Vehicle Electrification Market Report 2026

The vehicle electrification market size has grown rapidly in recent years. It will grow from $101.59 billion in 2025 to $112.38 billion in 2026 at a compound annual growth rate (CAGR) of 10.6%. The growth in the historic period can be attributed to emission regulations, fuel efficiency mandates, adoption of alternators and starters, automotive electrification initiatives, hybrid vehicle rollout.

The vehicle electrification market size is expected to see rapid growth in the next few years. It will grow to $169.03 billion in 2030 at a compound annual growth rate (CAGR) of 10.7%. The growth in the forecast period can be attributed to acceleration of ev adoption, battery cost reduction, electrified drivetrain demand, smart power management systems, government ev incentives. Major trends in the forecast period include rapid adoption of electric powertrain components, integration of start-stop systems, growth of electric auxiliary systems, expansion of hybrid vehicles, demand for energy-efficient components.

The increase in demand for hybrid vehicles is driving the growth of the vehicle electrification market. Hybrid vehicles combine an internal combustion engine with one or more electric motors, allowing the vehicle to run on either power source. They offer improved fuel economy and reduced emissions by enabling operation on an electric battery. The growing demand for hybrid vehicles is fueled by a focus on lowering emissions, rising income levels, and a younger population adopting eco-friendly transportation. As demand for hybrid vehicles rises, the need for vehicle electrification grows, as it is essential to convert conventional vehicles into hybrids. For instance, in December 2024, according to Eurostat, an EU-based statistical agency, 21.1% of new passenger-car registrations in the European Union in 2023 were non-plug-in hybrid petrol-electric vehicles, reflecting significant adoption of hybrid technology. Therefore, the increasing demand for hybrid vehicles is expected to drive the growth of the vehicle electrification market.

Major companies in the vehicle electrification market are focused on technological advancements, such as medium-duty electric work trucks that utilize Siemens software to enhance design and engineering processes. These medium-duty electric work trucks are electric vehicles designed for commercial use, capable of handling moderate loads and tasks. For example, in October 2024, Workhorse Group, a U.S.-based company, launched medium-duty electric work trucks aimed at developing electric vehicles and sustainable transportation solutions. These trucks, powered by Siemens software, feature an electric powertrain, improved efficiency through optimized designs, regenerative braking, telematics for real-time monitoring, customizable configurations, and user-friendly interfaces, all designed to enhance performance and reliability across various applications.

In July 2024, Porsche, a Germany-based company renowned for its high-performance sports cars and part of the Volkswagen Group, acquired Varta batteries for an undisclosed amount. Porsche's aim in acquiring Varta batteries is to secure a reliable supply, enhance electrification efforts, leverage innovative technology, and gain a competitive advantage in the EV market. Varta AG, based in Ellwangen, Germany, specializes in manufacturing batteries for automotive, industrial, and consumer applications.

Major companies operating in the vehicle electrification market report include Volkswagen AG, Toyota Motor Corporation, Ford Motor Company, Mercedes-Benz Group AG, General Motors Company, Bayerische Motoren Werke AG, Hyundai Motor Company, Honda Motor Co Ltd., Robert Bosch GmbH, Tesla Inc., Nissan Motor Co Ltd., Kia Corporation, BYD Company Limited, Audi AG, Volvo Group AB, Denso Corporation, Continental AG, Magna International Inc., Mitsubishi Electric Corporation, Aisin Seiki Co Ltd., Jaguar Land Rover Automotive plc, BorgWarner Inc., NIO Inc., Li Auto Inc., XPeng Inc., Rivian Automotive Inc., Delphi Technologies, Polestar AB, Lucid Motors Inc., Fisker Inc., Lordstown Motors Corp, Canoo Inc., Arrival Ltd., Proterra Inc., Faraday Future Inc., Rimac Automobili d.o.o.

Asia-Pacific was the largest region in the vehicle electrification market in 2025. The regions covered in the vehicle electrification market report include Asia-Pacific, South East Asia, Western Europe, Eastern Europe, North America, South America, Middle East, Africa. The countries covered in the vehicle electrification market report include Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Taiwan, Russia, South Korea, UK, USA, Canada, Italy, Spain.

The vehicle electrification market includes revenues earned by entities by light, medium, and heavy-duty vehicle electrification. The market value includes the value of related goods sold by the service provider or included within the service offering. Only goods and services traded between entities or sold to end consumers are included.

The market value is defined as the revenues that enterprises gain from the sale of goods and/or services within the specified market and geography through sales, grants, or donations in terms of the currency (in USD unless otherwise specified).

The revenues for a specified geography are consumption values that are revenues generated by organizations in the specified geography within the market, irrespective of where they are produced. It does not include revenues from resales along the supply chain, either further along the supply chain or as part of other products.

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