Vehicle Electrification Market - Global Industry Size, Share, Trends, Opportunity, and Forecast, 2021-2031

The Global Vehicle Electrification Market is projected to expand from USD 85.66 Billion in 2025 to USD 144.21 Billion by 2031, registering a CAGR of 9.07%. This transition involves shifting from internal combustion engines to electrically powered architectures, such as hybrid, plug-in hybrid, and fully battery-electric systems. The market's trajectory is fundamentally supported by strict government emission mandates and financial incentives designed to reach carbon neutrality, rather than fleeting consumer trends. As reported by the European Automobile Manufacturers' Association, battery electric vehicles captured a 13.6 percent market share within the European Union in 2024, demonstrating how these policy initiatives are successfully driving adoption rates in key regions.

Conversely, the industry faces a substantial hurdle regarding the insufficient deployment of public charging networks. The scarcity of available rapid charging points fuels consumer range anxiety and limits the practical usability of electric mobility options. This lack of infrastructure acts as a crucial logistical barrier that threatens to slow market saturation and delay the global shift toward sustainable transport, even amidst a favorable legislative backdrop.

Market Drivers

The enforcement of rigorous government emission standards and zero-emission requirements acts as the principal driver for the automotive sector's structural overhaul. Nations globally are introducing legal frameworks requiring reduced fleet carbon emissions, forcing manufacturers to electrify to comply and escape penalties. These regulatory forces are redefining production roadmaps and hastening the exit of internal combustion engines by setting concrete transition deadlines. The International Energy Agency's 'Global EV Outlook 2024' noted that global electric car sales approached 14 million in 2023, a figure largely driven by favorable policies and standards, offering stakeholders the long-term confidence needed to invest in electrification.

At the same time, falling lithium-ion battery prices are markedly improving the economic viability of electric vehicles by closing the cost disparity with conventional cars. Manufacturing economies of scale and technological progress are lowering component expenses, enhancing mass-market affordability and reducing dependence on subsidies. An analysis by Goldman Sachs in February 2024 projects average battery costs to drop to USD 99 per kilowatt-hour by 2025. This capital cost reduction enables rapid operational scaling and better margins, evidenced by the Volkswagen Group's 2024 report showing a 35 percent rise in all-electric vehicle deliveries to 0.77 million units, proving that mature supply chains are driving volume growth.

Market Challenges

The lack of adequate public charging infrastructure remains a significant impediment to the growth of the global vehicle electrification market. Prospective buyers often identify range anxiety as a major discouragement, a sentiment directly tied to the scarcity of dependable rapid charging locations. When the logistics of recharging an electric vehicle are viewed as more burdensome than refueling a traditional internal combustion engine, consumer willingness to switch diminishes. This reluctance directly decelerates adoption rates, even in markets where vehicles offer competitive pricing or benefit from financial incentives.

This infrastructure gap establishes a clear disconnect between vehicle availability and practical operational feasibility. Furthermore, the unequal allocation of resources hinders long-distance travel and restricts market access in underserved regions. Data from the European Automobile Manufacturers' Association in 2024 reveals that 61 percent of the European Union's public charging points were located in only three member states, leaving other nations with coverage too sparse to sustain mass adoption. As a result, this logistical constraint limits the total addressable market and hampers the momentum otherwise created by regulatory policies.

Market Trends

The automotive industry is progressively adopting Lithium Iron Phosphate (LFP) battery chemistries to bolster supply chain stability and thermal safety. In contrast to Nickel-Manganese-Cobalt setups, LFP cells eschew volatile raw materials, providing a consistent solution for high-volume production. This shift is reinforced by the chemistry's extended cycle life, which is attractive to fleet operators who value total ownership costs over slight improvements in energy density. According to the International Energy Agency's 'Global EV Outlook 2024', LFP batteries attained a global market share by capacity of nearly 40 percent in 2023, validating the significant shift toward this technology in standard-range electric vehicles.

Concurrently, manufacturers are incorporating Silicon Carbide (SiC) semiconductors into power electronics to maximize drivetrain efficiency and extend range. This material supersedes conventional silicon IGBTs in inverters, enabling higher voltage and temperature operations with markedly lower energy loss during conversion. Using these components permits automakers to shrink battery pack dimensions without sacrificing range, effectively managing weight and efficiency issues. In February 2024, onsemi reported in its fiscal results that silicon carbide shipment revenue quadrupled year-over-year in 2023, underscoring the rapid industrial adoption of this technology for automotive propulsion.

Key Players Profiled in the Vehicle Electrification Market

• Robert Bosch GmbH
• Continental AG
• Denso Corporation
• Delphi Automotive PLC
• Johnson Electric
• Mitsubishi Electric Corporation
• Magna
• Aisin Seiki
• Borwagner
• Johnson Controls

Report Scope

In this report, the Global Vehicle Electrification Market has been segmented into the following categories:

Vehicle Electrification Market, by Product Type:

• Starter Motor
• Alternator
• Electric Car Motors
• Electric Water Pumps
• Electric Oil Pump
• Electric Vacuum Pump
• Electric Fuel Pump
• Electric Power Steering
• Actuators
• Start/Stop System

Vehicle Electrification Market, by Demand Category:

• Original Equipment manufacturers (OEMs)
• Aftermarket

Vehicle Electrification Market, by Vehicle Type:

• Internal Combustion Engine Vehicle
• Micro & Full Hybrid Vehicle
• Plug-in Hybrid Electric Vehicle (PHEV) & Battery Electric Vehicle (BEV)

Vehicle Electrification Market, by Region:

• North America
• Europe
• Asia-Pacific
• South America
• Middle East & Africa

Competitive Landscape

Company Profiles: Detailed analysis of the major companies present in the Global Vehicle Electrification Market.

Available Customization

The analyst offers customization according to your specific needs. The following customization options are available for the report:

• Detailed analysis and profiling of additional market players (up to five).

This product will be delivered within 1-3 business days.