Electric Vehicle Powertrain Market Analysis

Electric Vehicle Powertrain Market Deep Dive – PESTLE, Porter, SWOT

The electric drive for cars is going through a transformational phase. The increasing demand for sustainable mobility solutions and the worldwide trend towards electrification are pushing the electric drive for cars into a growth phase. In the face of governments and consumers who are increasingly demanding a sustainable mobility, the transition from the internal-combustion engine to electric drive is gaining momentum. This shift not only affects the competition, but also the development of battery technology, electric motors and power electronics. The market's leading companies are investing heavily in research and development to improve the efficiency, performance and price of electric drive systems, as well as to overcome the challenges of charging infrastructure and range anxiety. The combination of technological progress, government support and changing consumer behavior is creating a dynamic environment that is expected to shape mobility in the coming years.

PESTLE Analysis

• Political:
  In 2022, many governments began to take measures to encourage the use of electric vehicles, and by 2035, twenty-six countries had already banned internal combustion engine vehicles. For example, the European Union imposed a reduction in the carbon dioxide emissions of new cars by 55 per cent by 2030, which had a significant impact on the market for engines. In the United States, the Bipartisan Highway Act of 2025 allocated $US 7.4 billion to the installation of a charging network, with the aim of encouraging the use of electric vehicles and their powertrains.
• Economic:
  In 2022, the global economy was on the rise. It was a time of great investment in electric vehicles, with about $120 billion going into EV projects, including development of powertrains. Rising fuel prices had prompted consumers to think about EVs. And the cost of lithium-ion batteries, a crucial component of EV powertrains, had fallen to $132 per kilowatt-hour from $137 in 2021.
• Social:
  A survey of the public showed that in 2022, of the people who might buy a car, three-quarters would prefer an electric car to a conventional one. In part this is due to an increased awareness of the environment and a desire for sustainable transport. Also, the number of recharging points grew from a few thousand to over 100,000 in the United States alone, making it easier for consumers to make the transition to electric cars, and influencing their buying decisions.
• Technological:
  The market for electric vehicles has developed very rapidly, with a battery energy density increase of approximately five percent by 2022, which enables longer ranges and better performance. Companies are investing a lot in research and development, an estimated 15 billion dollars on battery technology alone. In addition, the development of solid-state batteries, which offer better safety and performance, has also been gaining momentum, with several manufacturers launching prototypes by the end of 2023.
• Legal:
  In 2022 a great many legal regulations were drawn up to stimulate the electric-car market. For example, California's “Clean Car II” law required that by 2035 all new passenger-car sales would be of zero-emissions vehicles. This law was expected to be followed by other states and countries. In the United States, the EPA proposed tighter emissions standards, which would mean fines of up to $37,500 per car for manufacturers who did not meet them. This would have a further effect on the industry and further increase the pressure to go electric.
• Environmental:
  The question of the climatic effects of electric cars is a critical one. In 2022 it was calculated that over their life cycle electric cars might reduce greenhouse gas emissions by up to 50 per cent compared with petrol-driven cars, depending on the source of energy used to produce the electricity. But the production of electric car engines has been subjected to the closest scrutiny. It has been calculated that the extraction of lithium and cobalt for batteries releases up to fifteen tons of carbon dioxide per ton of material taken out. Hence the need for more sustainable extraction.

Porters Five Forces

• Threat of New Entrants:
  The barriers to entry for the Electric Vehicle Powertrains market are moderate, owing to the high capital costs for research and development, manufacturing, and the acquisition of the technology. The increasing demand for electric vehicles and the supportive government policies can attract new players, thus increasing competition.
• Bargaining Power of Suppliers:
  Suppliers of the electric motor for vehicles have great power, because the number of specialized components and materials required for production is small. Lithium for batteries is a rare material, and suppliers of such materials have considerable power in price and supply negotiations.
• Bargaining Power of Buyers:
  The buyers of electric vehicles are in a position of moderate power. The variety of electric drives is very wide, but the unique features and performance of each drivetrain may limit the choice. As the market grows and the number of manufacturers increases, the buyers may be able to influence the prices and features of electric vehicles.
• Threat of Substitutes:
  The threat of substitutes in the electric vehicle drivetrain market is moderate. There is still a good alternative to internal-combustion engines, but the growing importance of environment and sustainability is attracting consumers towards electric vehicles. The development of alternative fuels and hybrids is a threat to the electric vehicle drivetrain market.
• Competitive Rivalry:
  Competition in the electric-vehicle drive-system market is intense. Many established automobile manufacturers and new entrants are fighting for market share. The rapid technological development of the electric drive-systems and the continuous race to develop more powerful and efficient drive-systems are driving the competition, and this in turn is leading to a rapid and aggressive price war.

SWOT Analysis

• Strengths:
  • Growing consumer demand for sustainable transportation solutions.
  • Advancements in battery technology leading to improved efficiency and range.
  • Government incentives and regulations promoting electric vehicle adoption.
• Weaknesses:
  • High initial costs of electric vehicle powertrains compared to traditional systems.
  • Limited charging infrastructure in many regions.
  • Dependence on rare materials for battery production, leading to supply chain vulnerabilities.
• Opportunities:
  • Expansion of charging networks and infrastructure development.
  • Technological innovations in battery recycling and second-life applications.
  • Partnerships between automakers and tech companies to enhance powertrain capabilities.
• Threats:
  • Intense competition from traditional automotive manufacturers transitioning to electric.
  • Potential regulatory changes that could impact incentives and subsidies.
  • Market volatility in raw material prices affecting production costs.

The Electric Vehicle Powertrain Market 2022 is characterized by strong demand from consumers and technological developments, which enables the market to grow. However, high costs and lack of infrastructure are still significant barriers to entry. Opportunities for expansion and innovation are primarily in the field of charging stations and cooperation. Competition and regulatory uncertainty are threats that the market players must beware of.