Alternative Fuel Vehicles Market Size

Alternative Fuel Vehicles Market Overview

Alternative Fuel Vehicles Market Size was valued at USD 301.9 billion in 2022. The alternative fuel vehicles market is projected to grow from USD 382.8 billion in 2023 to USD 2558.2 billion by 2032, exhibiting a compound annual growth rate (CAGR) of 26.80% during the forecast period (2023 - 2032). The global decline in oil reserves, the rising cost of fossil fuels, the expansion of clean mobility solutions, stricter government emission control standards, and the expansion of government policies encouraging the use of alternative fuel vehicles are the main market drivers of market expansion.

Source: Secondary Research, Primary Research, MRFR Database and Analyst Review

Alternative Fuel Vehicles Market Trends

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  Increased price of fossil fuel is driving the market growth

  
  

The alternative fuel vehicles market is expected to rise due to the rising cost of fossil fuels. Fossil fuels are organic substances that contain hydrocarbons that are found in the earth's crust and can be used as an energy source. Due to the rising cost of fuel, developing and undeveloped nations are becoming increasingly dependent on foreign nations to import fossil fuels. This will put more pressure on emerging economies and create demand for the market for alternative fuel cars. As a result, more people are buying cars that use alternative fuels, like CNG, hydrogen, electric cars, and others. For instance, the price of Brent crude oil averaged USD 46 per barrel in November 2020, according to an article by the U.S. Energy Information Administration, a key organisation of the U.S. government statistical system. By March 2021, it had dramatically increased to a price of USD 105 per barrel. As a result, the market CAGR for alternative fuel cars is being driven by the rising cost of fossil fuel.

Another main trend gaining ground in the alternative fuel vehicles market is the growing acceptance of clean mobility solutions to minimize emissions from fossil fuels. When compared to vehicles that run on traditional fuels like petrol and diesel, the carbon emissions from alternative fuel-powered vehicles, such as CNG, hydrogen, biofuel, and biodiesel, are lower. As a result of consumer worries about the environment growing, governments around the world are focusing on implementing clean mobility solutions through alternative fuel vehicles. For instance, the trendy and urban All-New Celerio received a new CNG option in January 2022 from Maruti Suzuki India Limited, an Indian automaker that competes in the market for alternative fuel vehicles. The corporation wants to expand its selection of green vehicles in India with this launch. Similar to this, Jaguar Land Rover Automotive PLC produced a fuel cell prototype for a hydrogen-powered Land Rover Defender in June 2021. This multinational organisation has its headquarters in the UK and is active in the alternative fuel vehicle sector. The firm hopes to reach zero tailpipe and carbon emissions throughout all of its operations, supply chain, and products with this launch. Thus, driving the alternative fuel vehicles market revenue.

Alternative Fuel Vehicles Market Segment Insights

Alternative Fuel Vehicles Fuel Type Insights

The Alternative Fuel Vehicles Market segmentation, based on fuel type includes Hybrid Vehicles, Plugin Hybrid Vehicles, Battery Electric Vehicles and Others (Gaseous Fuels, Biofuels). The battery electric vehicles segment dominated the market because battery electric vehicles are being adopted more frequently to reduce carbon impact. To meet the demand for cars without emissions, OEMs are embracing electrification by switching from the manufacturing of conventional vehicles to that of electric vehicles.

For instance, Volkswagen, one of the top German automakers, declared in March 2021 that by 2030, 70% of the brand's European sales will be electric vehicles. In addition, by that point, half of the business's sales in the U.S. and China came from electric vehicles.

Alternative Fuel Vehicles Vehicle Type Insights

The Alternative Fuel Vehicles Market segmentation, based on vehicle type, includes Passenger Cars, Light Commercial Vehicles and Heavy Commercial Vehicles. The passenger cars category generated the most income. This is ascribed to the population's increased use of passenger automobiles as a result of rising disposable income, rising standards of living, shifting middle-class demographics, and rising demand for personal commuting options. Additionally, the segment is expanding as electric powered passenger cars become more and more popular around the world.

Figure 1: Alternative Fuel Vehicles Market, by Vehicle Type, 2022 & 2032 (USD billion)

Source: Secondary Research, Primary Research, MRFR Database and Analyst Review

Alternative Fuel Vehicles Vehicle Class Insights

The Alternative Fuel Vehicles Market segmentation, based on vehicle class, includes Economical Vehicles, Mid-priced Vehicles and Luxury Vehicles. The luxury category generated the most income. The price of the materials needed to develop electric vehicles has climbed along with advancement. the more comfortable automobiles have additional safety equipment installed. a rise in consumer demand for luxury-equipped electric cars.

Alternative Fuel Vehicles Regional Insights

By region, the study provides the market insights into North America, Europe, Asia-Pacific and Rest of the World. The North American alternative fuel vehicles market area will dominate this market. The region's demand for alternative fuel vehicles has increased dramatically as a result of the tough government laws limiting carbon emissions. Additionally, the production of effective alternative fuel vehicles is a focus for vehicle manufacturers that is expected to support market growth over the course of the forecast period.

Further, the major countries studied in the market report are The US, Canada, German, France, the UK, Italy, Spain, China, Japan, India, Australia, South Korea, and Brazil.

Figure 2: Alternative Fuel Vehicles Market Share By Region 2022 (%)

Source: Secondary Research, Primary Research, MRFR Database and Analyst Review

Europe alternative fuel vehicles market accounts for the second-largest market share as a result of escalating worries about the effects of global warming brought on by the burning of fossil fuels and the rapid development of technology for alternative fuels (AFs). Germany produces 25% of all passenger automobiles produced in Europe, making it the region's top automotive producer. The nation's automakers have made large investments in internal R&D initiatives and have hired the most researchers to perform high-quality research for creating new products. As a result, new technologies for alternative fuels (AFs) have been developed. Further, the German alternative fuel vehicles market held the largest market share, and the UK alternative fuel vehicles market was the fastest growing market in the European region

The Asia-Pacific Alternative fuel vehicles Market is expected to grow at the fastest CAGR from 2023 to 2032. The major drivers of the growth of the alternative fuel vehicle market in Asia Pacific include the presence of developing countries like China and India, rising disposable income, shifting consumer demographics, improving living standards, rapid urbanization, and rising awareness of the dangers of rising pollution levels. This region is rapidly industrializing and developing, which has led to higher pollution levels, which encourages the use of alternative fuel vehicles there. Moreover, China’s alternative fuel vehicles market held the largest market share, and the Indian alternative fuel vehicles market was the fastest growing market in the Asia-Pacific region.

Alternative Fuel Vehicles Key Market Players & Competitive Insights

Leading market players are investing heavily in research and development in order to expand their product lines, which will help the alternative fuel vehicles market, grow even more. Market participants are also undertaking a variety of strategic activities to expand their global footprint, with important market developments including new product launches, contractual agreements, mergers and acquisitions, higher investments, and collaboration with other organizations. To expand and survive in a more competitive and rising market climate, alternative fuel vehicles industry must offer cost-effective items.

Manufacturing locally to minimize operational costs is one of the key business tactics used by manufacturers in the global alternative fuel vehicles industry to benefit clients and increase the market sector. In recent years, the alternative fuel vehicles industry has offered some of the most significant advantages to medicine. Major players in the alternative fuel vehicles market attempting to increase market demand by investing in research and development operations include BMW Group, Ford Motor Company, Honda Motor Co., Ltd, Mercedes-Benz Group AG, Mitsubishi Motors Corporation, Nissan Motor Co., Ltd, Tesla, Inc., Toyota Motor Corporation, Volkswagen AG, and BYD Company Ltd.

Ford Motor Co. is an automaker that creates, produces, sells, and offers maintenance for a complete lineup of cars, trucks, sport utility vehicles, and electric vehicles. The business offers leasing and financing solutions for the automotive industry. Ford sells its goods under the Ford and Lincoln brands. Customers from South America, the Middle East, Europe, North America, Africa, and the Asia-Pacific region can use it. In addition to operating component factories around the world, the corporation also runs gearbox, assembly, casting, metal stamping, and engine plants. In February 2021, Ford Motor Company stated that by 2026, it would only be producing plug-in hybrid and electric vehicles in Europe. The company would shortly phase out the production of vehicles using internal combustion engines (ICEs). Additionally, automakers including Volkswagen, Lincoln, Jaguar Land Rover, and others have vowed to eliminate all emissions from their vehicle volume in the upcoming years.

Rechargeable batteries, photovoltaic devices, phone components, and other electronic products are all created, produced, and sold by BYD Co Ltd. The business also provides services for assembling whole products. It produces and sells both new energy cars and conventional fuel-engine vehicles. Rechargeable batteries, photovoltaics, handset components, smartphones, laptops, notebook computers, game hardware, and other consumer goods are among the spectrum of items that the company develops. High-end, medium-end, and low-end automobiles, as well as whole car moulds, auto parts, DM (dual mode) and entirely electric vehicles, are all examples of automobile products. In October 2020, a joint venture to develop commercial battery electric vehicles is to be established by an agreement between BYD and Hino. Hino Motors, Ltd. (Hino) and BYD Company Ltd. inked a joint venture agreement to create a new business for the development of commercial BEVs.

Key Companies in the alternative fuel vehicles market include

• BMW Group


• Ford Motor Company


• Honda Motor Co., Ltd


• Mercedes-Benz Group AG


• Mitsubishi Motors Corporation


• Nissan Motor Co., Ltd


• Tesla, Inc.


• Toyota Motor Corporation


• Volkswagen AG


• BYD Company Ltd

Alternative Fuel Vehicles Industry Developments

October 2023- The government has initiated work on the third stage of the Faster Adoption and Manufacturing of (Hybrid and Electric Vehicles in India (FAME-III) financial support scheme, which is likely to encompass alternative fuel vehicles, Business Standard has learned. As per the senior government official, there is a request to integrate vehicles powered by alternative sources such as biofuels and hydrogen in the upcoming phase of FAME. Government officials observed that the motive is to switch away from conventional polluting vehicles, and the incentive for alternative fuels concentrates to encourage the transition from internal combustion engine (ICE) to cleaner technology.

March 2024- The Union Minister for Petroleum & Natural Gas and Housing and Urban Affairs, Shri Hardeep Singh Puri, announced 'ETHANOL 100, a revolutionary automotive fuel at IndianOil Retail Outlet M/s. Irwin Road Service Station. Starting from 16th March, customers can gain ETHANOL 100 at select 183 retail outlets across five states – Maharashtra, New Delhi, Tamil Nadu, Karnataka, and Uttar Pradesh. Introducing the groundbreaking fuel, Shri Hardeep Singh Puri said that the launch of ETHANOL 100 was encouraged by the vision of the Prime Minister of India to transform Annadatas into Urjadatas. Naming it a revolutionary fuel, the Minister stated that ETHANOL 100 fuel could revolutionize the company's transportation sector and lower their dependence on fossil fuels. He stated that it signifies the government's commitment to lowering import dependency, boosting the agriculture sector, and conserving foreign exchange. Since the Prime Minister's announcement on E20 (20% ethanol blended fuel) in 2023, the E20 availability has increased to 12,000 outlets in under a year, and now, with the announcement of ETHANOL100 at 183 outlets of IndianOil, the company is close to acquiring a goal of 20% ethanol blending by 2025-26.

Alternative Fuel Vehicles Market Segmentation

Alternative Fuel Vehicles Fuel Type Outlook (USD Billion, 2018-2032)

• Hybrid Vehicles


• Plugin Hybrid Vehicles


• Battery Electric Vehicles


• Others




• Gaseous Fuels


• Biofuels

Alternative Fuel Vehicles Type Outlook (USD Billion, 2018-2032)

• Passenger Cars


• Light Commercial Vehicles


• Heavy Commercial Vehicles

Alternative Fuel Vehicles Class Outlook (USD Billion, 2018-2032)

• Economical Vehicles


• Mid-priced Vehicles


• Luxury Vehicles

Alternative Fuel Vehicles Regional Outlook (USD Billion, 2018-2032)

North America

• US


• Canada

Europe

• Germany


• France


• UK


• Italy


• Spain


• Rest of Europe

Asia-Pacific

• China


• Japan


• India


• Australia


• South Korea


• Australia


• Rest of Asia-Pacific

Rest of the World

• Middle East


• Africa


• Latin America