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The global electric vehicle component market was valued at $22.2 billion in 2018 and is expected to be worth $157.4 billion by 2025, growing with a CAGR of 29.4% between 2019 and 2025. The growth of the market is mainly aided by the increasing adoption of electric vehicles across the world.
Rest of the world (RoW) is the fastest growing region in the electric vehicle component market; it is expected to exhibit a CAGR of over 40% during the forecast period. The region contributed less than 2.5% of the global market revenue in 2018, as the penetration of electric vehicles is still at the nascent phase in the region. However, the penetration is increasing at a significant rate, with the surging adoption of electric vehicles in countries such as Brazil and Mexico.
Dynamics of Electric Vehicle Component Market
A major trend in the electric vehicle component market is the increasing preference of electric vehicle manufacturers for induction motors over synchronous motors. For instance, Tesla Inc., one of the most prominent electric vehicle manufacturers, uses induction motors in a lot of its models, including Tesla Model 3 and Tesla Model X. The reason for the preference for induction motors is that these motors have enhanced efficiency and help in reducing the magnetic losses by decreasing the inverter voltage. Thus, the induction motor, when operated with a smart inverter, offers greater efficiency than other motors, therefore it is highly preferred in high-performance electric vehicles.
Government support for electric vehicle adoption is a major driver for the electric vehicle component market. National governments are actively taking steps to support the adoption of electric vehicles, which, in turn, is driving the growth of the components’ market. Some of the supportive initiatives include tax exemptions, purchase rebates, and financial incentives to the buyers of electric vehicles. For instance, the federal government in the U.S. provides an Internal Revenue Service (IRS) tax credit of $2,500 to $7,500 per new EV purchased, thereby creating a higher demand for electric vehicles, which, in turn, is driving the demand for electric vehicles’ components.
Electric Vehicle Component Market Segmentation Analysis
Among all components, the battery pack constitutes the most substantial part of the vehicles. This is because the battery pack accounts for around 35–50% of the overall cost of electric vehicles, which makes the component the largest revenue contributor compared to the rest in the market. The battery pack is further comprised of a battery cell, battery management system (BMS), battery thermal management system, and other ancillary components. Out of these, the battery cell was the largest revenue generator in 2018 in the electric vehicle component market.
In terms of end use, the higher demand for electric vehicle components was registered by the OEMs category in the electric vehicle component market, owing to the growing production of electric vehicles across the world. The aftermarket category is expected to witness the faster growth during the forecast period.
Global Scenario of Electric Vehicle Component Market
Geographically, Asia-Pacific (APAC) was the largest market electric vehicle component market in the world in 2018. This is because of the greater adoption of electric vehicles in the region, led by China, than any other region. The rising environmental concern, growing government support for electric vehicles in the form of subsidies, and increasing ownership costs of internal combustion engine (ICE)-based vehicles are the major factors driving the demand for electric vehicles. For instance, the government of China has been allotting a subsidy per electric vehicle from 2017 onward, due to which the country recorded a rise in the adoption of electric vehicles by over 60% from 2017 to 2018.
Competitive Landscape of the Electric Vehicle Component Market
The manufacturing of electric vehicle components is primarily concentrated in China, Japan, South Korea, and the U.S., with all the top manufacturing companies located in these four countries. This is mainly attributed to the scalability of production volumes, presence of government incentives and subsidies, as well as a rapidly growing consumer base in the form of electric vehicle manufacturers. The major players operating in the electric vehicle component market are Robert Bosch GmbH, Contemporary Amperex Technology Co. Ltd., Panasonic Corp., Siemens AG, DENSO Corp., LG Chem Ltd., Tesla Inc., Hitachi Ltd., ABB Ltd., Samsung SDI Co. Ltd., BYD Co. Ltd., Mitsubishi Electric Corp., LG Innotek Co. Ltd., and OptimumNano Energy Co. Ltd.
Recent Strategic Developments of Major Electric Vehicle Component Market Players
In recent years, the major players in the global electric vehicle component market have taken several strategic measures, such as product launches, mergers and acquisitions, and facility expansions, to gain a competitive edge in the industry. For instance, in July 2019, Robert Bosch GmbH announced that it would take up a 50% stake in MAGURA Bike Parts, a subsidiary of MAGURA, in order to introduce a joint venture under the name MAGURA Bosch Parts & Services GmbH & Co. KG. Similarly, in April 2019, LG Chem entered into a joint venture with VinFast Trading and Production LLC (a subsidiary of Vingroup and manufacturer of vehicles) to start the production of battery packs for the Vietnamese start-up’s electric scooters and other upcoming electric vehicles.
Key Questions Addressed/Answered in the Report