Low Emission Vehicle Market Report 2025 (Global Edition)

Market dynamics of the Low-emission vehicle market
Key Drivers of the low-emission vehicle market

• The rise in fuel prices globally has a significant impact on the increased demand for low-emission vehicles

The rise in fuel prices would increase the consumer's willingness to use e-bikes or low–emission vehicles. Customers were inclined to purchase electric vehicles and hybrid vehicles compared with fuel vehicles due to the high price of fuel so it is a major factor for the growth of the market of low-emission vehicles. Changes taken in the consumers’ travel behavior and purchase intention when oil prices increased.  The impacts of record-high gasoline prices on consumers are twofold. Firstly, adjustments in fuel prices could affect consumers' travel behavior. Secondly, factors affecting consumers' purchase intention of new energy vehicles have changed significantly. 
•    For instance, In the UK, the Department for Business, Energy & Industrial Strategy reported that motorists saw the steepest weekly increase in fuel prices in more than 18 years after Russia invaded Ukraine. Prices could go up to as high as £2.50 a litre for petrol, and £3 for diesel. This means that people are increasingly looking at more wallet-friendly ways to get around town, be it through carpooling, public transportation, or electric vehicles.
https://www.cyclingweekly.com/news/are-soaring-gas-prices-extending-the-e-bike-boom

• Government initiatives and incentives resulted in the promotion of low-emission vehicles and play a pivotal role in market expansion

Governments worldwide have been setting increasingly stringent regulations to reduce carbon emissions and promote the adoption of cleaner energy sources. The temperature rise is largely due to an increase in pollution levels, with vehicles being a major source of pollution. To prevent the rise in global temperature, governments are creating global collaborations and enacting severe emission standards To facilitate this, incentives such as tax credits, rebates, and grants have been provided to reduce the cost of EVs and make them more affordable to consumers. Over the long run, EVs will help residents of rural areas reduce those costs and minimize the environmental impact of transportation in their communities. 
•    For instance, The Federal Government has set a goal to make half of all new vehicles sold in the U.S. in 2030 zero-emissions vehicles and to build a convenient and equitable network of 500,000 chargers to help make EVs accessible to all Americans for both local and long-distance trips. 
https://www.transportation.gov/rural/ev

Restraint of the Low-emission vehicle market

• The huge cost of low-emission vehicles and the need for more extensive charging or refueling infrastructure might limit the market growth

Consumers prefer low-emission vehicles and electric vehicles with rising oil prices, however, the vehicle prices of most low-emission and electric vehicle brands also increased in 2022 compared with 2021. More car buyers intend to buy hybrid vehicles as compared to electric as their next vehicle even as the former comes at a steep premium rate. Factors like charging time, availability of charging infrastructure, and safety of battery technology will also affect this vehicle industry. The lack of charging infrastructure associated with the development of zero-emission vehicles (ZEV) has proven to be a barrier to market growth. Similarly, manufacturers require a substantial amount of capital and assets, which may stifle market expansion.
•    For instance, the prices of the Tesla Model 3 all-wheel-drive version, BYD Yuan Pro series, and Xiaopeng series have increased by 28,000 CNY, 6000 CNY, and 10,000–20,000 CNY, respectively in the high gasoline prices era.
https://www.sciencedirect.com/science/article/abs/pii/S030142152300085X
•    For instance, comparing the cost of a petrol and electric car, the price for the top-of-the-line Tata Nexon petrol costs Rs 15.6 lakh, and the price for the top-of-the-line Nexon EV is 19.2 lakh. The main reason behind the high price of EVs is the cost of the battery, which accounts for around 35 to 40% of the total vehicle cost.
https://timesofindia.indiatimes.com/auto/cars/evs-get-big-price-cuts-prices-running-cost-of-petrol-vs-electric-cars/articleshow/107687660.cms

How Did COVID-19 Impact on the Low-Emission Vehicles Market?

The COVID-19 pandemic has been tough on the economy, but it has had some dramatic effects on emissions and the transport sector. The lockdown has temporarily put the brakes on global emissions and sparked a renewable energy experiment. Initially, there was a sharp decline in sales as consumer spending plummeted due to economic uncertainty and lockdown measures. However, as the pandemic progressed, there was a shift in consumer behavior towards more sustainable and environmentally friendly options. This led to a resurgence in interest in low-emission vehicles, particularly electric vehicles, as people became more conscious of their environmental footprint and sought alternative transport solutions. Despite, the challenges posed by the pandemic, the long-term outlook for the low-emission vehicle market remains positive. As awareness of climate changes and air quality issues continues to grow, and as technology advances and becomes more affordable the demand for low-emission vehicles is expected to increase steadily in the forecast period.
•    For instance, Electric and hybrid cars gained traction among European buyers in April despite coronavirus lockdowns stalling the market, suggesting carmakers are likely to avoid potential fines, The Tesla Model 3 was the best-selling electric car in Europe in April 2020.
https://www.theguardian.com/business/2020/jun/02/electric-carseurope-covid-19-emissions-reductions

Opportunities in the Low  Emission Vehicle Market

• Technological advancements in low-emission vehicles are an opportunity for market growth

Automobile manufacturers are focusing on the development of improved low-emission vehicle (ZEV) systems that are expected to emit fewer pollutants while costing less. Automobile companies are focusing on the production of advanced low-emission vehicle systems that are expected to have lower particular emissions at relatively lower costs. Companies have also started producing downsized engines to be implemented in vehicles as smaller engines help achieve the upcoming BHARAT STAGE VI emission norms, as smaller engines help meet pollution standards. The compactness and low cost of these engines add another dimension to their utility.
For instance, Robert Bosch GmbH is supporting the electrification of transportation ranging from bicycles to cars. The new technology introduced by Bosch in 2021 in electric motors and inverters with silicone carbide technology offers efficiency in the system by up to 97%.
https://us.bosch-press.com/pressportal/us/en/press-release-15297.html

Technological advancements like EVs can transform the Low Emission Vehicle Market.EVs are more efficient and environment-friendly than fuel-based vehicles. The adoption of Electric vehicles significantly reduces the reliance on fossil fuels. It reduces carbon emissions and carbon footprints from the environment. 

For instance, China raises the goals of EV penetration to complete their target by 2027. XX% of passenger vehicles sold in China were electric vehicles that contributed to sales. This was higher than XX million EVs sold than the rest of the countries. Therefore, China is the world’s largest market of Electric vehicles. For instance, the news stated that China is the biggest player in the EV market. China’s support to EVs can drive forces such as the reduction in battery costs and the adoption of EVs worldwide. Therefore, technological advancements in low-emission vehicles are an opportunity for market growth.

The potential buyers of low-emission vehicles need to be informed about the benefits of low-emission vehicles and the evolving landscape of sustainable transportation. The global automotive low-emission vehicle market is undergoing a significant transformation, with a shift towards electric and hybrid technologies, supported by governmental initiatives and growing awareness of environmental concerns. The government initiatives aimed at encouraging the production and consumption of zero-emission vehicles and low-emission vehicles have resulted in the public sectors and institutions adopting electric vehicles in their daily operations.
 

Frequently Asked Questions