AUTOMOTIVE POWERTRAIN MARKET SIZE:

The Automotive Powertrain Market size was valued at USD 908.14 billion in 2023 and is expected to reach USD 2455.30 billion by 2032, growing at a CAGR of 11.8% over the forecast period 2024-2032.

Automotive Powertrain Market growth is highly driven by rapid technological development and environmental regulations that increasingly evolve consumer preferences. Amid such fundamental shifts in the automotive industry toward sustainability and efficiency, powertrain systems stand out brightly as the answer to improvement of vehicle performance, reduction of emissions, and emerging demands for hybrid and electric vehicles. The leading parts of the powertrain are the engines, transmissions, driveshafts, and differentials. Major components about a vehicle and directly involved in any issues concerning fuel efficiency or emissions and in general and specific driving experiences.

The automotive powertrain market is driven by the demand for increasing sales of electric vehicles as well as hybrid electric vehicles

Over 10% of vehicle sales in new vehicles in the United States by 2023 constituted electric or hybrid models indicator of shifting consumer attitudes towards greener technologies. Additionally, stricter emissions standards caused the carbon dioxide (CO₂) emissions from new light-duty vehicles to drop by 30% by 2024. This resulted in manufacturers competing to come up with innovative powertrain solutions to meet these stringent standards. It is expected that adoption of advanced powertrain technologies, such as turbocharged engines and dual-clutch transmissions, will pick up. It is said over 60 % of all new vehicles may see some form of electrification in 2030.

Automotive Powertrain Market Dynamics

KEY DRIVERS:

• The Rise of Electrification and Hybridization

The automotive powertrain market is highly shifting towards electric and hybrid vehicles with more investment being done by the manufacturers in advanced electric powertrains, battery technologies, and hybrid systems.

New cars sold electric or hybrid, a very high share compared to those sold in 2020, estimated to be higher than 40% across the world, up 6%. That will expand the electric powertrain business to nearly USD 300 billion. Other significant investments involve battery technology as well as EV components reaching over USD100 billion every year as of 2030. For the same time frame by the end of the decade, an electric vehicle, on average, will surpass 500 miles and become considerably more appealing. Car makers continue to advance toward a more electrified fleet; meanwhile, demand for hybrid systems and high-performance batteries picks up speed, emphasizing how the automobile industry will define its future with electrification.

• Navigating Stringent Emission Regulations

For long, governments around the globe have been enforcing strict emissions standards to reduce air and climate pollution. This gives an automobile company no way but to innovate and follow cleaner powertrain technologies through which growth in fuel efficiency and low-emission system development is achieved.

Demand for cleaner automotive technologies is well-driven by stringent emission regulations that help to combat climatic change and improve atmospheric quality. The U.S. Environmental Protection Agency introduced new rules forcing automakers to produce vehicles with 55 mpg as an average fuel economy in 2026, as compared with the current 40mpg target. This change is part of a broader goal to cut greenhouse gas emissions from passenger vehicles by nearly 10 billion tons over the lifetime of these vehicles. By 2032, electric or plug-in hybrid models would comprise about 67% of new cars sold in the United States. Such regulations will force an investment wave in electric powertrains and cleaner technologies. Manufacturers will be forced to come up with innovative powertrain solutions that comply with environmental standards which are evolving. With increasingly stringent emission standards, the automotive powertrain market to witness a dramatic shift toward fuel efficiency and low emissions.

RESTRAIN:

• Navigating High Development and Manufacturing Costs

Higher costs of production of the battery, and new manufacturing processes would make such a transition very expensive for an automaker, especially the small ones, to get profitable in due time. The speed of innovation and the adoption of new technologies might also be slowed down.

High development and manufacturing costs of advanced powertrain technologies are expected to challenge the automotive sector through June 2024. For instance, it would cost around USD 150 per kilowatt-hour to power an electric vehicle. That is however still above their internal combustion engine counterparts for which it is estimated to come down to about USD 100 per kWh to get to price parity. The auto majors would have to spend around USD 300 billion by 2030 for the development and manufacturing of electric vehicles based on growing consumer demand and regulations. It is at this critical period that such rising costs make the smaller manufacturers disadvantageous, as they constitute just about 20% of the automotive market. In addition, the manufacturing cost of electric vehicles is 30% higher compared to traditional vehicles. This is mainly because of R&D and manufacturing costs, which deter profitability and slow the pace of innovation in cleaner automotive technologies. The financial burden of transitioning to electric and hybrid powertrains continues to be a critical restraint on the growth of the automotive powertrain market.

Automotive Powertrain Market Key Segment

BY PROPULSION TYPE

In 2023, the Automotive Powertrain Market was dominated by the ICE segment, which accounted for a significant revenue share of 78.30%. Automakers are now improving the ICE technologies to reduce emissions and increase efficiency. For example, Ford recently unveiled the latest EcoBoost engine series with advanced turbocharging and direct fuel injection technologies in a bid to achieve better fuel economy while maintaining strong performance. Until March 2023, the ICE segment dominated the Automotive Powertrain Market by capturing a massive share of 78% in the global market. In 2023, about 82 million ICE vehicles were sold globally. This has established that these are not being replaced at the rate they are losing market as people are beginning to gain more interest in electric vehicles.

The electric vehicle (EV) segment is likely to show tremendous growth. It has the fastest CAGR during the forecast period, at 13.56%. This will represent a more significant shift in consumer behavior and increased pressure from regulators to look towards more environmentally friendly alternatives in transportation. Tesla also appears to be continuing its trend of releasing a new variant latest Model Y, which features advanced battery technology to improve range and efficiency.

BY VEHICLE TYPE

Passenger Vehicle remains the biggest contributor to the Automotive Powertrain Market, with an impressive 68% market share of the total revenue generated in 2023. The growth in personal mobility needs, advanced vehicle features, and improvements in powertrain technologies were some of the reasons behind its strong performance. Most big automobile manufacturers are introducing new models or upgrading the already existing ones to meet consumer demand. For example, Toyota introduces a new Camry generation with improved hybrid technology in terms of superior fuel efficiency and reduced emissions. As of January 2024, the Passenger Vehicle segment leads the Automotive Powertrain Market, accounting for 68% of sales. In 2023, some 66 million passenger vehicles were sold worldwide, a rise of about 3 million units from last year's sales figure of 63 million units. Growth is testimony to the continuous demand from customers for personal mobility solutions; these are driven by improving powertrain technologies and other new features.

Commercial Vehicle is expanding very fast as of now with its fastest compound annual growth rate at 13.28% by the end of the forecast period. This is because freight movement and urbanization are on the rise, and logistics technologies are progressing. Ford recently launched the all-electric E-Transit van for commercial fleets aiming to save on fuel and emission costs. Another recent innovation is Mercedes-Benz's eActros, a completely electric truck designed for urban delivery, with grounds in sustainability and efficiency.

Automotive Powertrain Market Regional Analysis

Asia Pacific region emerged as the dominant player in the Automotive Powertrain Market, capturing an estimated market share of approximately 48% in 2023 due to rapid industrialization, an expansive middle class, and great investments in automotive technology.  The largest growth for EV adoption comes from China, which, in its own right, accounted for around 60% of the global market share selling over 6 million electric vehicles in the same period. The region also exhibited an impressive expansion of public charging infrastructure with more than 1.5 million charging points installed in the Asia Pacific to further reinforce the shift towards electric powertrains. In addition, the electric two-wheeler markets in the region further expanded with more than 30 million units sold. This was further evidence of a trend for sustainable mobility solutions. Continuation investment in battery technology and manufacturing capabilities in Asia Pacific, especially in China, Japan, and South Korea, helped maintain Asia Pacific's lead in the landscape of the automotive powertrain. With continued innovation and its expanded electric vehicle offerings, it continues to play a key role in shaping the future of the global Automotive Powertrain Market.

European region emerged as the fastest-growing market in the Automotive Powertrain sector, with an estimated CAGR of 14.10% in the forecasted period 2024-2032. There are various reasons for this high growth, including stringent emissions rules, rising demand from consumers for electric and hybrid vehicles, and enormous investment in sustainable automotive technologies. The growth has been provided by the commitment of the European Union towards reducing the greenhouse gas emission, by 55% by 2030 against 1990 levels. Such a scenario has motivated automobile companies to innovate and use cleaner powertrain technologies. Volkswagen has promised itself a top position in the manufacturing of electric cars and will invest in more than 70 new pure electric models by 2030. Its ID family of electric vehicles, including its first ID.4 SUV model, indeed found some serious marketability due to the environmentally friendly choices available.

Key players 

Some of the major players in the Automotive Powertrain Market are:

• BorgWarner Inc. (Turbochargers, Electric Drive Modules (EDMs))

• Continental AG (Transmission Control Units (TCUs), 48V Mild Hybrid Systems)

• Magna International Inc. (Electric Axle Drive Systems, Dual-Clutch Transmission Systems)

• ZF Friedrichshafen AG (8-Speed Automatic Transmissions, Electric Axles)

• Allison Transmission Holdings Inc. (Fully Automatic Transmissions for Trucks, Electric Axle Series (eGen Power))

• Aisin Seiki Co., Ltd. (Automatic Transmissions (AT), Electric Water Pumps)

• Denso Corporation (Common Rail Fuel Injection Systems, Hybrid Inverters)

• GKN Automotive Limited (Electric Drive Units (eDrive), Torque Vectoring Systems)

• Valeo SA (48V Electric Motors, Dual Dry Clutch Systems)

• Schaeffler AG (eAxles, Centrifugal Pendulum Absorbers (CPA))

• Hyundai Transys (Automatic Transmissions, Integrated Power Modules)

• JATCO Ltd. (Continuously Variable Transmissions (CVTs), Hybrid Transmission Systems)

• Eaton Corporation (Variable Valve Actuation Systems, Superchargers)

• AVL List GmbH (Engine Control Units (ECUs), Hybrid Powertrain Systems)

• Ricardo plc (Transmission Systems, Electric Drive Systems)

• Marelli Holdings Co., Ltd. (Electric Compressors, Integrated Thermal Management Systems)

• Mitsubishi Electric Corporation (Electric Power Steering Motors, Inverters for EVs)

• NIDEC CORPORATION (Electric Motors for EVs, In-Wheel Motor Systems)

• Robert Bosch GmbH (Engine Management Systems, Electric Drive Units)

RECENT TRENDS

• October 2024, Horse Powertrain Limited has affirmed a novel transmission technology that helps improve the efficiency and effectiveness of electric vehicles. In this mobility project, innovation would be constructed further to support transportation throughout the entire spectrum. This is even more critical since energy management has now become all the more crucial as more automotive companies have started focusing on the production of even more electrified powertrains production for improve the capability of their vehicle and their performance.

• June 2024: Aramco announced a strategic investment to acquire a 10% equity interest in Horse Powertrain Limited. The investment is part of the portfolio diversification strategy by Aramco and further expansion into the automotive powertrain sector, particularly innovative technologies that support the transition to more sustainable energy sources. The partnership will facilitate joint research and development on advanced powertrain technologies.