For decades, the traditional internal combustion engine (ICE) powertrain has been the powertrain of choice in vehicles. However, the industry has started to diversify its powertrain portfolio, and hybrid electric vehicles have become the first alternative to pure ICE vehicles. According to International Energy Agency, the number of electric vehicles (PHEV and BEV) on the road across the globe reached 2 million units in 2016 from around 160 thousand in 2012. Additionally, factors such as potential fuel saving with the adoption of mild hybrids and hybrids and incentives for the adoption of electric & hybrid vehicles are driving the growth of the hybrid system market. According to the MarketsandMarkets analysis, the Hybrid System Market is projected to grow at a CAGR of 10.79% from 2017 to 2022, to reach USD 40.99 billion by 2022.
The rapid adoption of the hybrid technology in regions such as Europe can be attributed to the stringent Euro VI emission regulations implemented by the EU, which have a tailpipe emission reduction limit. Rising concerns about carbon emissions by vehicle exhausts have led to the implementation of an increasing number of environmental regulations. These regulations are aimed at reducing vehicle emissions and decreasing the harmful effects of emissions on human health and the environment. According to the International Council on Clean Transportation (ICCT), the CO2 emission regulations for new passenger cars in Europe and the US were set at 118g CO2/km and 160g CO2/km in 2015, respectively. The proposed CO2 emission regulations for 2020 for a passenger car in Europe and US are 99g CO2/km and 116g CO2/km, respectively. The NOx emission limit has been set at 0.08g/km in Euro 6 as compared to 0.018g/km in Euro 5. The CO2 emission regulations for passenger car fleet in Europe and US were set at 130g CO2/km and 182g CO2/km, respectively in 2015. These would be revised to a proposed 95g CO2/km and 150g CO2/km, respectively. All these regulations will fuel the demand for EVs and hybrid vehicles. In addition, government subsidies and tax benefits for BEVs will also drive the growth of electric vehicles, which would, in turn, trigger the growth of the hybrid system market.
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With the increase in vehicle electrification trends, the automotive systems have shifted from manual to electric. With advancements in technology, components such as turbochargers and air conditioning compressor would also be electrified. To meet this increase in electrification trends, the 48V architecture or mild hybrid segment is projected to be the highest growing vehicle segment in the hybrid system market. The 48V mild hybrid segment is witnessing demand as the cost of conversion of conventional ICE vehicles to full hybrid or plug-in hybrid vehicles is cheaper than the cost of building a battery charging infrastructure for PHEV and BEV. Most of the benefits of hybrid or plug-in hybrid vehicles can be achieved by 48V mild hybrid vehicles at a fraction of the cost. Automotive manufacturers have started focusing on the manufacturing of mild hybrid vehicles as they offer a cheap solution between full hybrid and ICE vehicle.
The plug-in charging system segment is projected to witness the highest growth during the forecast period. The growth of this segment can be attributed to the various initiatives by government bodies to improve EV charging infrastructure across the world. The growth can also be attributed to high growth projections of BEVs and PHEVs in countries such as China, which has an ambitious plan of going all electric by 2025. Both these vehicle types use a plug-in charging system. Hence, this system is expected to experience the highest growth during the forecast period.
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