Global Hybrid Commercial Vehicle Market - Drivers, Trends, and Challenges Impacting Growth | Technavio

The global hybrid commercial vehicle market is expected to grow at a CAGR of close to 20% during the period 2017-2021, according to a new market research study by Technavio.

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Technavio has published a new report on the global hybrid commercial vehicle market from 2017-2021.  ...

Technavio has published a new report on the global hybrid commercial vehicle market from 2017-2021. (Graphic: Business Wire)

The report presents a comprehensive breakdown of the global hybrid commercial vehicle market by application, including light commercial vehicles (LCV) and medium and heavy commercial vehicle (M&HCV). The report also determines the geographic breakdown of the market in terms of detailed analysis and impact, which includes key geographies such as APAC, the Americas, and EMEA.

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Market driver: decreasing price of Li-ion batteries

Electric and hybrid vehicles are the future of vehicles. Therefore, the Li market plays an important role in keeping the cost in check. Li-ion batteries cost 70% of the total cost of the vehicle. In 2012, the cost of Li-ion batteries was six times more than that of lead acid batteries and four times more than that of NiMH batteries. The cost of the batteries has been declining since 2013. This decline is due to the increase in production. The reduction in cost was also propelled by the increase in the production of HEVs, BEVs, PHEVs, uninterruptible power supply (UPS) systems, and other non-automotive electronic appliances.

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Market trend: growing popularity of hydrogen fuel cell hybrid

Hybrid vehicles have two preferred fuel choices. The dominant one is fossil fuel, and the other is hydrogen. Hydrogen fuel cell vehicles (HFCVs) have become immensely popular after major manufacturers invested a lot in the development and promotion of the technology. The working mechanism of fuel cells is very simple and easy to understand. It generates electricity using hydrogen and oxygen with water as a by-product. HFCVs are zero emission vehicle (ZEVs) as pure water is the only waste produced. Hydrogen is considered an ideal replacement for fossil fuels as it is abundant in the universe.

According to Ganesh Subramanian, a lead analyst at Technavio for automotive manufacturing research, “Toyota was the first manufacturer to commercially manufacture an HFCV, followed by Hyundai and Honda. Globally, significant investments are being made in hydrogen refueling stations. This is expected to propel the market growth during the forecast period. International vendors like Ballard Power Systems, Daimler, Toyota, Honda, and Hyundai have invested a lot in making the technology economically feasible.”

Market challenge: high initial investment

The cost of a hybrid vehicle is 15%-30% higher than that of any conventional internal combustion (IC) engine vehicle. The biggest challenges faced by the industry include the high initial cost and the immaturity of battery technology. Hybrid commercial vehicles need a bigger battery pack to power the engine. The use of more electronic components will lead to a significant increase in the cost of the vehicle. Additionally, commercial vehicle sales in terms of units are lesser than that for passenger vehicles. This leads to higher manufacturing cost and this cost is pushed to the customer. The increase in the payback period makes the buyers reluctant to purchase hybrid vehicles.

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Key vendors in the market

  • Daimler
  • Hino Motors
  • Volvo

The global hybrid commercial vehicle market is an emerging market with few vendors investing in the market. The market is highly competitive in terms of technological advancements. Each vendor is making efforts to offer innovative and cost-effective products to gain more market share. Recent investments by governments worldwide have increased the level of competition and attracted more vendors to the game.

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