EV Contract Manufacturing Market Size (2023 - 2030)

The Global EV Contract Manufacturing Market was valued at USD 9.67 Billion and is projected to reach a market size of USD 57.16 Billion by the end of 2030. Over the forecast period of 2024-2030, the market is projected to grow at a CAGR of 28.9%.

The growth of the market can be attributed to the increasing demand for EVs, government initiatives to promote the adoption of electric vehicles, and the need for cost-effective production of EVs. The market size can also be influenced by factors such as technological advancements, partnerships, collaborations among key players, and strategic investments in R&D for the development of advanced manufacturing technologies for EVs.

Industry Overview:

The EV contract manufacturing market involves the production of electric vehicles on behalf of automakers by third-party manufacturers. The market has seen significant growth in recent years due to the increasing demand for electric vehicles & the complexity of EV manufacturing. Contract manufacturing enables automakers to leverage the expertise of specialized manufacturers to reduce costs and increase efficiency in the production process. The market includes a wide range of players, from established automakers to start-ups, & from traditional manufacturers to companies specializing in EV production. The market is projected to continue its growth trajectory in the coming years as the demand for electric vehicles continues to rise and automakers seek to streamline their production processes. Additionally, increasing government regulations and incentives supporting electric vehicle adoption is also projected to drive market growth.

COVID-19 Impact on the EV Contract Manufacturing Market:

The COVID-19 pandemic has significantly impacted the global EV Contract Manufacturing market. The pandemic has disrupted the entire automotive industry, including EV manufacturing, with plant closures, supply chain disruptions, & reduced demand. In the initial months of the pandemic, the EV contract manufacturing market witnessed a slowdown as many manufacturers postponed their new projects & investment plans. However, as the demand for electric vehicles started to increase, the market started to recover. The pandemic has also led to an increased focus on sustainability, & the growing adoption of electric vehicles as a more environmentally friendly option has further boosted the EV contract manufacturing market. Additionally, the pandemic has accelerated the trend towards localization of supply chains, which has led to an increased demand for local EV contract manufacturing services. Overall, while the pandemic initially caused disruptions, the long-term impact on the EV contract manufacturing market is projected to be positive.

Market Drivers:

Increasing Demand for Electric Vehicles helps to drive the market growth:-

The increasing demand for electric vehicles (EVs) is one of the major drivers for the growth of the EV contract manufacturing market. The ascension of concerns over carbon emissions, stringent government regulations to reduce emissions, & the increasing focus on sustainable transportation has led to a surge in demand for EVs. This has resulted in the need for efficient & cost-effective EV production, which has led to the sourcing of EV manufacturing to contract manufacturers.

Technological Advancements in EVs help to drive market growth:-

The advancements in technology related to electric vehicles, such as battery technology, power electronics, and software, are also driving the growth of the EV contract manufacturing market. With the increasing adoption of EVs, there is a need for advanced & reliable EV components and systems that are efficient and cost-effective. Contract manufacturers are continuously investing in research and development to provide advanced EV components & systems to their customers, which is further driving the market growth.

Market Restraints:

The EV Contract Manufacturing Market's growth is being stifled by a Lack of Skilled Workforce:

The production of electric vehicles requires skilled technicians and engineers who can design, develop & assemble the intricate components of the vehicle. However, the current demand for EVs has created a shortage of skilled workers in the industry. As a result, EV contract manufacturing companies are facing challenges in recruiting & retaining qualified professionals to meet the demand.

The EV Contract Manufacturing Market's growth is being stifled by High Initial Investment:​​​​​​​

The setup of an EV contract manufacturing plant requires a significant amount of capital investment in terms of technology, infrastructure, & equipment. This high initial investment can act as a restraint for new players trying to enter the market or for existing players trying to expand their operations. Additionally, EV contract manufacturing companies also need to invest in the development of new technology and innovation, which further adds up to the overall cost. These factors can increase the price of EVs, making them less affordable for consumers.

EV CONTRACT MANUFACTURING MARKET REPORT COVERAGE:

This research report on the global EV Contract Manufacturing Market has been segmented based on Services, Vehicle Type, Propulsion Type, and Region.

EV Contract Manufacturing Market – By Services

• Design and Development

• Vehicle Assembly

• Automotive Electronics

• Component Manufacturing

Among the segments, the automotive electronics segment is estimated to be the fastest-growing segment during the outlook period. It includes everything, from the headlight and LED brake light to the seating control mechanism inside the car. The demand for automotive electronics due to the growing integration and implementation of advanced safety systems in cars and other automotive vehicles is likely to drive the market growth.

EV Contract Manufacturing Market- By Vehicle Type

• Passenger vehicles

• Commercial vehicles

The EV contract manufacturing market can be segmented based on the types of vehicles demand for electric passenger vehicles has grown significantly due to increasing awareness regarding environmental concerns and the need to reduce carbon emissions. The rising demand for passenger electric vehicles has resulted in a surge in the production of electric vehicle components such as battery systems, motors, and power electronics. Additionally, the commercial vehicle segment is also projected to witness significant growth owing to the growing need for electric buses, trucks, and other heavy-duty vehicles. With governments worldwide implementing stringent regulations regarding carbon emissions and supporting the growth of electric vehicles, the demand for EV contract manufacturing is projected to increase in the coming years. The market is witnessing several developments and collaborations, such as partnerships between automotive OEMs and EV contract manufacturers, to cater to the increasing demand for electric vehicles across the globe.

EV Contract Manufacturing Market – By Propulsion Type

• Battery Electric Vehicle (BEV)

• Plug-In Hybrid Electric Vehicle (PHEV)

• Fuel Cell Electric Vehicle (FCEV)

The EV contract manufacturing market can be segmented based on propulsion type, including battery electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs), & fuel cell electric vehicles (FCEVs). The BEV segment is projected to grow significantly during the forecast period due to increasing consumer demand for eco-friendly and energy-efficient vehicles. According to a report by the International Energy Agency (IEA), the global BEV stock exceeded 7.2 million vehicles in 2020, with a year-on-year increase of 41%. This growth is primarily driven by government initiatives & subsidies to promote electric vehicles and reduce carbon emissions. The PHEV segment is also projected to witness significant growth in the coming years due to its lower operating costs and higher fuel efficiency compared to traditional gasoline vehicles. The FCEV segment is still in its nascent stage, but it is projected to grow in the future with technological advancements and increasing demand for sustainable transportation solutions.

EV Contract Manufacturing Market – By Region

• North America

• Europe

• Asia-Pacific

• South America

• Middle East and Africa

The global EV contract manufacturing market is projected to grow significantly in the coming years due to the increasing demand for electric vehicles & the need for cost-effective and efficient manufacturing solutions. The Asia-Pacific region is projected to dominate the market, owing to the presence of major automotive manufacturers & rising government initiatives to promote electric vehicles in countries such as China & India. North America & Europe are also projected to witness significant growth due to the increasing demand for electric vehicles and the presence of major automotive manufacturers. The rest of the world, including South America and the Middle East, is also projected to witness growth, owing to the increasing adoption of electric vehicles and the rising need for sustainable transportation solutions. The market is projected to witness significant developments & innovations in the coming years, with manufacturers focusing on developing advanced manufacturing processes and technologies to meet the growing demand for electric vehicles.

Major Key Players in the Market:

1. Magna International Inc.

2. Foxconn Technology Group

3. BYD Company Ltd.

4. Daimler AG

5. Valmet Automotive Inc.

6. BMW AG

7. Rivian Automotive LLC

8. Faraday Future Inc.

9. Fisker Inc.

10. Stellantis N.V.

Market Insights and Developments:

• In January 2020, General Motors informed its partnership with LG Chem to build a battery cell assembly plant in Ohio, USA. The facility is projected to have a production capacity of more than 30 gigawatt-hours (GWh) annually, making it one of the largest EV battery cell manufacturing plants in the world.

• In June 2021, Tesla announced that it had validated a contract with Chinese battery manufacturer CATL to supply battery cells for its electric vehicles produced in China. This is a significant move for Tesla as it seeks to secure a reliable & diversified supply of battery cells for its rapidly growing EV production.

• In September 2021, Ford informed its plans to invest $11.4 billion in electric vehicle production by 2025, with a goal of having 40% of its global vehicle volume be all-electric by 2030. This investment includes significant funds dedicated to EV battery production and highlights the growing importance of EV contract manufacturing for automakers.