Vehicle electrification involves the use of electric powertrain components in vehicles such as electric or hybrid electric vehicles. These include electric motors, batteries, and power electronics for improving vehicle efficiency. Features such as quick acceleration, silent operation, and lower maintenance make electrified vehicles a desirable option. The increasing stringency of emission norms by governments worldwide is propelling the demand for electric vehicles.

The global Vehicle Electrification Market is estimated to be valued at US$ 84.41 Bn in 2024 and is expected to exhibit a CAGR of 5.9% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.

Market Opportunity:

Reducing Vehicle Emissions- The growing concerns regarding environmental pollution caused due to vehicular emissions are forcing stringent emission regulations worldwide. Electric vehicles produce negligible tailpipe emissions and offer a viable solution to reduce carbon footprint of the transportation sector significantly. This presents a lucrative opportunity for vehicle electrification market players to expand into electric mobility solutions and benefit from policies supporting electric vehicles adoption. Government incentives and initiatives promoting electric vehicles will further boost market growth over the forecast period.

Porter's Analysis

Threat of new entrants: The threat of new entrants in the Global Vehicle Electrification Market Size is moderate. The market requires huge capital investments and technological expertise. However, support from governments worldwide through subsidies and tax rebates can encourage new players to enter the market.

Bargaining power of buyers: The bargaining power of buyers in the vehicle electrification market is high. Buyers have several options to choose from in terms of vehicle types, features, and brands. Moreover, falling battery prices are steadily making electric vehicles more affordable and accessible.

Bargaining power of suppliers: The bargaining power of suppliers is moderate as suppliers of critical components such as batteries have significant control over costs and innovation. However, leading OEMs are investing in developing competencies to manufacture key components in-house.

Threat of new substitutes: The threat of substitutes is high. Technological advancements are leading to new powertrain technologies such as hydrogen fuel cells that can substitutes electric vehicles. Moreover, improvement in conventional hybrid powertrains poses a substitution threat.

Competitive rivalry: The competitive rivalry is high owing to the presence of auto majors competing on technology, pricing, features to gain market share. Manufacturers are investing heavily in R&D to accelerate product development and gain a foothold in the growing market.

SWOT Analysis

Strength: Technological advancements have increased the driving range of electric vehicles above 300 km, alleviating range anxiety. Supporting charging infrastructure and fiscal incentives are encouraging EV adoption.
Weakness: High production costs and battery prices make electric vehicles more expensive than conventional vehicles. Limited charging infrastructure in many countries hinders mass adoption.
Opportunity: Stringent emission norms are compelling auto manufacturers to add electrified vehicles in their lineups. EV sales are expected to grow multi-fold due to carbon-neutral goals of various governments.
Threats: Delay in development of low-cost large-scale battery technology can hamper the mass adoption of EVs. Dependency on imported critical raw materials exposes the market to supply chain disruptions.

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