ELECTRIC VEHICLE TRANSMISSION MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2025-2032)

Electric Vehicle Transmission Market Size and Trends

The electric vehicle transmission market is estimated to be valued at USD 17.32 Billion in 2025 and is expected to reach USD 42.06 Billion by 2032, exhibiting a compound annual growth rate (CAGR) of 13.5% from 2025 to 2032.

Key Takeaways of the Electric Vehicle Transmission Market

• By transmission type, single-speed transmission segment is estimated to contribute the highest market share of 44. 1% in 2025.
• By electric vehicle type, battery electric vehicles (BEVs) segment is estimated to contribute the highest market share of 62. 3% in 2025.
• By distribution channel, original equipment manufacturer (OEM) segment is estimated to contribute the highest market share of 56. 9% in 2025.
• North America remains the dominant player in the electric vehicle transmission market and is estimated to account for 41. 4% of the global market share in 2025.

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Market Overview

Stricter emission norms for electric vehicles globally can boost demand for electric vehicle transmission. Major automotive companies are shifting focus towards developing electric powertrains for commercial and passenger electric vehicles. Furthermore, declining battery prices and advancement in battery technology makes electric vehicles more viable and affordable option for consumers.

However, complexity and high cost of electric vehicle transmission systems as compared to conventional transmission can hamper the wider adoption of electric vehicles.

Market Concentration and Competitive Landscape

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• The industry is moderately consolidated, with leading Tier-1 suppliers like ZF Friedrichshafen AG, Aisin Seiki, BorgWarner, and Magna holding significant market share. These companies dominate through advanced e-axle systems, high R&D investment, and global OEM partnerships. ZF, BorgWarner, and GKN Automotive are particularly influential in multi-speed electric vehicle (EV) transmissions and high-performance applications.
• While Tier-1 suppliers offer modular multi-speed and e-axle solutions to multiple OEMs, automakers (e.g., Tesla, BYD) are increasingly building in-house EV transmission units, reducing dependence on external suppliers. This shift challenges suppliers like Aisin, Magna, and Continental, who must differentiate through efficiency gains, lightweight design, and system integration. Ongoing M&A activity and joint R&D ventures (e.g., ZF-GKN, Denso-Aisin collaborations) highlight a race to maintain relevance amid evolving EV architectures.

Current Events and Their Impact on the Electric Vehicle Transmission Market

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Market Trends

Changing Consumer Preferences

Rising environmental awareness, evolving mobility needs and attractive total cost of ownership have triggered a shift in consumer preferences. Customers now prefer more sustainable yet feature-rich transportation options. The potential to reduce fuel costs significantly while gaining silent, vibration-free driving experiences is appealing many first-time EV buyers.

For instance, according to a 2025 study by the International Energy Agency, EV sales share for light-duty vehicles (cars and vans) surpassed that of two- and three-wheelers (2/3Ws)—a reversal of the trend seen before 2023. By 2030, under the Stated Policies Scenario (STEPS), EVs are expected to make up around 40% of sales in both segments. In terms of vehicle stock, 2/3Ws remain more electrified, with 1 in 6 being electric, compared to 1 in 7 for light-duty vehicles. This shift highlights the rapid electrification of mainstream passenger vehicles and the growing effectiveness of policy measures and infrastructure support in accelerating EV adoption.

Growing Demand for Electric Buses and Commercial Vehicles

The growing demand for environmentally-friendly transportation has opened up huge opportunities for the electric vehicle transmission market. Electric buses and commercial vehicles are increasingly being adopted by many cities and logistics companies across the world as they look to reduce their carbon footprint.

For instance, according to an article published by Sustainable Bus, in 2024, the electric city bus market in Europe (including the U.K.) experienced a 22% increase compared to 2023, with electric bus registrations reaching 7,779 units. This growth reflects accelerating government initiatives and increased investment in sustainable urban transportation infrastructure across the region.

Segmental Analysis

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Electric Vehicle Transmission Market Insights, by Transmission Type

In terms of transmission type, single-speed transmission segment is estimated to contribute the highest market share of 44.1% in 2025, owing to its inherent cost-effectiveness.

Single-speed transmissions are the most basic type that transmits power from the motor to the wheels through a single gear ratio. This simplistic design makes them very economical to produce and repair compared to multi-speed variants. The minimal moving parts also significantly boost reliability and reduce maintenance requirements over the lifecycle of electric vehicles.

Electric Vehicle Transmission Market Insights, by Electric Vehicle Type

In terms of electric vehicle type, battery electric vehicles (BEVs) segment is estimated to contribute the highest market share of 62.3% in 2025. 

BEVs run solely on battery power and do not have a backup internal combustion engine. This avoids the complexity of hybrid powertrains while leveraging the full potential of electric motors. The zero-emissions attribute is appealing to environmentally conscious consumers and governments targeting pollution reduction.

Electric Vehicle Transmission Market Insights, by Distribution Channel

In terms of distribution channel, original equipment manufacturer (OEM) segment is estimated to contribute the highest market share of 56.9% in 2025.

New battery cell and powertrain technologies emerge frequently, necessitating tight coordination between design and production schedules. Original equipment manufacturing facilitates this integration whilst achieving vital economies of scale. Automakers leverage their supply chain heft to procure cutting-edge parts at competitive costs.

Emerging Innovations in the Electric Vehicle Transmission Market

1. Solid-State Batteries

Application: Solid-state batteries represent an emerging technology that replaces the liquid or gel electrolyte found in traditional lithium-ion batteries with a solid electrolyte. This innovation offers benefits such as faster charging, extended lifespan, lighter weight, and enhanced safety. Moreover, solid-state batteries help decrease dependence on rare materials.

Example: In April 2025, Stellantis and Factorial Energy successfully validated automotive-sized solid-state battery cells with 375Wh/kg energy density, a major step toward commercial use. The battery cells can operate in temperatures from -30°C to 45°C (-22°F to 113°F), with potential for further expansion and demonstrate high power capabilities up to 4C discharge.

2. Sodium-Ion Batteries

Application: Drawbacks of traditional lithium-ion batteries are astronomical costs and scarce supplies. Sodium-ion batteries are one such feasible alternative. With advantages such as lower cost and improved safety, CATL’s new sodium-ion battery line, Naxtra, boasts an energy density of 175 Wh/kg, comparable to lithium iron phosphate batteries. Mass production begins in December 2025, potentially revolutionizing battery technology.

Example: In April 2025, CATL unveiled three groundbreaking EV battery products at its inaugural Super Tech Day: The Freevoy Dual-Power Battery, Naxtra - the world's first mass produced sodium-ion battery, and the second-generation Shenxing Superfast Charging Battery, as well as an integrated 24V start/stop Naxtra battery for heavy-duty trucks. These revolutionary innovations break through technological boundaries, and officially lead the industry into the "Multi-Power Era".

Impact of AI on the Electric Vehicle Transmission Market

There is enormous potential for advancing environmentally friendly transportation options with the incorporation of Artificial Intelligence (AI) technologies into electric vehicles (EVs).

• The Internet of Things (IoT) and artificial intelligence (AI) combine to improve safety, maximize performance, and transform the driving experience in electric cars. In order to optimize energy management and create predictive maintenance predictions, AI algorithms analyze real-time data on vehicle operations gathered by IOT sensors.
• Vehicle-to-Grid (V2G) communication is a promising application of IOT technology
• that enables bidirectional energy flow between electric vehicles and the power grid. By leveraging IOT-enable communication protocols, electric vehicles can serve as distributed energy storage units, allowing surplus energy to be stored in vehicle batteries during off-peak hours and discharged back to the grid during peak demand periods.

Reimbursement Scenario the Electric Vehicle Transmission Market

• Direct Purchase Incentives and Tax Credits: Governments worldwide offer financial incentives to reduce the upfront cost of EVs, thereby stimulating demand for EV components, including transmissions:
  •  U.S.: The Inflation Reduction Act provides up to USD 7,500 in tax credits for new EV purchases, contingent on meeting specific battery sourcing criteria.
  • China: Offers substantial subsidies for EV purchases, including exemptions from vehicle purchase taxes, which can amount to significant savings for consumers.
  • European Union: Countries like Germany and France provide substantial subsidies for EV buyers. For example, Germany offers up to USD 9,900 (€9,000).

• Manufacturing Incentives and Localization Policies: To promote domestic production and reduce reliance on imports, several countries have implemented policies that provide financial support to manufacturers:
  • India: The Production Linked Incentive (PLI) scheme offers financial incentives to manufacturers to boost domestic production of advanced automotive technology products, including EV components.
  • Brazil: The Rota 2030 program imposes requirements for localized production to qualify for tax exemptions, encouraging manufacturers to set up local production facilities.

• Infrastructure Development and Charging Incentives: The expansion of EV charging infrastructure is crucial for the widespread adoption of electric vehicles:
  • U.K.: The government has committed USD 490 million (£400 million) over five years to expand EV charging infrastructure, focusing on underserved areas.
  • China: Significant investments are being made to develop a comprehensive EV charging network, facilitating the adoption of EVs across the country.

Regional Insights

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North America Electric Vehicle Transmission Market Analysis and Trends

The North America electric vehicle transmission market is projected to dominate the global landscape with a significant market share of 41.4% in 2025. This dominance is driven by a robust increase in electric vehicle (EV) adoption, supported by various government initiatives aimed at promoting eco-friendly transportation solutions.

For instance, in January 2025, the U.S. Department of Transportation’s Federal Highway Administration (FHWA) announced USD 635 million in grants from the Bipartisan Infrastructure Law to expand EV charging and alternative fueling infrastructure. The funding supports 49 projects deploying over 11,500 charging ports and hydrogen/natural gas stations across 27 states, four tribes, and the District of Columbia. This substantial funding is expected to significantly accelerate the build-out of EV charging infrastructure, addressing key barriers to electric vehicle adoption across the country.

Asia Pacific Electric Vehicle Transmission Market Analysis and Trends

The Asia Pacific region is anticipated to be the fastest-growing market for electric vehicle transmissions in 2025. This growth is fueled by rapid urbanization, rising disposable incomes, and increasing investments in electric vehicle infrastructure.

For instance, India plans to triple its existing renewable energy capacity, with the EV30@30 campaign aiming to have electric vehicles (EVs) make up at least 30% of new vehicle sales by 2030. This ambitious target reflects the country’s commitment to reducing carbon emissions and promoting sustainable transportation.

U.S. Electric Vehicle Transmission Market Analysis and Trends

The U.S. electric vehicle transmission market is primarily driven by strong government incentives such as the Inflation Reduction Act, which provides tax credits of up to USD 7,500 for EV buyers, accelerating demand for electric vehicles and their components.

For instance, ONE launched U.S. manufactured grid products, including LFP Cells, modules and battery management systems in 2025. The company’s Gemini battery system features a dual-chemistry design that integrates LFP cells for daily cycling with high-energy anode-free cells for extended range.

Additionally, stringent emission regulations and aggressive corporate sustainability goals are pushing OEMs to innovate in transmission technologies that improve efficiency and performance. The rising adoption of multi-speed and e-axle systems, combined with advancements in AI-driven smart transmissions, further stimulate market growth.

Canada Electric Vehicle Transmission Market Analysis and Trends

Canada is emerging as a strong contributor to the electric vehicle transmission market due to its strategic focus on sustainable automotive manufacturing and critical mineral supply chains. The Canadian government’s USD 680 million Zero Emission Vehicle Infrastructure Program (ZEVIP) and partnerships with automakers like Stellantis and GM are driving domestic EV production, creating direct demand for localized powertrain components, including transmissions.

Additionally, Canada’s rich reserves of nickel, lithium, and cobalt are prompting investments in vertically integrated EV supply chains, encouraging Tier-1 suppliers to establish or expand transmission production facilities closer to battery and vehicle assembly plants.

  China Electric Vehicle Transmission Market Analysis and Trends

China leads the global electric vehicle transmission market due to its massive EV adoption fueled by substantial government subsidies, including purchase tax exemptions and direct incentives for EV buyers.

Furthermore, China’s focus on integrating high-performance multi-speed transmissions to improve vehicle range and power, combined with investments in infrastructure and supply chain enhancements, cements its dominance. Local manufacturers benefit from strong state-backed support, facilitating rapid innovation and production scale-up in EV transmission technologies.

For instance, according to International Energy Agency, China currently accounts for more than 80% of electric medium- and heavy-duty truck sales worldwide, and the sales share in the country increased to more than 4% in 2024, from 2% in 2023. This rapid growth underscores China’s leadership in electrifying commercial vehicles and its strong government support for clean transportation initiatives.

Japan Electric Vehicle Transmission Market Analysis and Trends

Japan remains a global powerhouse in electric vehicle transmission innovation, backed by strong domestic OEMs such as Toyota, Nissan, and Honda, along with world-class Tier-1 suppliers like Aisin Seiki and JATCO. Japan’s EV transmission market is driven by its emphasis on hybrid systems, where compact and efficient multi-speed transmissions are essential to performance and fuel economy.

The government’s Green Growth Strategy, which targets complete electrification of new cars by the mid-2030s, is accelerating R&D in electric drivetrains. Moreover, Japan’s deep technical expertise in precision manufacturing gives it a competitive edge in developing next-gen e-axles and integrated transmission modules.

Pricing Analysis of the Electric Vehicle Transmission Market

1. Price Range Variation by Transmission Type:

Single-speed transmissions for mass-market EVs typically cost between USD 500 and USD 1,200 per unit.

Example: Tesla’s single-speed gearbox used in Model 3 is estimated to be on the lower end due to simplified design.

2. Regional Pricing Differences

• Asia Pacific suppliers often offer lower prices due to cost-effective manufacturing.
  • Example: JATCO and Nidec manufacture EV transmissions in Japan and China at lower costs than European suppliers.
• European and North American systems are priced higher, reflecting stricter regulations and quality standards.
  • Example: Continental and Schaeffler’s transmissions in Germany include advanced features that justify higher pricing.
• Raw Material Cost Sensitivity:
  • Prices fluctuate with raw material costs, such as rare earth magnets used in motors and gear alloys.
  • Example: Rising cobalt and nickel prices in recent years have pushed transmission system costs higher globally.
• Lower Aftermarket Costs Compared to ICE:
  • EV transmissions have fewer moving parts, leading to lower maintenance costs and better total cost of ownership.
  • Example: Eaton’s EV transmission components require less frequent servicing compared to traditional ICE gearboxes, reducing long-term expenses.

Market Report Scope

Electric Vehicle Transmission Industry News

• In May 2025, AISIN CORPORATION showcased at Automotive Engineering Exposition 2025, held at Pacifico Yokohama (Nishi-ku, Yokohama) from May 21 to May 23, 2025. It exhibited “Integrated Electric Drive Unit (Xin1)” which significantly improves energy efficiency and packaging by consolidating essential components from AISIN’s full lineup of electric drive units, including key components necessary for electric vehicles such as drive systems, power conversion, and thermal management.
• On June 12, 2025, Allison Transmission Holdings Inc. announced that it had entered into a definitive agreement to acquire the Off-Highway business of Dana Incorporated, a leading provider of drivetrain and propulsion solutions, for approximately USD 2.7 billion. This acquisition aligns with Allison’s strategic priorities to expand its emerging markets footprint, enhance core technologies and deliver strong financial results.
• In May 2025, BorgWarner obtained High-Voltage Coolant Heater Contract with Global OEM. 400V high-voltage coolant heater (HVCH) technology to be used in series of plug-in hybrid electric vehicles. This marks the company’s largest eHeater contract for plug-in hybrid electric vehicles in North America.
• In April 2025, Eaton introduced new EV Truetrac differential designed for electric vehicles at Auto Shanghai 2025. The innovative design caters the unique challenges faced by EV propulsion systems, including shared low-viscosity oil environments, increased sensitivity to noise, and the demands of high and instant torque delivery.

Analyst View

• Single-speed systems are not the future for all EVs. While they suffice for urban EVs and budget models, they underperform in high-load scenarios like towing, high-speed cruising, and steep terrain—where a second gear provides tangible benefits in efficiency and thermal load management.
• Allison Transmission, traditionally a diesel heavyweight, is now seeing stronger-than-expected adoption of its EV drivetrains in electric buses and refuse trucks, where multi-speed gearboxes improve gradeability by over 25%. These segments care less about cost-per-unit and more about ROI via efficiency, making advanced transmissions not just viable but necessary.
• Moreover, regional disparities in adoption and pricing are creating fragmented innovation patterns. Nidec Corporation’s strategy of low-cost, high-volume single-speed e-axles dominates in China, thanks to government subsidies and a fast-paced OEM ecosystem. In contrast, European suppliers like Schaeffler and Vitesco are winning premium contracts by supplying ultra-compact, modular e-axle systems to brands like BMW and Audi—vehicles where powertrain refinement trumps pricing.

Market Segmentation

• Transmission Type Insights (Revenue, USD Bn, 2020 - 2032)
• Single-Speed Transmission
• Multi-Speed Transmission
• Continuously Variable Transmission (CVT)
•  Electric Vehicle Type Insights (Revenue, USD Bn, 2020 - 2032)
• Battery Electric Vehicles (BEVs)
• Hybrid Electric Vehicles (HEVs)
• Plug-In Hybrid Electric Vehicles (PHEVs)
•  Distribution Channel Insights (Revenue, USD Bn, 2020 - 2032)
• Original Equipment Manufacturer (OEM)
• Aftermarket
• Regional Insights (Revenue, USD Bn, 2020 - 2032)
• North America
• U.S.
• Canada
• Latin America
• Brazil
• Argentina
• Mexico
• Rest of Latin America
• Europe
• Germany
• U.K.
• Spain
• France
• Italy
• Russia
• Rest of Europe
• Asia Pacific
• China
• India
• Japan
• Australia
• South Korea
• ASEAN
• Rest of Asia Pacific
• Middle East & Africa
• GCC Countries
• Israel
• South Africa
• Rest of Middle East & Africa
• Key Players Insights
• Aisin Seiki Co., Ltd.
• Allison Transmission Inc.
• AVL List GmbH
• BorgWarner Inc.
• Continental AG
• Dana Incorporated
• Eaton Corporation plc
• GKN Automotive Limited
• JATCO Ltd.
• Magna International Inc.
• Nidec Corporation
• Schaeffler AG
• Valeo SA
• Vitesco Technologies
• ZF Friedrichshafen AG

Sources

Stakeholders:

• Electric Vehicle OEMs (Original Equipment Manufacturers)
• Experts in gear design, thermal management, system integration, and control algorithms.
• R&D Institutions and Technical Universities: Automotive research departments at TU Munich, MIT, and Tsinghua University.
• Supply Chain and Procurement Heads: Leaders managing component sourcing and cost analysis for EV drivetrain systems
• Fleet Operators and Commercial EV Buyers

Primary Sources:

• In-depth conversations with senior executives and product managers from electric vehicle OEMs.
• Interviews with product managers at Tier-1 transmission suppliers
• Technical discussions with EV powertrain engineers on transmission integration and system performance
• Engagements with component procurement heads from global EV manufacturers

Public Domain sources:

• International Energy Agency (IEA)
• U.S. Department of Energy (DOE)
• European Alternative Fuels Observatory
• National Renewable Energy Laboratory
• Others

Newspapers:

• The Wall Street Journal
• Financial Times
• The Economic Times
• Others

Journals:

• Journal of Electric Vehicles
• Automotive Engineering International
• IEEE Transactions on Vehicular Technology
• Others

Proprietary Elements:

• CMI Data Analytics Tool
• CMI Existing Repository of Information for the Last 8 Years

*Definition: Global Electric Vehicle Transmission Market consists of different types of transmission systems that are used in electric vehicles to transfer rotational power from the electric motor to the driving wheels. These transmissions help electric vehicles attain maximum efficiency and performance.