The global alternative fuel and hybrid vehicle market was valued at $352.0 billion in 2020 and is projected to reach $7,976.0 billion by 2030, growing at a CAGR of 34.5% from 2021 to 2030.
An alternative fuel vehicle is a vehicle designed to operate on compressed natural gas, electricity, biofuel, biodiesel, fuel cell, liquid nitrogen, and dimethyl ether. Different types of natural gas vehicles include dedicated vehicles, bi-fuel vehicles, and dual-fuel vehicles. Plug-in hybrid electric vehicles are considered as alternative fuel vehicles, as the primary input fuel is electricity. Moreover, alternative fuel vehicles create less or no CO2 emissions and also aid in reducing pollution.
The impact of the COVID-19 pandemic resulted in supply-chain disruptions, causing a halt in the production of vehicles and low sales of passenger cars across the globe. Moreover, government-enforced lockdowns resulted in a halt in production and a decrease in demand for alternative vehicles during the COVID-19 period. However, with the removal of lockdown restrictions, growth in sales of electric cars has been observed. For instance, sales for the electric car were recorded at 3 million in 2020 in comparison to 2019, stating a growth of 40% from 2019. This rise in sales of electric vehicles is expected to contribute to the growth of the alternative fuel and hybrid vehicle market.
The global decrease in oil reserves, growth in prices of fossil fuels, increase in adoption of clean mobility solutions, stringent government norms for emission control, and growth in supportive government policies to promote the adoption of alternative fuel vehicles are factors that drive the growth of the market. However, low fuel economy and performance associated with alternative fuel vehicles and the lack of infrastructure to support alternative fuel vehicles are factors expected to hamper the growth of the market. Furthermore, the development of charging infrastructure, electrification of the public fleet, and technological advancements are expected to offer growth opportunities during the forecasted period.
The alternative fuel and hybrid vehicle market is segmented on the basis of fuel type, vehicle type, vehicle class, and region. By fuel type, the market is fragmented into hybrid vehicles, plugin hybrid vehicles, battery electric vehicles, and others. On the basis of vehicle type, it is fragmented into passenger cars, light commercial vehicles, and heavy commercial vehicles. Based on vehicle class, the market is divided into economical vehicles, mid-priced vehicles, and luxury vehicles. By region, the report is analyzed across North America, Europe, Asia-Pacific, and LAMEA.
Some leading companies profiled in the alternative fuel and hybrid vehicle industry report include BMW Group, BYD Company Ltd., Ford Motor Company, Honda Motor Co., Ltd., Mercedes-Benz Group AG, Mitsubishi Motors Corporation, Nissan Motor Co., Ltd., Tesla, Inc., Toyota Motor Corporation, and Volkswagen AG.
Growth in Prices of Fossil Fuels
Several countries across the globe face rise in the price of fossil fuels. For instance, in 2021, Europe registered an increase in gas prices owing to several factors, such as reduced gas supply from Russia, low storage levels, extreme weather conditions, and carbon pricing. This increase in the price of fossil fuels results in the adoption of vehicles running on alternative fuels as a future mobility solution. Moreover, fossil fuel-based vehicles emit harmful gases and contribute to an increased level of pollution. However, vehicles based on alternative fuel do not emit CO2 emissions or harmful gases, which make alternative fuel vehicle an efficient mobility solution with low operating cost. Hence, growth in the prices of fossil fuels is expected to contribute to an increase in the adoption of alternative fuel and hybrid vehicles during the forecast period.
Increase in Adoption of Clean Mobility Solutions
Increase in the adoption of clean mobility solutions is observed globally due to climatic changes. Continuous usage of fossil fuels in automobiles is a major factor resulting in climate change. Vehicles that run on alternative fuels, such as natural gas, electricity, biofuel, biodiesel, fuel cell, liquid nitrogen, and dimethyl ether result in lesser carbon emissions. Increasing environmental concerns among consumers, the introduction of stringent emission regulations, and the launch of advanced vehicles supporting alternative fuels are expected to increase the adoption of alternative fuel and hybrid vehicle market during the forecast period.
Growth in Supportive Government Policies to Promote Adoption of Alternative Fuel Vehicles
Several countries are taking numerous initiatives to achieve the net-zero emissions target. Different governments across the globe promote the adoption of alternative fuel vehicles, such as electric vehicles and plug-in hybrid vehicles. Several governments are providing various benefits to buyers on the adoption of electric vehicles in their region. For instance, in 2022, the Government of India has increased the subsidy on the purchase of an electric vehicle to promote the adoption of the electric vehicle under the Faster Adoption and Manufacturing of Hybrid & Electric Vehicle (FAME) scheme. This growth in supportive government policies to promote the adoption of alternative fuel vehicles is anticipated to drive the growth of the alternative fuel and hybrid vehicle industry.
