Global Market Size, Forecast, and Trend Highlights Over 2025-2037
Zero Emission Vehicle Market size was valued at USD 225.8 billion in 2024 and is projected to reach USD 1.5 trillion by the end of 2037, rising at a CAGR of 16% during the forecast period, i.e., 2025-2037. In 2025, the industry size of zero emission vehicle is evaluated at USD 262 billion.
The global zero emission vehicle market is experiencing rapid growth owing to strict emission regulations and mandatory policies. The implementation of strict guidelines by the governments to phase out fossil fuel vehicles and promote zero-emission alternatives is a key driver for market growth. Regulatory bodies such as the European Union, the U.S. Environmental Protection Agency, and China’s Ministry of Ecology and Environment are implementing strict emission reduction targets, including bans on new ICE vehicle sales by 2035. For instance, the UK government introduced a zero-emission vehicle mandate in January 2024 to drive the adoption of cleaner transportation. The zero-emission vehicle (ZEV) mandate specifies a certain percentage of new zero-emission cars and vans to be produced each year by 2030. As per this mandate, it is anticipated that 80% of new cars and 70% of new vans sold in Great Britain will be zero-emission vehicles by 2030, escalating to 100% by 2035.
In addition, the development of fast-charging networks and hydrogen refueling stations is crucial for the widespread adoption of ZEVs. Governments and private stakeholders are investing in expanding charging infrastructure that reduces range anxiety. For instance, in January 2025, the U.S. Department of Transportation invested USD 635 million to expand the EV charging and alternative fueling infrastructure across 27 states. Public-private partnerships also play an important role in scaling infrastructure projects, ensuring seamless integration with smart grids and renewable energy sources.
Zero Emission Vehicle Sector: Growth Drivers and Challenges
Growth Drivers
- Advancements in battery and hydrogen fuel cell technology: Innovations in energy storage, including solid-state batteries, lithium-sulfur technology, and hydrogen fuel cells, are enhancing vehicle range, efficiency, and affordability. The declining cost of lithium-ion batteries and increased energy density make BEVs more competitive with ICE vehicles. For instance, in March 2025, Solidion Technology achieved a remarkable milestone in lithium-sulfur (Li-S) battery development, attaining an energy density of 450 Wh/kg. This advancement of Li-S batteries stands as a promising alternative to traditional lithium-ion batteries, offering higher energy densities that can potentially extend EV range and reduce costs. Meanwhile, advancements in hydrogen refuelling infrastructure are improving the viability of fuel-cell electric vehicles, particularly in heavy-duty transportation and long-haul logistics.
- Corporate fleet electrification and sustainability initiatives: Large corporations and fleet operators are transitioning to zero-emission vehicles as part of their sustainability and ESG commitments. Logistics companies, ride-hailing services, and public transit agencies are leading the shift, supported by the cost savings on fuel and maintenance. For instance, the United States Postal Service announced plans to deploy over 66,000 electric vehicles by 2028, positioning it to have one of the largest electric vehicle fleets in the nation. The integration of ZEVs into commercial fleets is creating significant demand for electric trucks, vans, and buses, further propelling market growth.
Challenges
- High initial costs of investment: One of the biggest challenges for ZEV adoption is the high initial cost of electric and hydrogen-powered vehicles compared to ICE vehicles. While lithium-ion battery prices have declined, they still represent a significant portion of an EV’s cost. The emerging technologies, such as solid-state batteries, are promising but remain expensive to commercialize. Moreover, businesses transitioning to electric trucks or vans face higher acquisition costs and return on investment concerns, which may limit widespread adoption.
- Consumer adoption barriers, including range anxiety and perception issues: Despite advancements in zero-emission vehicle technology, consumer perception and practical concerns continue to impact adoption rates. Many potential buyers worry about limited driving range and charging/refuelling availability, especially in colder climates where battery performance declines. Additionally, uncertainties surrounding the resale value of EVs, including concerns about battery degradation, replacement costs, and overall demand in the used market, impact purchasing decisions.
Zero Emission Vehicle Market: Key Insights
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Base Year |
2024 |
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Forecast Year |
2025-2037 |
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CAGR |
16% |
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Base Year Market Size (2024) |
USD 225.8 billion |
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Forecast Year Market Size (2037) |
USD 1.5 trillion |
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Regional Scope |
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Zero Emission Vehicle Segmentation
Vehicle Type (Battery Electric Vehicles (BEVs), Fuel Cell Electric Vehicles (FCEVs))
Battery electric vehicle segment is likely to capture over 72.5% zero emission vehicle market share by 2037, due to its ability to run entirely on electricity with no tailpipe emissions. These vehicles rely on advanced lithium-ion or solid-state batteries for energy storage, offering improved efficiency and low operating costs. BEVs are increasingly popular due to advancements in battery technology, expanding charging infrastructure, and government incentives. As automakers invest in longer-range models and faster charging, BEVs are driving the transition to sustainable transportation.
Vehicle Class (Passenger Cars, Two Wheeler, Commercial Vehicles)
The passenger cars segment in the zero emission vehicle market is anticipated to capture a notable share through 2037, driven by rising consumer demand and stringent emission regulations. In 2023, the European Union witnessed a 28% reduction in average CO2 emissions from new passenger cars as compared to 2019, primarily due to a surge in zero emission vehicle registrations, which accounted for 23.6% of new car sales. Additionally, 1,548,417 new zero-emission passenger cars were registered in the EU, accounting for a 14.5% share of all new registrations of passenger cars in 2023. The highest number of zero-emission passenger cars was recorded in Sweden (38.6%), followed by Denmark (36.1%) and Finland (33.8%). Government incentives, expanding charging infrastructure, and advancements in battery technology are accelerating adoption. As cities push for cleaner transportation, zero-emission passenger cars are playing a crucial role in reducing urban air pollution.
Our in-depth analysis of the global market includes the following segments:
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Vehicle Type |
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Vehicle Class |
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Drive |
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Top speed |
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Customize this ReportZero Emission Vehicle Industry - Regional Scope
North America Market Analysis
North America zero emission vehicle market is set to account for revenue share of more than 38% by the end of 2037, due to strong government policies, corporate fleet electrification, and increasing consumer adoption. Stricter emission regulations and incentives such as tax credits are accelerating the transition to electric and hydrogen-powered vehicles.
The U.S. market is expanding due to aggressive federal policies, state level mandates, and substantial investments in clean transportation infrastructure. The Inflation Reduction Act and EV tax credits are making electric and hydrogen vehicles more affordable for consumers and businesses. Automakers in the U.S. are focused on domestic EV production, supported by funding for battery manufacturing and supply chain localization. Additionally, the rising fuel costs in the U.S. and corporate sustainability commitments push fleet operators towards large-scale electrification.
Canada’s growth in the ZEV market is driven by stringent emission regulations, government incentives and strong push for integrating renewable energy. The federal and provincial policies such as the mandate to rule out new gasoline vehicle sales by 2035, are somewhat accelerating adoption. For instance, to decarbonize the transportation sector in Canada and reach zero-emission targets, the Canada government aims to achieve 100% sales of zero-emission vehicles by 2035. As per Canada's 2030 Emissions Reduction Plan, it aims to achieve minimum 20% sales of new light-duty vehicles by 2026 and 60% by 2030. Further, investments in EV charging infrastructure and incentives for hydrogen fuel cell technology make ZEV ownership in Canada more accessible.
Asia Pacific Market Analysis
Asia Pacific is predicted to grow at the fastest rate and capture a notable share through 2037, owing to urbanization, rising environmental concerns, and government policies. China, Japan, India, and South Korea are rapidly expanding their EV infrastructure, incentive shares, and hydrogen fuel cell technology. Regional automakers are also consistent in developing cost-effective ZEVs tailored to diverse consumer needs. With a booming middle class and increasing fuel costs, demand for cleaner and more affordable solutions is rising.
China leads the global zero emission vehicle market, driven by strict emission targets, heavy government subsidies, and robust domestic manufacturing capabilities. The country’s New Energy Vehicle Policy, along with incentives for automakers and consumers, has fueled rapid mass adoption of EVs. China also dominates the EV battery supply chain, which reduces production costs and makes ZEVs accessible to consumers. Additionally, the expansion of high-speed charging networks and smart city initiatives is accelerating demand for electrified transportation.
The zero emission vehicle market in India is growing speedily due to ambitious government initiatives such as the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme and state-level subsidies. The government is investing USD 1.43 billion as part of the FAME II scheme to develop the electric vehicle market and encourage local manufacturing. The growing demand for electric two-wheelers and compact EVs is reshaping urban mobility, making ZEVs more affordable for the mass market. With rising fuel prices and increasing air pollution, consumers are opting for cleaner alternatives. Infrastructure expansion, including battery swapping stations and localized EV production, is further driving market growth.
Companies Dominating the Zero Emission Vehicle Landscape
- BYD Company Limited
- Company Overview
- Business Strategy
- Key Product Offerings
- Financial Performance
- Key Performance Indicators
- Risk Analysis
- Recent Development
- Regional Presence
- SWOT Analysis
- BMW Group
- Ford Motor Company
- General Motors
- KIA
- Stellantis NV
- Tesla, Inc
- Volkswagen AG
- Okinawa Autotech Pvt Ltd
The zero emission vehicle is highly competitive with leading automakers, emerging startups, and tech firms investing in electric and hydrogen-powered mobility solutions. Companies such as Tesla, BYD, Toyota, and Volkswagen are expanding their ZEV portfolios, focusing on battery efficiency, range, and affordability. Further, strategic partnerships, advancements in charging infrastructure, and government policies are shaping the market competition. Here are some leading players in the zero emission vehicle market:
In the News
- In January 2025, Amazon bought over 150 electric heavy goods vehicles (HGVs) for its UK operations, including 140 Mercedes Benz eActross 600 and eight Volvo FM Electric trucks. This initiative is a part of Amazon’s broader plan to have 1,500 electric trucks in Europe by 2027, cutting carbon emissions and reducing environmental impact. These zero exhaust emission trucks will help deliver over 350 million packages annually while supporting Amazon’s goal of reaching net-zero emissions by 2040.
- In March 2024, Intelligent Energy, a leading UK-based fuel cell company, introduced a new hydrogen fuel cell system for passenger cars. This system is smaller, more powerful, and efficient than existing solutions, offering a major step towards a zero-emission future. The patented IE drive system is designed to help car manufacturers access a compact, high-performance cost cost-effective hydrogen fuel cell technology.
Author Credits: Saima Khursheed
- Report ID: 7416
- Published Date: Mar 28, 2025
- Report Format: PDF, PPT
