Hybrid Electric Car Market Size & Share Analysis - Trends, Drivers, Competitive Landscape, and Forecasts (2024 - 2030)

Hybrid Electric Car Market Size

Hybrid Electric Car Market Trends & Drivers

Stringent Emission Norms

Several steps are being taken by the European Commission to ensure a cleaner environment. For example, the European Union (EU) recently targeted to reduce net emissions by 55% by 2030. Similarly, many countries have also proposed motor vehicle fuel efficiency or carbon emission policies. The growing concern for CO2 emission around the world is leading to a gradual phase-out of conventional vehicles.

These stringent emission norms will ultimately increase the price of conventional cars and encourage customers and automobile companies to adopt low-emission cars. Many countries have increased taxes on conventional fuel cars and are offering incentives, such as high-occupancy vehicle lane exemption and emission inspection exemption, to hybrid car customers.

In order to lessen the impact of greenhouse gases, the government of the U.S. and Europe are also focusing on lowering emission standards and enhancing vehicle fuel efficiency. For instance, the Corporate Average Fuel Economy standards for automotives were established by the U.S. Department of Transportation. Moreover, the U.K. suggested a ban on the sale of all polluting automobiles by 2035 and committed to a goal of net-zero emissions by 2050.

Falling Battery Prices

The electric car battery pack cost dropped significantly in the last decade and it is expected to decline further. Thus, li-ion batteries are expected to witness a steep decline in prices compared to NiMH batteries during the forecast period. With increasing investments in li-ion and the high manufacturing capacity of companies such as Tesla and Nissan, an oversupply of li-ion batteries is expected in the coming years, which will further decrease the prices of battery packs in the forecast period.

In 2020, there were around 160 gigawatt hours of electric vehicle li-ion battery capacity, which is 33% more than in 2019. According to industry experts, the cost of li-ion batteries is expected to fall more, which is expected to benefit the market. The lower price of batteries will also create new opportunities for the players to increase battery capacity and range.

Increasing Fuel Economy

One of the major factors driving the growth of the hybrid electric car market is the surging fuel economy offered by HEVs compared to conventional cars, which run entirely on the engine. Such cars offer better fuel efficiency because of the incorporation of a battery and other electric systems, which results in lower fuel costs. They do not run entirely on the engine but use an electric motor during the start/stop/idling period, which considerably increases their fuel efficiency.

These cars reduce fuel consumption by 15–40% as compared to non-hybrid cars. Additionally, the new-generation hybrid car model delivers better fuel efficiency than the previous-generation models, which also drives the growth of the market.

Hybrid Electric Car Market Analysis

Full Hybrid Electric Cars Dominated Market

The full category contributed around 66% revenue share in 2022, in global revenue, owing to its earlier inception. However, the mild category is expected to have faster growth during the forecast period, mainly due to its low price as compared to the full category.

Moreover, some other factors contributing to the mild category growth are easy mechanical integration of components and powertrains and more features, such as electric power steering, electric turbocharger/supercharger, and electric air conditioning, at a low cost.

NiMH Batteries Will Maintain Dominance

NiMH batteries accounted for the larger share in HEV sales during the last decade, owing to their lower cost, higher durability, and more safety features than li-ion batteries.

The dominance of Toyota (which uses NiMH batteries) in the market also helped in the sales of NiMH battery-fitted HEVs. However, falling prices of li-ion batteries coupled with their inherent advantages, such as lightweight, small size, high energy density, low maintenance cost, and low rate of self-discharge, are expected to increase their demand during the forecast period.

Regional Analysis

Fastest-Growing Region To Be APAC

Asia-Pacific, led by Japan, held a significant share in 2022, owing to increasing government support in the form of incentives, coupled with stringent emission norms in the region, which led to the growth of the industry during the forecast period.

Japan is a hub for major companies, such as Toyota, Honda, Mitsubishi, Nissan, and Panasonic. Thus, in terms of revenues, Japan accounted for a significant revenue share of in 2022. This is because of the considerable penetration of such cars in the country. The increasing government initiatives in the form of tax breaks and subsidies on purchases have led to the high penetration of such cars in the country.

Moreover, the strong positions of the pioneers of the technology, Toyota and Honda, have also helped in the penetration of such cars in the country. Moreover, China has witnessed significant growth over the last few years, with the increased popularity of Toyota’s Levin and Corolla models, with key car components locally. Thus, the Japanese market is expected to grow at a significant CAGR during the forecast period.

Market Breakdown

This report offers deep insights into the hybrid electric car industry, with size estimation for 2019 to 2030, the major drivers, restraints, trends and opportunities, and competitor analysis.

Based on Hybridization

• Full
• Mild

Based on Battery

• Nickel–Metal Hydride (NiMH)
• Lithium-Ion (Li-ion)

Based on Type

• Hatchback
• Sedan

Geographical Analysis

• North America
  • U.S.
  • Canada
• APAC
  • Japan
  • South Korea
  • China
• Europe
  • U.K.
  • Germany
  • France

Top Hybrid Electric Car Manufacturers