Global Hybrid Vehicle Market: Significant rise in freight sector is creating demand for Hybrid Vehicles.

Published Date: 11/05/2021

The overall hybrid vehicle, by volume, is estimated to be 5147 thousand units in 2020 and is projected to grow at a CAGR of 7.6 % from 2020 to 2027, to reach 8571 thousand units by 2027. The global hybrid vehicles market is poised for substantial growth over the forecast period owing to the need for addressing consumers’ needs pertaining to fuel expenditure reduction and mandatory compliance with CO2 emissions norms. Plying of hybrid vehicles and electric drive trains are expected to become a common sight with growing awareness levels among consumers. Internal combustion engines are projected to dominate the automotive market, but electric and hybrid vehicles are expected to make significant in-roads.

Growing eco-friendly initiatives pertaining to fuel emissions is expected to be a significant driving force for the hybrid vehicles market. The consumer base for green cars in the U.S. has considerably expanded as a result of increased focus on electric and hybrid vehicles. Buyers’ increased emphasis on enhanced fuel efficiency and demand for environmentally friendly vehicles has led to the introduction and development of electric and hybrid versions of popular existing car models. The commercial transportation industry has gradually shown an inclination towards green cars. Manufacturers have begun to explore options for capitalizing efficiency opportunities for hybrid drive in heavy trucks.

Hybrid vehicles offer immense opportunities for growth in the markets of developing countries because of initiatives and support from governments (e.g., incentives in sales and manufacturing, tax rebates, increased focus on deploying hybrid commercial vehicles). The Indian government is providing incentives of approximately USD 446 on the purchase of hybrid and electric vehicles in India. The Brazilian government is encouraging the purchase of hybrid vehicles such as plug-in hybrid, hybrid electric, and CNG hybrid by reducing the tax rate. The Mumbai Metropolitan Region Development Authority (MMRDA), India, has awarded a contract to Tata Motors for supplying 25 Tata Starbus Diesel Series Hybrid Electric Buses.

The challenge faced by the hybrid vehicle is high cost. A hybrid vehicle such as a plug-in hybrid vehicle has the battery as its central component. The battery increases the cost of the vehicle, making it costlier than diesel- and gasoline-powered vehicles. The price difference is due to parts such as battery and regenerative brake price. However, there has been a significant decrease in the cost of batteries in the past few years. Also, battery manufacturers are taking initiatives and carrying out R&D operations to decrease the cost of batteries.

The increasing demand for Battery Electric Vehicles (BEVs) and Fuel Cell Electric Vehicles (FCEVs) will be one of the major challenges for the growth of hybrid vehicles. There are many models and degree of hybridisations of BEVs such as hatchbacks, sedans, and SUVs in the passenger car segment. Automotive manufacturers such as BYD (China), Tesla (US), and Volkswagen (Germany) are focusing more on the development of BEVs.

Key automotive companies offering hybrid versions of popular car models include Volvo Group, Volkswagen Group, Toyota, Tata Motors Limited, Suzuki Motor Corporation, Renault, PSA Peugeot Citroen, Nissan, Hyundai-Kia, Honda, General Motors, Ford, Fiat, Daimler AG, Chrysler, and BYD.

APAC is estimated to be the fastest-growing region for the hybrid vehicle, with Japan accounting for the largest market share in 2018. The market growth in the region can be attributed to the increased sales of hybrid vehicles in Japan, China, and South Korea. Also, the Asia Pacific region is home to major players in the hybrid vehicles market, such as Toyota, Honda, Nissan, Kia, BYD, and Hyundai. Toyota has the highest share in hybrid vehicle sales worldwide. Moreover, governments of Asian countries are supporting the growth by providing subsidies. The mass adoption of hybrid vehicle technology by Japan and China will also boost the market.