According to a new report published by Allied Market Research, titled, “Ethanol Vehicle Market Share" was valued at $564.3 billion in 2021, and is estimated to reach $1,317.6 billion by 2031, growing at a CAGR of 9.1% from 2022 to 2031.
North America dominates the market, in terms of revenue, followed by LAMEA, Europe, and Asia-Pacific. However, on the basis of forecast analysis, Asia-Pacific is expected to lead during the forecast period, due to surge in technological innovations in automobile industry, increase in focus by manufacturers in significant pressure from governments and society to modify their working practices, culture, and products.
The concept of ethanol vehicle is typically attributed to the transportation options that use ethanol blend to enhance vehicle’s performance and make engine efficient to give the best performance. The best use of ethanol is blended with gasoline. However, the quantity of ethanol required is 10%, and 90% is gasoline. The blend of ethanol helps to increase the life of the engine. Automakers recommend a particular quantity of ethanol to make engine performance smooth and long lasting. Hence, the shift in the focus from petroleum-based vehicles to alternative fuel-based vehicles such as ethanol-based vehicles and the increasing focus of governments on ethanol-based vehicles due to concerns regarding greenhouse gas emissions are expected to foster market growth over the forecasted period. For instance, the Environmental Protection Agency (EPA) finalized federal greenhouse gas (GHG) emissions standards for passenger cars and light trucks in the U.S. through 2026. The final standards leverage advances in clean car technology to unlock $190 billion in net benefits to Americans, including reducing climate pollution, improving public health, and saving drivers money at the pump.
In addition, the ethanol vehicle market has witnessed significant growth in recent years, owing to the increased demand for improved vehicle performance and the inclination of consumers towards environment-friendly vehicles. Furthermore, the companies operating in the market have adopted partnerships, R&D, and product launches to increase their market share and expand their geographical presence. For instance, in September 2021, Volkswagen AG revealed intentions to turn Brazil into a R&D hub for ethanol-based engines that run on gasoline or ethanol. Furthermore, increased performance and long-term viability are aspects that would help the gasoline-based ethanol vehicle market develop during the forecast period. In addition, in 2020, according to an analysis by Argonne National Laboratory, it has been found that using corn-based ethanol in place of gasoline reduces life cycle GHG emissions on average by 40%. Using cellulosic ethanol provides an even more significant benefit.
Also, adopting higher ethanol blends for more efficient engine designs gives the desired boost and is incorporated in car fuels since it is clean, renewable, abundant, and inexpensive. At present, several typical ethanol fuel combinations with more than 85% ethanol blends are in use. Above E85 ethanol fuel blends have become more popular around the world due to their higher fuel efficiency. For instance, the Indian government permitted oil marketing businesses to sell E100 flex-fuels (ethanol) for flex-fuel vehicles in March 2021. Above E85 flex-fuel engines are being used worldwide due to a rise in government support and greater fuel efficiency.
Similarly, the innovative Saab Aero X Biopower 100 Concept E100 features a V6 engine that runs entirely on E100 bioethanol. The limited edition of the Koenigsegg CCXR, a version of the CCX, is converted to run on E85 or E100, as well as standard 98-octane gasoline. And currently, the fastest and most potent flex-fuel vehicle with its twin-supercharged V8 produces 1018 hp when running on biofuel. Such enhancements in the automotive industry to develop & implement more pristine automobiles are anticipated to drive the ethanol vehicle market in the forecast period.
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COVID-19 Impact Analysis:
The COVID-19 outbreak severely impacted the automotive sector on a global level, which in turn leads to considerable drop in automotive sales. Ethanol vehicle engine manufacturers, on the other hand, have focused their efforts on developing and launching better ethanol vehicles through innovative methods. According to BP PLC, ethanol accounted for around 83% and 72% of the total fuel produced in North America and South and Central America regions, respectively. In December 2020, the German motoring association ADAC backed the proposition of doubling the existing ethanol blending percentage with petrol in car engines from 10% to 20% to reduce carbon emissions. Hence, the ethanol demand remained viable for expansion in the future, with the increasing market access in individual countries in the region.
KEY FINDINGS OF THE STUDY
The leading players operating in the ethanol vehicle market are AB Volvo, BMW AG, Daimler AG, Deere & Company, Ford Motor Company, General Motors Company, Honda Motor Co., Ltd., Mitsubishi Motors Corporation, Nissan Motor Corporation, Scania, Toyota Motor Corporation, and Volkswagen AG.
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