Global Alternative Fuel Vehicles Market to Grow at a CAGR of 11.6% During the Period 2024-2032, Driven by Regulations Enforcing Decreased Emissions

Efforts to minimise reliance on fossil fuels, cut oil imports, and seek and develop cleaner sources of energy to power vehicles are likely to drive the global alternative fuel vehicles market. Individual customers are also showing greater interest in such automobiles. While North America and Europe are key markets, the market is increasingly spreading to developing countries like India. Europe and the United States are on track to phase out combustion engines in passenger vehicles by 2035. The first such ban will take effect in Norway in the beginning of 2025. It is noteworthy that in 2021, sales of electric cars accounted for over 60% of all vehicle sales in Norway. By 2035, all European Union countries will have phased out the sale of petrol and diesel passenger cars. Specific countries, such as Belgium, are implementing previously agreed-upon speedier approaches in some areas, while several Western European countries have set 2030 as a deadline. Further, all signatories to the COP26 climate agreement, including the United States and China, seek to ban combustion passenger automobile sales by 2035. Even in countries like India, governments are making efforts to increase the usage of alternative fuels and reduce carbon emissions.

Such regulations and prohibitions seek to phase out combustion cars running on the roads. However, the gradual phasing out will take place as infrastructure moves towards non-combustion vehicles. According to projections, alternative fuel vehicles are expected to explain over 17 percent of the U.S. domestic passenger fleet, and 11 percent of the commercial vehicle fleet by 2040. While electric vehicles are likely to account for majority of growth in alternative fuel passenger vehicle sales, alternative fuel commercial vehicle sales are expected to be more robust in the natural gas market. Evidently, electric vehicles are currently the most obvious and popular non-combustion vehicle option. The Washington DC Auto Show in 2022 placed a special emphasis on displaying electric vehicles, reflecting the growing global popularity of electric vehicles. The event also demonstrated that the market for electric vehicles in the United States was growing.

Examples of alternative fuels include biodiesel, electricity, ethanol, hydrogen, natural gas, and propane. Other alternative fuels include biobutanol, dimethyl ether, methanol and renewable hydrocarbon biofuels (renewable diesel, renewable gasoline, and sustainable aviation fuel). Examples of alternative fuel vehicles include Fuel Cell Electric Vehicles (FCEVs), Natural Gas Vehicles (NGVs) and Propane Vehicles.

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Key Findings of the Report:

• Governments across the world are enforcing regulations to reduce emissions and promote cleaner fuels. This is expected to drive the market.
• While North America and Europe are expected to be major markets. Developing economies like China and India are likely to stimulate the market.
• The growing adoption and popularity of electric vehicles is expected to drive the market.

Market Analysis by Fuel Type, Vehicle Type, and Region:

• By fuel type, the market is segmented into Compressed Natural Gas (CNG), Hydrogen, Electric, and Others.
• By vehicle type, the market is classified into Passenger Vehicles, Light Commercial Vehicles, and Medium and Heavy-duty Commercial Vehicles.
• By region, the market is segmented into North America, Europe, Asia Pacific, Latin America, and Middle East and Africa.

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