The automotive steering system market was valued at USD 35.3 billion in 2022 and is expected to reach USD 39.5 billion by 2027, at a CAGR of 2.3% over the forecast period 2022–2027. With emissions standards becoming more stringent automotive electrification is imminent. The rapid adoption of Electric Vehicles (EVs) worldwide creates a huge demand for Electrical Power Steering (EPS) and steer-by-wire steering systems. OEMs in the passenger car segment have almost entirely moved to EPS systems, with EPS systems for commercial vehicles at a very nascent stage. As more commercial EVs are introduced in the market, the demand for EPS in these vehicles will witness significant growth.
Reducing prices of EV batteries will increase demand for EVs by making them cost effective
Due to technological advancements and the production of EV batteries on a mass scale in large volumes, the cost of EV batteries has been decreasing during the past decade. This has led to a decrease in the cost of electric vehicles as EV batteries are one of the most expensive components of an electric vehicle. The prices of EV batteries fell significantly in the last decade, from USD 1,200/kWh in 2010 to USD 160/kWh in 2023 and is expected to decrease in the coming years. Meanwhile the price is as low as USD 100 per kWh in China. This is because of the reducing manufacturing costs of these batteries, reduced cathode material prices, higher production, etc. The prices of EV batteries are expected to fall to approximately USD 60 per kWh by 2030, which is expected to significantly reduce the prices of EVs, making them cheaper than conventional ICE vehicles. The price of EV batteries is expected to reach around USD 80 per kWh by 2025. This will bring the price of EVs to the same level as that of ICE vehicles in the market and start a big shift to EVs. From 2025, we can expect EVs to get cheaper than some ICE vehicles. The improvement in battery technology is the main reason for this fall in battery prices. Once Solid-State Batteries enter the electric vehicle market, we can expect another price fall (per kWh) by the end of this decade.
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Rising demand for electric vehicles in the automotive and transportation sectors
Increase in the adoption and demand for electric vehicles has accentuated the need to develop charging infrastructure and the electric vehicle market. Leading markets for electric vehicles such as China, US, and Germany are investing significantly in electric vehicles and EV charging infrastructure along with research & development for faster and efficient charging methods, longer range EVs, and lower cost batteries. Significant investments by automakers are expected to cater to the rising demand for EVs. Countries across North America and Europe along with many Asian countries have adopted measures to reduce emissions during the coming decades and replace their vehicle fleets for lower emissions by varying numbers by 2035. This is expected to lead to a significantly high demand for electric vehicles. OEMs offer a wide range of vehicles, from small hatchbacks such as Leaf to high-end sedans such as Tesla model 3. The wide range of product offerings has attracted a high number of consumers, resulting in an increased market for electric vehicles. For instance, in January 2018, Ford announced plans to increase planned investments to USD 11 billion by end of 2022 for the development of EVs. The company introduced 40 EVs in 2022, of which 16 are expected to be fully electric and 24 are expected to be plug-in hybrid vehicles. The investment is higher than the previously announced target of USD 4.5 billion. Further, Stellantis also plans to come with 29 new EVs by 2030. Launched in September 2020, SAIC-GM-Wuling has a range of 106 miles on a single charge and was one of the highest selling EVs in 2021 and 2022.
Asia Pacific to be the largest and the fastest growing market by value during the forecast period
The region is home to some of the fastest-developing economies, such as China and India. The governments of these emerging economies have recognized the growth potential of the electric vehicle market trends and, hence, have taken different initiatives to attract major OEMs to manufacture electric vehicles in domestic markets. The region is home to 93 of the world’s most polluted cities and has a high energy demand. As of 2022, transportation sector in the region accounts for around 14% of overall emissions. Thus, countries in the region, are planning to reduce emissions in the coming years. China, the e-mobility leader in the region, had set a target of over 20% EV sales by 2025, which it had already achieved in 2022 and is expected to have around 35% in 2023. Similarly, countries such as South Korea, Japan and India have also announced plans to shift to EVs in coming years.
Key Market Players
The electric vehicle market is dominated by BYD (China), Tesla (US), Volkswagen AG (Germany), SAIC Motors (China), and Stellantis (Netherlands), among others. These companies have worked with other players in the EV ecosystem and developed best in class EV technology.
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