The global vehicle electrification market was valued at USD 89.26 billion in 2022 and is projected to expand at a compound annual growth rate (CAGR) of 9.9% from 2023 to 2030. This anticipated growth is largely driven by the automotive sector's shift towards alternatives to petroleum-based fuels, as well as government initiatives promoting environmentally sustainable transportation options worldwide. Various governments are rolling out green initiatives, and numerous environmental agencies are establishing ambitious targets for emission reductions. Concurrently, consumers who prioritize environmental sustainability are increasingly opting for electric vehicles (EVs), thereby helping to decrease their overall carbon footprint. Consequently, demand for vehicle electrification products is expected to rise throughout the forecast period.

Moreover, vehicle electrification offers multiple advantages that enhance performance, introduce new features, and provide benefits such as decreased vehicle weight, lower emissions, improved fuel economy, and enhanced driving comfort and safety. These factors are expected to significantly fuel market growth.

The rising consumer preference for fuel-efficient vehicles has intensified the demand for vehicle electrification. However, despite their many benefits, electric vehicles tend to be relatively expensive. This is primarily due to the high costs associated with the batteries used in EVs and the expenses related to charging these batteries. The development of charging infrastructure is still in its infancy, which poses challenges for using electric vehicles over long distances.

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Hybridization Insights

In 2022, the segment encompassing Internal Combustion Engine (ICE) vehicles and micro-hybrid vehicles represented the largest share of the revenue, approximately 58.5%. This dominance can be attributed to significant technological advancements in the automotive industry, which have facilitated the introduction of battery electric vehicles. There is a growing demand for these vehicles across various sectors, including agriculture, construction, mining, and power generation. A major contributing factor to the continued reliance on ICE vehicles is the current inadequacy of global electric vehicle (EV) infrastructure, which has hindered the widespread adoption of fully electric models. Additionally, the rising popularity of gasoline-powered vehicles and the increasing production of shale gas are further factors propelling market growth in this segment.

On the other hand, the Plug-In Hybrid Electric Vehicle (PHEV) segment is anticipated to achieve the fastest compound annual growth rate (CAGR) of 14.6% during the forecast period. This surge is expected to be fueled by collaborative efforts between private companies and government agencies aimed at developing smart cities and enhancing charging infrastructure. Such initiatives are likely to lead to a heightened demand for plug-in hybrid electric vehicles. Furthermore, the adoption of PHEVs has seen substantial growth in technologically advanced countries, where consumers are increasingly embracing these vehicles. Governments worldwide are promoting integrated electrification systems for various transportation modes, including freight delivery vehicles, public transportation, and two-wheelers, as part of efforts to reduce dependence on fossil fuels. All these elements contribute positively to the anticipated growth of the market.

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