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Valued at $57.2 billion in 2017, the global hybrid electric car market is expected to reach $138.0 billion by 2023, witnessing a CAGR of 16.7% during 2018–2023.
Among all regions, Europe is predicted to register the fastest growth in the hybrid electric car market during the forecast period, owing to government support in the form of subsidies and stringent emission norms. In addition, the increasing number of improved hybrid electric vehicles being developed by automakers and rising environmental concern among customers have further catalyzed the growth of the hybrid electric car industry in the region. High fuel prices, declining diesel car sales, and countries’ long-term plans to phase out conventional passenger cars are additional factors which will drive the market growth in the region. Furthermore, automakers, such as Renault S.A., Volkswagen AG, Peugeot S.A., Mercedes-Benz, and AB Volvo, have plans to launch new hybrid electric vehicle models in Europe in the coming years.
Fundamentals Governing Hybrid Electric Car Market
The increasing demand for mild hybrid electric cars is an emerging trend in the hybrid electric car market. The acceptance rate of mild hybrid cars is rising across the globe, especially in emerging economies, such as China and India, owing to the low cost of such cars compared to full hybrid cars. Even though a full hybrid electric vehicle is more fuel efficient than the mild one, the latter offers a better cost-to-benefit ratio because of its comparatively low upfront cost. To meet emission targets and save up on fuel costs, customers are finding more value in mild hybrid cars compared to other electric vehicles because of the formers’ lower costs.
The low price of hybrid electric cars, when compared with other electric cars, is one of the key growth drivers for the hybrid electric car market. In terms of price, HEVs are positioned midway between conventional and fully electric cars. HEVs are not only seen as an affordable option by customers, but they also feature the traditional design of conventional vehicles, a factor that adds a mainstream appeal to these cars. Among all electric cars, HEVs are the most affordable, which is responsible for their increasing penetration across the world. The batteries and technologies used in battery electric vehicle (BEV) demand huge investments from the manufacturers, which, in turn, leads to an increase in the retail price of these cars. For instance, a typical HEV, priced at $26,000, is considerably cheaper than a BEV, priced at $43,000. The lower price of HEVs is one of the main reasons they enjoy maximum penetration.
Emerging economies, such as China, India, Indonesia, Brazil, and South Korea, hold a huge potential for the market players in the hybrid electric car market. This is majorly due to the stringent emission norms, high gasoline prices, and huge demand for passenger cars in these countries. Most of the key emerging economies are adopting European Union emission standards and planning to ban fossil fuel-powered cars in the coming years. For example, in June 2017, India announced intentions to end the sale of gasoline and diesel cars by 2030. Similarly, China is also planning to ban the production and sale of vehicles powered only by fossil fuels. Such factors would assist in the growth of the players in hybrid electric car industry.
Hybrid Electric Car Market Segmentation Analysis
When segmented on the basis of hybridization, the mild hybrid electric car category is expected to see the faster growth in the hybrid electric car market during the forecast period, mainly due to the low price of these cars compared to full hybrid electric cars. Some other factors contributing to the increasing demand for mild hybrid cars are the easy mechanical integration of components and powertrains and other features, such as electric power steering, electric turbocharger/supercharger, and air conditioning, at a low cost.
In terms of battery, nickel–metal hydride (NiMH) batteries accounted for the larger volume share in the hybrid electric car market, in 2017, owing to their lower cost, higher durability, and more safety features than Li-ion batteries. The dominance of Toyota Motor Corporation (which uses NiMH batteries) in the market also helped in the high sales of NiMH battery-fitted hybrid electric cars.
Based on type, hatchbacks have largely dominated the hybrid electric car market, owing to the high consumer preference for small cars in major hybrid electric vehicle markets, such as Japan. Hybrid electric hatchbacks are expected to continue their dominance on the industry, especially in emerging economies, owing to their lower cost compared to other car types and the launch of several new hatchback models, during the forecast period.
Geographical Analysis of Hybrid Electric Car Market
Globally, Asia-Pacific (APAC), led by Japan, was the largest hybrid electric car market in 2017. The increasing government support in the form of incentives, coupled with the stringent emission norms in in Japan, led to the growth of the hybrid electric car industry in the region during the historical period. In addition, Japan is a hub for major hybrid electric vehicle companies, such as Toyota Motor Corporation, Honda Motor Company Ltd., Mitsubishi Motors Corporation, and Nissan Motor Co. Ltd. The strong position of these pioneers has also helped in the penetration of hybrid electric cars in the country, thereby benefitting the regional market’s growth.
Competitive Landscape of Hybrid Electric Car Market
The global hybrid electric car market was highly consolidated in 2017, characterized by the presence of established companies, such as Toyota Motor Corporation and Honda Motor Company Ltd. Other significant players in the market include Nissan Motor Co. Ltd., Ford Motor Company, Hyundai Motor Company, Volkswagen AG, and General Motors Company.
Recent Strategic Developments of Major Hybrid Electric Car Market Players
In recent years, major players in the hybrid electric car market have taken several strategic measures, such as partnerships and product launches, to gain a competitive edge. For instance, in January 2018, Hyundai entered in a strategic partnership with Grab Holdings Inc., a Southeast Asian on-demand transportation and mobile payment platform. Hyundai aims to provide future mobility services to its Southeast Asian customers, which include a new mobility service platform that will utilize its eco-friendly hybrid electric car models. Also, in July 2017, Japanese automaker Suzuki Motor Corporation launched the hybrid version of its Swift model in Japan.
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