina, Rest Of Latin America)
- Middle East & Africa - (GCC Countries, South Africa, Rest Of Middle East & Africa)
- Fiat (Italy)
- Hyundai (South Korea)
- BMW (Germany)
- Kia (South Korea)
- Chevrolet (US)
- Toyota (Japan)
- BYD (China)
- Tesla (US)
- Nissan (Japan)
- Volkswagen (Germany)
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