Automotive Powertrain Market Outlook (2021-2031) Trends, Size, Segment and Growth by Forecast to 2030

Executive Summary and Global Market Analysis

The global automotive powertrain market is poised for substantial growth, projected to reach US$ 2,010.96 billion by 2031, up from US$ 1,112.16 billion in 2024, registering a CAGR of 8.8% from 2025 to 2031. This growth is primarily driven by tightening emission regulations, increasing consumer demand for electric vehicles (EVs), and rapid technological innovation.

📚Download Full PDF Sample Copy of Market Report @
https://wwcw.businessmarketinsights.com/sample/BMIPUB00031628

The market is segmented by vehicle type into passenger cars, light commercial vehicles, and heavy commercial vehicles, with passenger vehicles holding a dominant share. This segment’s expansion is fueled by rising urbanization, increasing disposable incomes in emerging markets, and evolving consumer preferences.

The automotive powertrain industry is undergoing a significant transformation, shifting from traditional internal combustion engines (ICE) to electrified alternatives such as hybrid and battery electric powertrains. Governments worldwide are enforcing stringent emission standards, compelling automakers to invest in cleaner and more efficient technologies. For instance:

• The European Union’s 2025 CO₂ target mandates a fleet-wide average of 95 g/km, with penalties of €95 for every gram exceeded per vehicle.
• The UK’s Zero Emission Vehicle (ZEV) mandate requires 28% of new car sales to be zero-emission by 2025.
• California’s goal for 68% EV sales by 2030 reflects growing global momentum.
• China’s New Energy Vehicle (NEV) policy enforces aggressive EV adoption quotas.
• Countries like Norway are targeting 100% EV sales by 2025, while major cities such as London and Paris plan to phase out ICE vehicles from urban centers.

These regulatory shifts are not only compliance-driven but also represent a strategic pivot for automakers aiming to remain competitive in a rapidly evolving landscape. The push toward sustainability and decarbonization has prompted unprecedented R&D investments in electrification, solidifying EVs and hybrid systems as core elements of the powertrain market’s future.

Automotive Powertrain Market Segmentation Analysis

Key segments that contributed to the derivation of the automotive powertrain market analysis are product, application, and end user.

• By Vehicle Type, the automotive powertrain market is segmented into Passenger Cars, Light Commercial Vehicles (LCVs), Heavy Commercial Vehicles (HCVs. The passenger cars segment dominated the segment in 2024
• By Drive Type, the automotive powertrain market is segmented into Front-Wheel Drive, Rear-Wheel Drive, All-Wheel Drive)
• By Propulsion Type, the automotive powertrain market is segmented into ICE and Electric. The ICE segment dominated the market in 2024
• By ICE Propulsion Type, the automotive powertrain market is segmented into Engine, Transmission Systems, Driveshafts, Differentials, Axles. Engine segment dominated the market in 2024
• By Electric Propulsion Type, the automotive powertrain market is segmented into Motors, Battery Packs, Transmissions, Differentials, Axles. The battery segment dominated the market in 2024
• By Sales Channel, the automotive powertrain market is segmented into OEM and Aftermarket. The OEM segment dominated the market in 2024

Automotive Powertrain Market: Key Drivers and Opportunities

1. Rising Consumer Demand for Electric Vehicles (EVs)

As fuel prices surge and climate concerns intensify, electric vehicles—particularly battery-electric vehicles (BEVs) and hybrids—are witnessing unprecedented global demand. EV sales are projected to hit 17 million units in 2025, reflecting a 20% increase over 2024. Advancements in battery technology now offer ranges exceeding 300 miles, while declining production costs are making EVs more accessible to mainstream consumers. Government incentives, such as the US$ 7,500 federal tax credit in the US and subsidies across Europe and China, are accelerating EV adoption.

Infrastructure is also evolving rapidly, with more than 3 million public charging stations deployed worldwide as of 2024—helping mitigate range anxiety. Popular models like Tesla’s Model Y and BYD’s Han highlight the growing consumer preference for high-performance, environmentally conscious vehicles. Urban policies—such as congestion charges and planned bans on internal combustion engine (ICE) vehicles—are further nudging consumers toward EVs. However, challenges remain in emerging markets where high upfront costs and limited charging infrastructure slow adoption. Despite this, automakers plan to launch over 200 new BEV models by 2026, spanning both budget and luxury segments.

2. Technological Advancements Transforming Powertrains

Innovation is reshaping the powertrain market, improving acceleration, reducing emissions, and lowering operating costs. Breakthroughs in solid-state and lithium-iron-phosphate battery technologies are enhancing driving range and slashing charging times. Market leaders like CATL and Samsung SDI are at the forefront of this evolution.

Lightweight materials such as carbon fiber and aluminum are increasingly used to improve energy efficiency by reducing vehicle mass. Meanwhile, modern electric motors deliver greater power with less energy loss. Battery prices have dropped by 20% since 2020, narrowing the price gap between EVs and ICE vehicles. Modular EV platforms—such as Volkswagen’s MEB—are enabling cost-effective production and faster model rollouts.

Despite the positive outlook, raw material constraints and high R&D costs continue to pose risks. Nevertheless, technological advancements are enabling automakers to develop flexible, scalable vehicle platforms that cater to diverse customer needs while adhering to strict global emissions regulations.

3. Expansion of Autonomous and Connected Vehicle Technologies

The rise of autonomous and connected vehicles is creating new growth avenues for electric powertrains. Self-driving vehicles require high-powered electric systems to support advanced computing platforms like Nvidia’s Drive, which handles tasks such as real-time pedestrian detection. While Tesla leads with its full self-driving technology, traditional OEMs like BMW are also integrating electric powertrains with sophisticated sensor and AI systems.

Connected vehicles, powered by 5G networks, rely on software-defined powertrains that continuously collect and process data, improving vehicle performance and safety. By 2026, it’s estimated that 60% of new vehicles will feature connected technology. Companies such as Waymo have successfully deployed autonomous taxis, while others like GM’s Cruise continue to navigate regulatory and safety challenges.

Although these systems entail higher costs due to advanced batteries and processors, the long-term value is substantial. Autonomous-capable premium EVs alone could unlock over US$ 100 billion in additional market value by 2030. Automakers that effectively integrate these technologies are well-positioned to lead the next wave of industry transformation.

Automotive Powertrain Market Size and Share Overview

The automotive powertrain market is segmented by vehicle type into passenger cars, light commercial vehicles (LCVs), and heavy commercial vehicles (HCVs). In 2024, passenger cars led the market and are expected to maintain dominance. The electric vehicle (EV) segment continues to gain traction, projected to account for over 10% of global car sales by 2025—driven by emission regulations, government incentives, and improved charging infrastructure. Europe and China lead EV adoption, while the U.S. market steadily grows. Traditional internal combustion engines (ICEs), though still dominant, are losing ground as automakers shift toward electrification. Hybrid and plug-in hybrid vehicles (HEVs/PHEVs) serve as transitional options in regions with limited charging networks.

Advancements in lightweight materials, turbocharging, and energy-efficient components are enhancing ICE performance to meet emissions standards. Simultaneously, falling EV powertrain costs—driven by battery tech improvements and production scale—boost BEV competitiveness. However, challenges persist, including supply chain disruptions, battery material shortages, and high upfront EV costs.

Asia Pacific leads in vehicle sales and powertrain manufacturing, with China and India fueling market growth. Emerging trends include hydrogen fuel systems and sustainable production as automakers pursue carbon neutrality.

By drive type, the market includes front-wheel drive (FWD), rear-wheel drive (RWD), and all-wheel drive (AWD). FWD remains dominant, especially in compact vehicles across Europe and Asia Pacific, due to its cost-efficiency and space optimization. This layout is widely used across ICE, hybrid, and electric vehicles.

By propulsion, the market is divided into ICE and electric. ICE powertrains held the largest share in 2024, particularly in developing regions where fuel accessibility and lower costs favor gasoline and diesel engines despite rising EV adoption.

 key company profiles

  Aisin Seiki Co., Ltd

  BorgWarner Inc,

  GKN PLC

  Jtekt Corporation

  Magna International Inc.

  Marelli Holdings Co., Ltd.

  ZF Friedrichshafen AG

  Valeo

  Robert Bosch GmbH

  Schaeffler AG

Automotive Powertrain Market Report: Coverage & Deliverables

The “Automotive Powertrain Market Size and Forecast (2021–2031)” report offers comprehensive insights and analysis across the following key areas:

• Market Size & Forecast: In-depth projections of the automotive powertrain market at global, regional, and country levels, segmented across all major categories defined within the report scope.
• Market Trends & Dynamics: Detailed assessment of current and emerging trends, along with analysis of key drivers, challenges, and growth opportunities shaping the industry.
• SWOT Analysis: Thorough evaluation of strengths, weaknesses, opportunities, and threats impacting the market.
• Strategic Market Insights: Analysis of market structure and dynamics, including global and regional trends, regulatory frameworks, key players, and recent developments.
• Competitive Landscape: Overview of industry competition, featuring market concentration metrics, heat map analysis, and insights into leading companies and their recent strategies.
• Company Profiles: Comprehensive profiles of major players in the automotive powertrain market, covering business overview, product portfolio, strategic initiatives, and financial performance.

The geographical scope of the automotive powertrain market report is divided into five regions: North America, Asia Pacific, Europe, Middle East & Africa, and South & Central America. The automotive powertrain market in Asia Pacific is expected to grow significantly during the forecast period.

The Asia Pacific automotive powertrain sector, with key nations including China, Japan, India, South Korea, and neighboring countries, represents the world’s biggest market, propelled by industrial growth, urban expansion, and increasing customer needs. At US$ 476.10 billion in 2024, it captured 42% of the worldwide market share, with projections indicating growth to US$ 890.86 billion by 2034, growing at 9.36% CAGR.

China leads the region with its strong automotive industry, representing over 60% of regional EV sales in 2024, supported by initiatives like the New Energy Vehicle (NEV) program. The passenger vehicle segment dominated with a 68% market share in 2024, driven by higher household incomes and metropolitan growth, especially in India and China. Traditional combustion engines maintained a 84% share in 2024, though gasoline powertrains face competition from hybrid and electric alternatives amid tighter emission controls and breakthroughs such as BYD’s hybrid system, delivering 2,000+ km range. 

Automotive Powertrain Market News and Key Development:

The automotive powertrain market is evaluated by gathering qualitative and quantitative data post primary and secondary research, which includes important corporate publications, association data, and databases. A few of the key developments in the automotive powertrain market are:

• BMW: Committed ZAR 4.2 billion during 2023 to modernize its Rosslyn facility in South Africa, preparing for electric vehicle manufacturing by 2026, with initial focus on X3 production to support the nation’s Just Energy Transition initiative.
• BYD: Strengthened its Thai market position, driving a 639% year-over-year increase in BEV purchases in 2023, while launching the ATTO 3 model in South Africa, accelerating electric vehicle adoption across developing regions.
• Bosch: Secured controlling interest in Seeo Inc. during February 2023, enhancing its ECU development capabilities for electric and hybrid powertrains through innovative battery solutions.

About Us:
Business Market Insights is a market research platform that provides subscription service for industry and company reports. Our research team has extensive professional expertise in domains such as Electronics & Semiconductor; Aerospace & Défense; Automotive & Transportation; Energy & Power; Healthcare; Manufacturing & Construction; Food & Beverages; Chemicals & Materials; and Technology, Media, & Telecommunications

Author’s Bio
Akshay
Senior Market Research Expert at Business Market Insights