Automotive Powertrain Market Size, Share & Trends Analysis Report By Vehicle Type (Passenger Vehicle, Commercial Vehicle), By Propulsion Type (ICE, Electric Vehicle), By Region- Global Industry Analysis, Share, Growth, Regional Outlook and Forecasts, 2024-2033

The global automotive powertrain market size was exhibited at USD 793.00 billion in 2023 and is projected to hit around USD 3,468.23 billion by 2033, growing at a CAGR of 15.9% during the forecast period of 2024 to 2033.

Key Takeaways:

• Asia Pacific accounted for the largest market share of 62.0% in 2023.
• The Internal Combustion Engine (ICE) segment accounted for the largest share of 88.0% in 2023.
• The passenger vehicle segment dominated the market with a revenue share of 75.9% in 2023.

Automotive Powertrain Market: Overview 

The automotive powertrain market plays a pivotal role in driving the dynamics of the automotive industry. As advancements in technology reshape the landscape, the powertrain sector witnesses a continuous evolution, characterized by innovations in efficiency, performance, and sustainability. This overview delves into the key aspects defining the automotive powertrain market, offering insights into its current state, trends, challenges, and future prospects.

Automotive Powertrain Market Growth

The growth of the automotive powertrain market is propelled by several key factors. Firstly, the increasing adoption of electric powertrains, spurred by advancements in battery technology and supportive government policies promoting sustainability, is driving market expansion. Additionally, the demand for fuel-efficient vehicles is fueling innovation in powertrain design, with manufacturers focusing on lightweight materials and advanced technologies to enhance efficiency. Moreover, the integration of connectivity and artificial intelligence into powertrain systems is enabling optimized performance and diagnostics, further driving market growth. Lastly, the global push towards stricter emissions regulations is incentivizing automotive stakeholders to invest in cleaner and more sustainable powertrain solutions, driving innovation and market expansion in the process.

Automotive Powertrain Market Report Scope

Automotive Powertrain Market Dynamics

• Electrification Dynamics:

The automotive powertrain market is undergoing a profound shift towards electrification, driven by various dynamics. Advancements in battery technology, coupled with declining costs and increasing energy density, are making electric powertrains increasingly viable alternatives to traditional internal combustion engines. Moreover, stringent emissions regulations and government incentives promoting electric vehicle adoption are accelerating the electrification trend. As a result, automakers are investing heavily in the development of electric powertrain technologies, including battery electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs), and hybrid electric vehicles (HEVs).

• Integration of Advanced Technologies Dynamics:

The integration of advanced technologies into automotive powertrains is driving significant dynamics within the market. Artificial intelligence (AI), connectivity, and predictive analytics are being increasingly leveraged to optimize powertrain performance, enhance efficiency, and enable predictive maintenance. AI-powered algorithms are used to optimize engine operation, transmission shifting, and energy management in hybrid and electric vehicles, leading to improved fuel economy and driving dynamics. Additionally, connectivity enables real-time data exchange between vehicles and infrastructure, facilitating dynamic optimization of powertrain parameters based on driving conditions and environmental factors. Furthermore, predictive analytics algorithms analyze vast amounts of data generated by powertrain sensors to predict potential failures and optimize maintenance schedules, reducing downtime and enhancing reliability. 

Automotive Powertrain Market Restraint

• Cost Constraints:

One of the significant restraints facing the automotive powertrain market is cost constraints associated with the adoption of advanced technologies, particularly in the realm of electrification. Electric powertrains, despite their environmental benefits and long-term cost savings on fuel, initially require substantial investment due to the high cost of components such as batteries and electric motors. This upfront cost can deter price-sensitive consumers from purchasing electric vehicles and hinder market penetration, particularly in emerging economies where affordability is a significant concern. Additionally, the high cost of research, development, and production of advanced powertrain technologies poses challenges for automotive manufacturers, especially smaller players with limited resources.

• Infrastructure Limitations:

Another restraint hampering the automotive powertrain market is infrastructure limitations, particularly concerning electric vehicle charging infrastructure. Despite the increasing adoption of electric vehicles, the availability of charging stations remains inadequate in many regions, limiting the practicality and convenience of electric vehicles for consumers. Insufficient charging infrastructure can lead to range anxiety among potential buyers and hinder the widespread adoption of electric powertrains. Moreover, the expansion of charging infrastructure requires significant investment in terms of both capital expenditure and regulatory approvals, posing challenges for governments, utility companies, and private investors. Furthermore, the availability of renewable energy sources to power electric vehicles adds another layer of complexity to the infrastructure challenge. 

Automotive Powertrain Market Opportunity

• Expansion of Electric Vehicle Market:

One of the significant opportunities within the automotive powertrain market lies in the expansion of the electric vehicle (EV) market. With increasing environmental concerns and government initiatives aimed at reducing emissions, there is a growing demand for electric vehicles powered by advanced electric powertrains. This presents a significant opportunity for automotive manufacturers to invest in the development and production of electric powertrain components, including batteries, electric motors, and power electronics. Moreover, the shift towards electrification opens up new revenue streams and business models, such as battery leasing and energy storage solutions, further enhancing the market opportunity.

• Technological Innovation and Integration:

Another key opportunity in the automotive powertrain market lies in technological innovation and integration. As the automotive industry undergoes a digital transformation, there is a growing demand for advanced powertrain technologies that offer improved efficiency, performance, and connectivity. This presents an opportunity for automotive manufacturers, suppliers, and technology providers to collaborate and develop innovative powertrain solutions that meet the evolving needs of consumers and regulatory requirements. Additionally, the integration of emerging technologies such as artificial intelligence (AI), machine learning, and predictive analytics offers new opportunities to optimize powertrain performance, enhance diagnostics, and enable predictive maintenance.

Automotive Powertrain Market Challenges

• Regulatory Uncertainty:

A significant challenge facing the automotive powertrain market is regulatory uncertainty, particularly concerning emissions regulations and government policies. Rapidly evolving emissions standards, varying regulations across regions, and uncertainty about future policy direction create challenges for automotive manufacturers in terms of compliance and strategic planning. Meeting stringent emissions targets requires significant investment in research and development to develop cleaner and more efficient powertrain technologies. Moreover, differing regulations in various markets add complexity to product development and manufacturing processes, leading to increased costs and logistical challenges for automotive stakeholders. 

• Shift towards Electrification:

Another significant challenge facing the automotive powertrain market is the ongoing shift towards electrification. While electric powertrains offer environmental benefits and long-term cost savings on fuel, the transition from traditional internal combustion engines poses challenges for automotive manufacturers in terms of investment, infrastructure, and consumer acceptance. Electric vehicles require significant upfront investment in battery technology and electric drivetrains, leading to higher manufacturing costs and price premiums compared to conventional vehicles. Additionally, the availability of charging infrastructure and concerns about range anxiety present barriers to consumer adoption of electric vehicles, particularly in emerging markets. Moreover, the electrification trend disrupts existing supply chains and manufacturing processes, requiring automotive stakeholders to adapt to new technologies and business models.

Segments Insights:

Propulsion Type Insights

The Internal Combustion Engine (ICE) segment accounted for the largest share of 88.0% in 2023. The ICE segment consists of gasoline, diesel, and natural gas vehicles. Currently, gasoline engines are widely adopted and are projected to be replaced by diesel engines owing to the increasing difference between diesel and gasoline prices. However, the price difference between ICEs and EVs and improper charging infrastructure are the major factors that benefit the adoption of ICE vehicles. Due to these factors, component manufacturers are adopting hybrid powertrains to reduce vehicle fuel usage.

The electric vehicle segment is expected to register the highest CAGR of 28.1% over the forecast period. The slowdown in the sales of internal combustion engine vehicles and restrictions on CO2 targets have helped increase demand for electric vehicles. The mass adoption of BEVs is an effective solution to cutting emissions and reducing the total cost of ownership in the long run. Moreover, advancements in battery technology and a reduction in lithium-ion battery prices are also expected to boost the demand for BEVs over the forecast period.

Vehicle Type Insights

The passenger vehicle segment dominated the market with a revenue share of 75.9% in 2023. The need for more computer chips in the automotive industry has affected production volumes and hindered market growth. Moreover, diesel, oil, and gasoline-based passenger vehicle markets are witnessing a shift toward electric passenger vehicles owing to increasing investments by governments in EV infrastructure and tax benefits offered to consumers. For instance, in the U.S., under the Clean Vehicle Rebate Project (CVRP), eligible candidates are provided a tax rebate from the State of California on April 23, 2021.

The commercial vehicle segment is estimated to register the highest CAGR of 17.0% over the forecast period, owing to the increasing demand for a unified supply chain network connecting multiple transportation modes, including freight rail, air, express delivery services, maritime transport, and truck transport. The introduction of electric vehicles in the commercial vehicle sector and the decentralization of production activities are expected to increase the production volumes of commercial vehicles globally. Moreover, truck digitization or connected trucks is expected to offer new business opportunities for key regional OEMs, including Volkswagen (MAN & Scania), Daimler AG, and Volvo. These OEMs are expected to invest heavily in telematics solutions, which is anticipated to propel the growth of the commercial vehicle market.

Regional Insights

Asia Pacific accounted for the largest market share of 62.0% in 2023.Home to the largest automobile manufacturing nations and markets, such as India, China, and Japan. The growth in the Asia-Pacific region is mainly attributed to rising disposable income, increasing urbanization, and a highly competitive market that favors car ownership across the region. Furthermore, the sale of luxury cars known for their high speed and performance further propels the market demand for efficient powertrains.

On the other hand, Europe is projected to demonstrate growth at a significant CAGR of 16.7% over the forecast period. The region's rapidly growing market for automotive powertrains can be attributed to the growing demand for electric vehicles due to the carbon emissions laws passed by the European Union and respective national governments. The major automotive manufacturers in the region also invest a hefty amount in research and development activities aimed at producing high-performance, fuel-efficient, and low-carbon-emitting powertrains.

Recent Developments

• In July 2023, Geely and Renault Group entered into a joint venture agreement wherein each entity would hold a 50% stake in the newly formed company. The primary objective of this collaboration is to establish dominance in the market for next-generation highly efficient and hybrid powertrain solutions in response to the global demand anticipated in the forthcoming years. Renault Group and Geely aim to combine their expertise, resources, and technological advancements to address the evolving needs of the automotive industry.
• In January 2023, Tata Motors Electric finalized its acquisition of Ford India's Sanand plant on January 10, 2023. This development marks a significant step for Tata Motors Electric in expanding its manufacturing capabilities and bolstering its electric vehicle (EV) market presence. The acquisition of the Sanand plant will provide Tata Motors Electric with a state-of-the-art facility for producing electric vehicles. The plant in Gujarat, India, has a strategic location and infrastructure well-suited for efficient production operations.

Some of the prominent players in the automotive powertrain market include:

• BorgWarner Inc.
• Continental AG
• Magna International Inc.
• Marelli Holdings Co., Ltd.
• Mitsubishi Electric Corporation
• NIDEC CORPORATION
• Robert Bosch GmbH
• Schaeffler AG
• ZF Friedrichshafen AG
• VALEO

Segments Covered in the Report

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2021 to 2033. For this study, Nova one advisor, Inc. has segmented the global automotive powertrain market.

Propulsion Type

• ICE

• • Gasoline
  • Diesel
  • Natural Gas Vehicle

• Electric Vehicle

• • BEV
  • PHEV

Vehicle type

• Passenger Vehicle
• Commercial Vehicle

By Region

• North America
• Europe
• Asia-Pacific
• Latin America
• Middle East & Africa (MEA)