ZERO EMISSION VEHICLES MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2024-2031)

Market Size and Trends

The zero emission vehicles market is estimated to be valued at USD 357.12 billion in 2024 and is expected to reach USD 1,581.28 billion by 2031, growing at a compound annual growth rate (CAGR) of 23.70% from 2024 to 2031. The rapidly growing environmental concerns, supportive government policies, and initiatives towards promoting green vehicles are contributing to the high demand of zero emission vehicles Globally.

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The market is expected to witness a positive growth trend during the forecast period. Stringent emission norms by governments across regions to curb environmental pollution are driving the adoption of zero emission vehicles. Major automakers are heavily investing in electric vehicles to cater to the growing customer demand. Additionally, advancements in battery technologies are resulting in higher driving range and lower costs of electric vehicles, making them a feasible alternative to conventional vehicles. Developed markets in North America and Europe currently dominate the zero emission vehicles sales. However, the Asia Pacific region is expected to emerge as a major market during the forecast period supported by the rapid economic growth and initiatives by countries like China and India to promote clean mobility.

Environmental concerns

There is a growing concern among consumers and governments regarding the impact of vehicular emissions on the environment. Vehicles powered by internal combustion engines emit harmful gases such as nitrogen oxides, carbon monoxide, hydrocarbons, and particulate matter which are the major contributors to air pollution in many cities. The transportation sector accounts for a significant portion of overall carbon emissions and governments are actively working to reduce the carbon footprint of this industry. Many countries and states have enacted stricter emission norms over the past decade while also offering incentives to consumers to adopt cleaner vehicles.

In January 2023, First Hydrogen, a company focused on automobiles and energy, gave a sneak peek of its next-generation zero-emission vans. These new designs, a collaboration with EDAG Group, a renowned mobility engineering firm, were showcased in Generation II photos. EDAG, hired by First Hydrogen in 2022, is known for its expertise in global automotive development. The images reveal both front and back details of the latest vans, featuring a smart digital screen in the front with a unique daytime running light (DRL) configuration for a distinct identity and enhanced visibility.

Market Concentration and Competitive Landscape

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Government policies play a major role in encouraging the adoption of new technologies in the automotive industry. Governments around the world are supporting the development and uptake of zero emission vehicles through various fiscal and non-fiscal incentives. They offer subsidies and tax rebates for purchases of electric vehicles to make them affordable for consumers. Some countries have implemented quotas for car manufacturers to ensure a minimum sale of green vehicles. Restrictive emission norms are being made more stringent over the years.

In January 2023, the California Energy Commission (CEC) approved a substantial funding of USD 2.93 billion for enhancing California's zero-emission transportation infrastructure. This funding, authorized in December 2022, aims to expand Electric Vehicle chargers, zero-emission vehicles, transit and school buses, and hydrogen refueling equipment. California is set to receive an additional 90,000 EV chargers, requiring an investment of USD 900 million. The state currently has around 80,000 EV chargers. A significant portion of the funding, USD 1.71 billion, is allocated for the infrastructure of medium- and heavy-duty Zero Emission Vehicles (ZEVs), following the California Energy Commission’s approval of zero-emission vehicle infrastructure and USD 1.42 billion in funding for 2021.

Market Challenges: High Battery Costs Impeding Affordability

The zero emission vehicles market faces several challenges in its growth. Battery costs remain high, limiting the affordability of electric vehicles. Range anxiety from limited driving ranges relative to gas vehicles also discourages customers. Widespread charging infrastructure is still being developed in most regions. There is also uncertainty around future fuel economy and emission standards which could impact demand. Customers are unfamiliar with new electric technologies and hesitant to replace reliable gas cars. Established automakers also face challenges transitioning design, production and services to electric models.

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Global efforts to reduce urban air pollution and mitigate carbon emissions are driving government support policies. Electric vehicles have lower fueling and maintenance costs which appeal to fleet operators and companies focused on sustainability. Technological innovations are steadily extending driving ranges while reducing battery costs. 

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Within the Global zero emission vehicles market, passenger vehicles is estimated to contribute the largest share of 47.3% in 2024,  due primarily to growing consumer demand. As the effects of climate change become ever more apparent, many individuals now prioritize reducing their environmental impact through sustainable transportation choices. Zero-emission electric vehicles allow passengers to travel in a manner that produces no tailpipe pollutants or greenhouse gas emissions.

An expanding network of charging infrastructure is also helping drive adoption of electric passenger cars. Whereas early battery-electric vehicles faced range limitations due to underdeveloped charging access, new fast-charging stations are increasingly common alongside major highways and in populated areas. Drivers no longer need to worry as much about finding a place to "refuel." Furthermore, advances in battery technology continue extending vehicle ranges, alleviating “range anxiety” concerns.

Financial incentives from government programs also play a role in propelling the passenger electric vehicle segment. Rebates and tax credits lower the upfront costs that previously presented an adoption barrier. As production volumes increase and battery prices decline, the total cost of ownership of electric cars is becoming comparable to gasoline equivalents, appealing to cost-conscious consumers. Premium electric carmakers additionally leverage their brand image and style to cater to environmentally-minded buyers seeking the latest technologies.

The continued expansion of the passenger electric vehicle market segment depends on ongoing tech improvements, supportive policies, and widespread charging provision. As battery range and power increase while pricing decreases due to economies of scale, zero-emission mobility options will appeal to ever larger portions of the driving population.

Insights, Propulsion Segment - Battery Technologies Take the Lead in Zero-emission Propulsion

Within the zero-emission vehicles industry, battery-electric vehicles currently dominates the propulsion segment relative to hydrogen fuel cell competitors. Several defining traits give BEVs an edge over FCVs at this stage.

Most significantly, lithium-ion batteries benefiting from decades of development for consumer electronics have reached a high level of energy density, specific power, and cost-efficiency. By contrast, hydrogen fuel cells remain an emerging technology still striving for commercial viability at scale. Widespread manufacturing has yet to drive down fuel cell costs to parity with batteries. Infrastructure is also strongly battery-electric-biased, with a far more extensive public fast-charging network complementing widespread residential Level 2 charging accessibility.

Simplicity favors BEVs as well - electric drive trains involving far fewer components prove less complex and expensive to build compared to fuel cell powertrains at low production volumes. Battery swapping has also been demonstrated as a quicker “refueling” alternative to charging, especially for commercial applications. Additionally, the automotive industry currently places greater manufacturing and R&D resources toward battery technologies, benefiting from multifaceted applications across markets.

However, hydrogen fuel cell vehicles hold promise for longer-haul commercial and public transport in the future. As technical obstacles are overcome, fuel cells may gain ground, particularly for applications requiring rapid refueling. Still, battery improvements continue apace, and existing charging infrastructure momentum favors electric vehicles preserving their dominance in the zero-emission propulsion segment for the foreseeable future.

Regional Insights

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North America is estimated to establish itself as the dominant market for zero emission vehicles globally with 43.7% of the market share in 2024. The region is home to leading automakers like Tesla, General Motors, and Ford who have invested heavily in electrifying their model line-ups. Both consumers and businesses in the U.S. and Canada have shown strong appetite for EVs, especially in populous states like California which offer attractive purchase incentives and charging infrastructure. The auto industry in North America is aligning to shift from internal combustion engines to battery-powered vehicles in the near future in line with regional emission regulations.

The Asia Pacific region, is emerging as the fastest growing market for zero emission vehicles worldwide with CAGR of 30.78%. The Chinese government has been aggressively pushing the auto sector to embrace electromobility in order to reduce air pollution levels in major cities. Substantial subsidies on electric vehicles and setting up of extensive public charging networks have made EVs an attractive alternative to gasoline vehicles. Chinese automakers like BYD and Nio have taken the lead in the domestic EV market and are also looking at expansion overseas. Moreover, increasing raw material supply and battery production in China is supporting stronger adoption of electric vehicles across applications.

Europe remains an important regional market, led by Norway and the Netherlands which have very high EV penetration rates already. However, high upfront costs coupled with lack of public charging options in parts of Central and Eastern Europe has hampered faster adoption of zero emission vehicles. European automakers are now bolstering their investments in electric technology and platforms to position themselves better for upcoming emissions regulations across EU nations.

This regional analysis highlights how government support mechanisms like subsidies and charging infrastructure rollout have been instrumental in driving the zero emission vehicles industry forward in different markets. Cost competitiveness with gasoline vehicles remains a key factor influencing consumer behavior and adoption rates in various regions globally.

Market Report Scope

Key Developments

• In August 2022, Maruti Suzuki, India's largest carmaker, confirmed plans to launch its first electric vehicle by the end of 2025. Additionally, its parent company, Suzuki Motor Corporation, aims to invest USD 127 million in Gujarat, India for a new manufacturing plant. This facility will not only produce electric vehicles but also manufacture lithium-ion batteries, a move to reduce dependency on imports.
• In January 2022, The Volkswagen Group and Bosch Group signed an agreement to explore creating a European battery equipment solution provider. Their joint initiative aims to supply comprehensive battery production systems and provide support for on-site ramp-up and maintenance for battery cell and system manufacturers.
• In December 2021, Hyundai India is accelerating its electric vehicle strategy by announcing plans to introduce six new electric vehicles in India by 2028. To support this initiative, the company is investing USD 482.50 Million in developing these models and establishing charging infrastructure across the country. The Company will will introduce its globally recognized E-GMP modular platform to India, with modifications, emphasizing local manufacturing synergies to promote the adoption of Battery Electric Vehicles (BEVs).

*Definition: The zero emission vehicles market consists of automakers developing and manufacturing vehicles that produce no tailpipe emissions, such as battery electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs), and fuel cell electric vehicles (FCEVs). Governments around the world are promoting the adoption of zero emission vehicles to reduce dependency on fossil fuels and curb air pollution and greenhouse gas emissions from the transportation sector.

Market Segmentation

• Vehicle Type Insights (Revenue, USD BN, 2019 - 2031)
  • Two Wheelers
  • Three Wheelers
  • Passenger Vehicle
  • Light Commercial Vehicle
  • Heavy Commercial Vehicle
• Propulsion Insights (Revenue, USD BN, 2019 - 2031)
  • Battery-electric vehicles (BEVs)
  • Hydrogen fuel cell vehicles (FCVs)
• Regional Insights (Revenue, USD BN, 2019 - 2031)
  • 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
    • South Africa
    • Israel
    • Rest of Middle East & Africa
• Key Players Insights
  • BMW AG
  • Chevrolet Motor Company
  • Ford Motor Company
  • General Motors
  • Hero Electric
  • Hyundai Motor Company
  • Mahindra Electric Mobility Limited
  • Tata Motors
  • Tesla Inc.
  • Toyota Motor Corporation
  • Daimler AG
  • SEGWAY INC.
  • Motor Development International SA
  • Volkswagen AG
  • Honda Motor Co. Ltd.
  • MITSUBISHI MOTORS CORPORATION
  • Volvo
  • GAC Motor