Wed, 26 Feb 2020

Driveline Market forecast to reach $63.58 billion by 2025, after growing at a CAGR of 15.83% during 2020-2025. Innovations in the automotive sector such as the shifting from front-wheel drive (FWD) towards all-wheel drive (AWD) with the integration of electronic control unit, E-CVTE-axle for enhanced fuel efficiency is set to boost the demand of driveline market growth. With rise in the increasing sales of electric and hybrid vehicles, the Drivelinemarket is witnessing huge growth, as driveline systems are highly used in electric and hybrid vehicles (HEV) for power control and movement of vehicles. Growingnorms and regulations in order to use electric vehicles such as plug-In electric hybrid (PHEV), battery electric vehicles (BEV) and public interest towards sustainable and environment-friendly vehicles will further enhance the overall demand for Driveline market size asit is mainly used in electric vehicles during the forecast period 2020-2025.

Key Takeaways

• Asia-Pacific dominates the Driveline market owing to significant production and consumption of hybrid and electric vehicles in the region. The significant government initiatives to propel adoption of electric vehicles will drive the market growth.

• Strict regulations for enhanced fuel efficiency vehicles have forced automotive OEMs to manufacture hybrid and electric vehicle technology. Significantly, technological developments in the spectrum of electric and hybrid drivelines that includes regenerative braking, automatic start-stop, and E-axle are the major driving forces for the driveline market demand. Increasing demand for driveline systems with growing demand for electric and hybrid vehicles is set to create opportunities for the Driveline market.

• Increasing adoption of new technologies such as E-CVT E-Axle in electric vehicles is another factor driving market growth.

• Innovation of new driveline systems, such as the development of innovative torque driveline clutch system with low weight; advanced combustion; and less space required products, and acquisition of various companies for expanding its services in various regions is driving the driveline market growth.

Final Drive- Segment Analysis

E-Axle segment held the largest share in the Drivelinemarket in 2018. E-axles are used in the driveline as the end components to transmit the motor power to the wheels. E-axle helps in lowering the weight and improving the efficiency of electric vehicles. E-axles segment is likely to grow with faster rate owing to their benefits associated such as noise reduction, central housing with integrated water cooling system, and integrated parking lock. In 2019, BorgWarner, Inc had launched new integrated e-Axle called iDM. The iDM is designed to allow for a small package, low complexity and minimum losses. Development of new e-axles helps the OEMs in integrating them with vehicles very easily based on customer demands such as scalable and modular architecture, wide range of gear ratios, vehicle size and flexibility. Innovation of new e-axles which can be suitable for more number of vehicles such as hybrid and electric vehicles set to create ample opportunities for driveline market.

Vehicle Type- Segment Analysis

Hybrid Electric Vehicle (HEV)has been the primary market for Driveline. Emissions reduction and energy conservation have become increasingly significant for vehicles due to the severity of the current energy situation. With the rising focus on fuel efficiency and environmental concerns, automobile and other vehicle manufacturers have been developing and updating the system with torque converter with improved mechanical lockup, and neutral idle control features. As these components are highly used in HEVs, replacement of gasoline direct injection system or fuel vehicles with these components in order to reduce carbon emission is set to fuel the driveline market. Increase in production of hybrid electric vehicles (HEVs)and high adoption of driveline systems in these vehicles set to drive the driveline market growth.

Geography- Segment Analysis

APAC dominated the Drivelinemarket with a share of around 38%, followed by North America and Europe. According to the International Energy Agency,in 2018, around 2.1 million electric cars were sold in China. China is the major country in the production and consumption of electric cars compared to other countries. The Chinese government has spent nearly $60 billion in the last decade to create an industry that builds electric cars, while also reducing the number of licenses available for gasoline-powered cars to increase demand for electric cars. China now has more than 100 electric-car manufactures and hundreds of additional companies that supply components for electric cars. In 2018, Indian government has created momentum through its faster adoption and manufacturing of hybrid and Electric Vehicles schemes that encourage, and in some sectors mandates the adoption of electric vehicles (EV), with a goal of reaching 30% EV penetration by 2030. These schemes create demand for electric vehicles which further boost the demand of driveline systems.

Drivers –DrivelineMarket

• Growing demand for electric vehicles

The electric vehicles market has witnessed a healthy growth in recent years, in terms of the number of vehicles sold. For instance, in the U.S., the number of electric vehicles that have been sold increased from 0.89 million to 1.18 million during the 2018-2019 period in U.S. There has been 32.58% increase in sale of electric vehicles during 2018-2019 period. This spike in sales is attributable to the regulatory norms imposed by various organizations and governments to control emission levels and propagate zero-emission vehicles. This has forced the OEMs to increase their expenditure on R&D of electric vehicles, which eventually allowed them to market electric vehicles and high usage of drivelines in electric vehicles. This strategy had a strong impact on people, as there was a considerable change in the purchase pattern from conventional Internal Combustion (IC) engine vehicles to electric vehicles. Thus, the shift towards electric vehicles in the developed and developing nations would positively impact the Driveline market over the forecast timeframe.

• Implementation of Government initiatives, norms and regulations

Governments across the global level have initiated various schemes and initiatives, which encourage consumers to choose electric vehicles over conventional vehicles. For instance, in 2018, China Government had announced its New Energy Vehicle (NEV) mandate, in which automotive OEMs planned to sell over 4.6 million electric vehicles by 2020 and ban cars with traditional IC engines over the long term.California (Zero Emission Vehicle) ZEV program, which aims at having 1.5 million electric vehicles on road by 2025, is one such initiative that promotes the purchase of electric vehicles in U.S. region. These are some of the driveline market trends and increasing government initiatives, norms across the globe set to drive the driveline market for electric vehicles

Challenges – DrivelineMarket

• Designing of drivelines for electric vehicles and high Cost of electric vehicles

Challenges associated with the integration of the different components that have been encountered in the development of electric vehicle drive units. For instance, reducing noise from gearboxes and motors to an acceptable level in electric vehicles has resulted in expensive delays in development. The high cost of electric vehicles is a major challenge for OEMs. However, governments of various countries in Asia Oceania offer incentives to increase the adoption of green technologies, which is expected to drive the demand for driveline systems. Going forward, the increasing trend of electrification and hybridization will increase the demand for electric and hybrid drivelines which further creates opportunities for drivelines.

MarketLandscape

Technology launches, acquisitions and R&D activities are key strategies adopted by players in the Drivelinemarket. In 2018, the market of Drivelinehas been consolidated by the top five players-ZF Friedrichshafen AG, Schaeffler AG, GKN Automotive Limited, BorgWarner Inc, Robert Bosch GmbH, Volkswagen, and among others.

Acquisitions/Technology Launches

  • In March 2019, ZF has acquired WABCO in order to form a leading global integrated systems provider for cars and other commercial vehicles. This acquisition helped both the companies in expanding their product portfolio with the combined sale of related products such as driveline, chassis technology systems, active air suspension systems, vehicle dynamic control systems, fleet management systems in various countries. Expanding the product portfolio through acquisition of other companies set to drive the driveline market growth.
  • In October 2019, BorgWarner had developed innovative torque drivelineclutch system for electric vehicles. The system enables the use of just one electric motor instead of the traditional two that are typically found on electric vehicles. This system is cost-effective and features a compact design, significantly reducing the vehicle space needed and the weight of the system. Development of innovative products fuel the driveline market growth.

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