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Automotive Natural Gas Vehicle Market Analysis

ID: MRFR//4295-HCR | 100 Pages | Author: Swapnil Palwe| April 2024

A lot of cars and trucks run on natural gas, like LNG or CNG compressed natural gas. These cars use a different kind of fuel. Natural gas cars work the same way that diesel cars do. The gas in an NG car is stored in the gas tank, which is also called a cylinder. This tank is in the back of the car most of the time. Through fuel pipes, the high-pressure gas from the fuel tank gets to the combustion chamber. The fuel and air are then squished together in the combustion tube. A spark plug starts the fire. A natural gas car can also get good gas economy.
Natural gas is becoming more popular around the world as an alternative power. It is simple to get, makes cars cleaner, and costs less than regular fuels like gasoline and diesel. LNG cars are becoming more popular because more and more businesses need different types of fuel. This is why the shipping business needs more cars that run on LNG.
The fact that gas and oil prices aren't stable and are hard to guess is a big reason why NGVs are becoming more popular. When the worth of the U.S. dollar changes, more people want to buy and sell oil, and energy-hungry businesses like power, transportation, and production grow. All of these things hurt the oil and gas business's finances. The price of crude oil is expected to change a lot because of these things. Because of this, the market for NGV cars is expected to grow a lot over the next few years. In the U.S., more shale gas is being dug up, which means there is more natural gas on the market. Since 2008, natural gas sources and shales have grown quickly, and new ways to dig have been made quickly, like fracking. This is what made the price go up so much. Because of this, gas costs for houses and businesses have gone down since 2008.
A lot of different programs and projects are being started by governments and leaders all over the world to protect the climate. Several groups are working to get cars to use fuels other than gasoline and diesel. These include the National Green Tribunal (India), the European Green Vehicles Initiative (EGVI), the National Climate Change Plan of the UAE 2017–2050, and the Sustainable and Livable Cities Initiative (SLCI) of China, India, and Brazil.
What about COVID-19? It has slowed down the production of cars because it has been so bad for the world economy. The pandemic is making things hard in many areas of business, politics, and culture. In some ways, this is likely to slow the growth of the market. Things aren't getting made as much because of the spread, which has messed up the supply system. Because of the spread, fewer people are buying both personal and work cars. This has changed the market for NGVs in the car business.

Covered Aspects:

Report Attribute/Metric Details
Segment Outlook Fuel Type, Vehicle Type, and Region

Automotive Natural Gas Vehicle Market Overview:

Automotive Natural Gas Vehicle Market  Size was valued at USD 12.8 Billion in 2022. The automotive natural gas vehicle market is projected to grow from USD 13.6 Billion in 2023 to USD 21.6 Billion by 2032, exhibiting a compound annual growth rate (CAGR) of 6.0% during the forecast period (2023 - 2032). The players in the transportation industry are adopting liquefied Natural Gas (LNG) trucks due to the increased need for alternative fuel alternatives in the transportation sector. 

As a result, the transportation sector is seeing an increase in demand for LNG vehicles. Additionally, it is anticipated that demand for natural gas vehicles (NGVs) will increase over the forecasted period due to the expanding government initiatives to develop natural gas distribution infrastructure.

Automotive Natural Gas Vehicle Market Overview

Source: Secondary Research, Primary Research, MRFR Database and Analyst Review

Automotive Natural Gas Vehicle Market Trends

  • Increased pricing and volatile and disruptive petrol and diesel pricing drive the market growth.

One of the key elements influencing the adoption of NGVs is the volatile and disruptive pricing structure associated with petrol and diesel. Due to several variables, including shifting oil supply and demand and the expansion of energy-intensive industries like transportation, electricity, and manufacturing, the oil and gas industry is currently experiencing economic instability. It is anticipated that these elements will cause crude oil prices to fluctuate. As a result, the automotive NGV market is projected to expand significantly during the next few years. The natural gas supply has increased due to increased shale gas extraction across the United States. This substantial increase can be attributed to the explosive development of unconventional gas sources and shales since 2008 and the advancement of modern drilling techniques like fracking. As a result, household and business customers' costs of natural gas have fallen since 2008. Thus, driving the automotive natural gas vehicle market revenue.

Government rules governing environmental preservation and greenhouse gas (GHG) emissions are becoming stricter globally. As a result, natural gas is increasingly used in various applications across numerous industries. Governmental organizations and authorities worldwide are implementing several initiatives and programs to protect the environment. For instance, the European Green Vehicles Initiative (EGVI), the National Green Tribunal (India), the National Climate Change Plan of the UAE 2017-2050, the Natural Gas STAR Programme and the Methane Challenge Programme by the Environmental Protection Agency (US), the Sustainable and Livable Cities Initiative (SLCI) of China, India, and Brazil, and the National Green Tribunal (India) are all promoting the use of alternative fuels, such as compressed natural gas (CNG) and LNG, in the automotive industry.

Automotive Natural Gas Vehicle Market Segment Insights:

Automotive Natural Gas Vehicle Fuel Type Insights

The automotive natural gas vehicle market  segmentation based on fuel type includes CNG and LNG. The CNG segment accounted for over 95% of the volume share in 2022, which will continue to grow at a constant CAGR from 2023 to 2032. The rise in government measures to reduce rising vehicle emissions and protect the environment is responsible for the CNG market's expansion. Because CNG is nontoxic, less environmental harm results. The Federal Motor Vehicle Safety Standards 303 and 304 (US), which guarantee the precise requirements for fuel systems' integrity employing CNG fuel systems of dedicated CNG and dual-fuel CNG automobiles, are also compliant with CNG fuel systems. 

The LNG market is anticipated to grow fastest between 2023 and 2032. The category is primarily encouraged by favorable government policy, the price difference between diesel and LNG, and the growing logistics sector supported by stronger economic growth. The main force behind the adoption of LNG is the road transport sector. The adoption of LNG Heavy-Duty Trucks (HDT) is higher than other types of LNG vehicles. Considering numerous nations' research and development efforts, LNG has enormous potential as an automotive fuel.

Figure 1: Automotive Natural Gas Vehicle Market  by Fuel Type, 2022 & 2032 (USD Billion)

Automotive Natural Gas Vehicle Market  by Fuel Type, 2022 & 2032

Source: Secondary Research, Primary Research, MRFR Database and Analyst Review

Automotive Natural Gas Vehicle Type Insights

Based on the vehicle type, the automotive natural gas vehicle market segmentation includes light-duty vehicle, medium-duty vehicle, and heavy-duty vehicle. Over 87% of the total volume 2022 came from the light-duty vehicle segment. The excessive emissions of pollutants and GHG produced by the combustion of fossil fuels, such as coal, petrol, and diesel, are worsening air quality throughout the world. People are more likely to adopt alternative fuel sources and related technologies as a result of the deteriorating environment and air quality in nations like China, India, Saudi Arabia, Iran, and Pakistan.

Automotive Natural Gas Vehicle Regional Insights

By region, the study provides market insights into North America, Europe, Asia-Pacific and the Rest of the World. With a projected considerable CAGR during the forecast period, the Asia Pacific region, which held the largest global market share at more than 46% in 2022, is expected to maintain its dominance. The region's rising passenger automobile production and sales are to blame for this expansion. Around 50% of passenger automobile sales in APAC were in China. Due to the expansion of the natural gas infrastructure in nations like India, China, and Pakistan, the area has adopted NGVs at the highest rate. For instance, the Ministry of Petroleum and Natural Gas created the City Gas Distribution (CGD) policy in India. According to the plan, the government would upgrade the CNG network nationwide.

Further, the major countries studied in the market report are The US, Canada, German, France, the UK, Italy, Spain, China, Japan, India, Australia, South Korea, and Brazil.

Figure 2: Automotive Natural Gas Vehicle Market  Share By Region 2022 (USD Billion)

Automotive Natural Gas Vehicle Market  Share By Region 2022

Source: Secondary Research, Primary Research, MRFR Database and Analyst Review

Europe's automotive natural gas vehicle market accounts for the second-largest market share. Leading market competitors are making significant investments in R&D to diversify their product offerings, which will spur further growth in the market for automotive natural gas vehicles in Europe. Further, the German automotive natural gas vehicle market held the largest market share, and the UK automotive natural gas vehicle market was the fastest-growing market in the European region.

North America is expected to grow at a significant growth rate due to increasing demand of lower emission powertrains and uncertainty around petrol and diesel prices in North America are further increasing the demand of natural gas vehicles.

Automotive Natural Gas Vehicle Key Market Players & Competitive Insights

Leading market players are investing heavily in research and development to expand their product lines, which will help the automotive natural gas vehicle market grow even more. Market participants are also undertaking various strategic activities to expand their global footprint, with important market developments including new product launches, contractual agreements, mergers and acquisitions, higher investments, and collaboration with other organizations. The automotive natural gas vehicle industry must offer cost-effective items to expand and survive in a more competitive and rising market climate.

Manufacturing locally to minimize operational costs is one of the key business tactics manufacturers use in the global automotive natural gas vehicle industry to benefit clients and increase the market sector. The automotive natural gas vehicle industry has offered some of the most significant advantages in recent years. Major players in the automotive natural gas vehicle market include Dongfeng Motors Group Limited (China), Beiqi Foton Motors Group Limited (China), AB Volvo (Sweden), Daimler AG (Germany), Shaanxi Automobile Group Limited (China), Landi Renzo (Italy), CNH Industrial NV (The Netherlands), and Westport (Canada).

State-owned Chinese automaker Dongfeng Motor Corporation Ltd. has its headquarters in Wuhan, Hubei. With automobile sales of 5.37 million, 3.50 million, 3.28 million, and 2.30 million in 2021, respectively, it is now the third largest of China's "Big Four" state-owned car manufacturers, which include SAIC Motor, FAW Group, Dongfeng Motor Corporation, and Changan Automobile.

 Through its subsidiary Dongfeng Motor Group, the firm develops and markets vehicles under its brands, including Venucia, Fengdu, Voyah, Aeolus, and Frothing, as well as under foreign-branded joint ventures, including Dongfeng-Honda, Dongfeng-Nissan, and Dongfeng-Peugeot Citron. 79% of sales in 2021 were made by cars of foreign brands. Under some of the abovementioned brands, including specifically created EV brands like Voyah, it also manufactures electric vehicles.

Swedish multinational industrial company, The Volvo Group, is based in Gothenburg. Volvo offers financial services in addition to manufacturing, distributing, and selling trucks, buses, and construction equipment. It also provides marine and industrial drive systems. With its subsidiary Volvo Trucks, it was the world's second-largest producer of heavy-duty trucks in 2016. Up until 1999, when it was sold to Ford Motor Company, Gothenburg-based Volvo Cars was a subsidiary of AB Volvo. Volvo Cars has been a part of the Geely Holding Group automotive portfolio since 2010. Both AB Volvo and Volvo Cars use the Volvo emblem and work together to maintain the Volvo Museum in Sweden. The company was first listed on the Stockholm Stock Exchange in 1935, and from 1985 to 2007, it was a component of the NASDAQ indexes. Although the ball bearing manufacturer SKF founded Volvo in 1915, the Volvo Group and Volvo Cars considered launching the company's first automobile series, the Volvo V 4, on April 14, 1927, to mark the beginning of their respective histories.

Key Companies in the Automotive Natural Gas Vehicle Market Include

  • Dongfeng Motors Group Limited (China)

  • AB Volvo (Sweden)

  • BeiqiFoton Motors Group Limited (China)

  • Shaanxi Automobile Group Limited (China)

  • Daimler AG (Germany)

  • CNH Industrial NV (The Netherlands)

  • Landi Renzo (Italy)

  • Westport (Canada).

Automotive Natural Gas Vehicle Industry Developments

February 2021: To improve its standing among companies offering mobility solutions based on natural gas and renewable natural gas, Agility Fuel Solutions announced a merger with Hexagon Mobile Pipeline.

September 2020: Westport Fuel Systems Inc. and its joint venture partner, UNO MINDA Group, reached a firm agreement. The deal allowed the business to cater to the expanding Indian NGV market more effectively.

Automotive Natural Gas Vehicle Market Segmentation:

Automotive Natural Gas Vehicle Fuel Type Outlook

  • CNG

  • LNG

Automotive Natural Gas Vehicle Type Outlook

  • Light-Duty Vehicle

  • Medium-Duty Vehicle

  • Heavy-Duty Vehicle

Automotive Natural Gas Vehicle Regional Outlook

  • North America

    • US

    • Canada

  • Europe

    • Germany

    • France

    • UK

    • Italy

    • Spain

    • Rest of Europe

  • Asia-Pacific

    • China

    • Japan

    • India

    • Australia

    • South Korea

    • Australia

    • Rest of Asia-Pacific

  • Rest of the World

    • Middle East

    • Africa

    • Latin America

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