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Alternative Fuel Vehicles (AFV) Market Size - By Fuel Type (Electric, Biofuel), Vehicle Type (Passenger Cars, Commercial Vehicles), End User (Commercial & Fleet, Public Transportation, Government & Municipal), Regional Outlook & Global Forecast, 2023 – 2032

  • Report ID: GMI7360
  • Published Date: Nov 2023
  • Report Format: PDF

Alternative Fuel Vehicles Market Size

Alternative Fuel Vehicles Market size was valued at USD 634.5 billion in 2022 and is projected to grow at a CAGR of 10% between 2023 and 2032. Rising government investments in electric battery technology significantly propel the market growth. Government initiatives including subsidies, incentives & research funding for battery advancements drive innovation and affordability, fostering consumer confidence and ultimately accelerating market growth & adoption.

Alternative Fuel Vehicles Market

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For instance, in September 2023, French President Emmanuel Macron revealed a pioneering USD 100/month Electric Vehicle (EV) leasing initiative, exclusively for EU-made cars. By making EVs more affordable and encouraging their usage, this measure will bolster market size, boosting consumer adoption and supporting the shift toward eco-friendly transportation.

Technological advancements in EV batteries are propelling the alternative fuel vehicles market by improving battery performance, enhancing range, and reducing charging times. For instance, in June 2023, Toyota introduced an advanced EV battery technology, emphasizing a hybrid approach with Battery Electric Vehicles (BEVs), Plug-in Hybrid Vehicles (PHEVs), Hybrid Electric Vehicles (HEVs), and Fuel Cell Electric Vehicles (FCEVs).

Alternative fuel vehicles, particularly electric vehicles, often have higher purchase prices than traditional internal combustion engine vehicles. This cost disparity inhibits mass adoption as consumers face initial investment barriers despite potential long-term savings. Lowering upfront costs through incentives, subsidies, or technological advancements remains crucial in driving widespread AFV adoption.

COVID-19 Impact

COVID-19 negatively impacted the alternative fuel vehicles market due to economic uncertainty, disrupted supply chains, and decreased consumer spending. Pandemic-induced financial strains led to reduced purchasing power, impacting AFV sales. Furthermore, global lockdowns and travel restrictions affected production and distribution, causing a slowdown in AFV adoption. The uncertainty and economic challenges resulting from the pandemic hindered the market's growth and consumer acceptance of alternative fuel vehicle technologies.

Alternative Fuel Vehicles Market Trends

Diversity in alternative fuels in the AFV industry is an evolving trend due to advancements in various fuel sources. Innovations in hydrogen fuel-cell technology, natural gas, and biofuels are broadening options beyond traditional gasoline & diesel. These advancements address environmental concerns and offer diverse solutions, catering to different vehicle types & driving patterns. The development and acceptance of these alternative fuels mark a significant shift toward sustainability, encouraging the growth of varied eco-friendly transportation options.

Partnerships & collaborations between automotive manufacturers, tech firms, and various industries are accelerating advancements in AFVs. These collaborative efforts combine expertise, resources, and innovative technology to develop more efficient, eco-friendly vehicles. By leveraging diverse knowledge bases and resources, these collaborations boost the evolution of AFV technology, fostering breakthroughs in electric cars, hydrogen fuel cells, and other eco-friendly solutions. This synergy fosters rapid innovation, enhancing market offerings and accessibility for consumers.

For instance, in November 2023, KG Mobility entered into an agreement with BYD, a global EV leader, at BYD's Shenzhen, China headquarters. This collaboration involves the advancement of EV technology and market endeavors.

Alternative Fuel Vehicles Market Analysis

Alternative Fuel Vehicles (AFV) Market, By Fuel Type, 2021 – 2032, (USD Billion)

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Based on fuel type, the electric segment is poised to expand at 9% CAGR during the forecast period, due to increasing environmental consciousness and technological advancements. With rising concerns over emissions, improved battery technology, expanded charging infrastructure & government incentives, EVs are gaining momentum. Consumers are shifting toward electric options, prompting automakers to invest in EV production, thereby enhancing their presence in the market.

Alternative Fuel Vehicles (AFV) Market Share, By Vehicle Type, 2022

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Based on vehicle type, the alternative fuel vehicles market size from passenger cars segment dominated around USD 400 billion in 2022, owing to increased consumer interest in eco-friendly transportation. Advancements in electric and hybrid vehicle technology are particularly contributing to this growth. With expanding charging infrastructure, government support, and a shift in consumer preferences toward cleaner energy, passenger cars, especially electric & hybrid models, are expected to gain prominence, thereby contributing significantly to market expansion.

China Alternative Fuel Vehicles (AFV) Market Revenue, 2021 -2032, (USD Billion)

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Asia Pacific alternative fuel vehicles market accounted for 60% of revenue share in 2022, attributed to heightened environmental concerns and government support. According to the Invest India report, India has 8,738 operational public EV charging stations and 847,439 electric vehicles registered until August 2023. Rapid urbanization, increasing disposable incomes, and a focus on reducing emissions are fueling consumer interest in AFVs. With extensive investments in charging infrastructure and EV manufacturing, along with supportive policies, the region is set to witness robust growth, fostering a substantial increase in AFV adoption.

Alternative Fuel Vehicles Market Share

Major companies operating in the alternative fuel vehicles (AFV) industry are:

  • BYD Company Limited
  • Ford Motor Company
  • General Motors Company
  • Honda Motor Co., Ltd.
  • Hyundai Motor Company
  • Kia Corporation
  • Nissan Motor Corporation
  • Tesla, Inc.
  • Toyota
  • Volkswagen Group

Toyota and BYD are the prominent companies in the market. Toyota's extensive experience in hybrid technology, like the Prius, and commitment to hydrogen fuel cell vehicles. Meanwhile, BYD's expertise in electric vehicle technology, battery innovation, and strong government support in China has propelled its prominence. Both companies' unique strategies and technological advancements contribute significantly to their strong presence in the AVF market.

Alternative Fuel Vehicles Industry News

  • In October 2023, BAK Battery introduced semi-solid-state lithium batteries, offering higher energy density and safety. They possess resilience against leaks, ignition, and short circuits, enhancing safety & durability and positioning themselves as advanced & reliable energy solutions.

The alternative fuel vehicles (AFV) market research report includes in-depth coverage of the industry with estimates & forecast in terms of revenue (USD Billion) and shipment (Units) from 2018 to 2032, for the following segments:

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Market, By Fuel Type

  • Electric
    • Battery Electric Vehicles (BEVs)
    • Hybrid Electric Vehicles (HEVs)
    • Plug-in Hybrid Electric Vehicles (PHEVs)
    • Fuel Cell Electric Vehicle (FCEV)
  • Biofuel
  • Others

Market, By Vehicle Type

  • Passenger Cars
  • Commercial Vehicles
    • Vans
    • Trucks
    • Buses
    • Others

Market, By End User

  • Commercial & fleet
  • Public transportation
  • Government & municipal
  • Others

The above information has been provided for the following regions and countries:

  • North America
    • U.S.
    • Canada
  • Europe
    • UK
    • Germany
    • France
    • Italy
    • Spain
    • Netherlands
    • Nordics
  • Asia Pacific
    • China
    • India
    • Japan
    • South Korea
    • Southeast Asia
    • Australia 
  • Latin America
    • Brazil
    • Mexico
    • Argentina
  • MEA
    • UAE
    • Saudi Arabia
    • South Africa  


Authors: Preeti Wadhwani

Frequently Asked Questions (FAQ) :

The market size of alternative fuel vehicles (AFV) reached USD 634.5 billion in revenue in 2022 and is set to expand at over 10% CAGR from 2023 to 2032, owing to the increasing government investments in electric battery technology worldwide.

The passenger cars segment generated more than USD 400 billion in revenue in 2022, driven by the rising consumer interest in eco-friendly transportation coupled with the advancements in electric and hybrid vehicle technology.

Asia Pacific market accounted for more than 60% of the revenue share in 2022, attributed to the rising environmental concerns and government support.

Some of the top alternative fuel vehicle companies are BYD Company Limited, Hyundai Motor Company, Ford Motor Company, General Motors Company, Honda Motor Co., Ltd., Tesla, Inc., Kia Corporation, Nissan Motor Corporation, Toyota, and Volkswagen Group.

Alternative Fuel Vehicles (AFV) Market Scope

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Premium Report Details

  • Base Year: 2022
  • Companies covered: 15
  • Tables & Figures: 242
  • Countries covered: 19
  • Pages: 246
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