The EV Contract Manufacturing Market Size is valued at USD 9.8 Bn in 2023 and is predicted to reach USD 68.5 Bn by the year 2031 at an 27.7% CAGR during the forecast period for 2024-2031.
EV Contract Manufacturing is an increasingly crucial strategy for electric vehicle (EV) businesses to address market challenges and maintain competitiveness in a rapidly evolving industry. This approach benefits both early-stage original equipment manufacturers (OEMs) and traditional automakers transitioning to EV production. By outsourcing the manufacturing of specific parts or entire vehicles to third-party manufacturers, companies can leverage specialized expertise, reduce production costs, and increase flexibility. For conventional OEMs, contract manufacturing helps minimize short-term capital expenditures while optimizing production capabilities and capacity. This allows EV companies to scale efficiently and meet growing market demand without significant investment in their manufacturing facilities. Electric vehicle producers can adjust their output levels according to demand through contract manufacturing, saving money on costly infrastructure purchases. This might be especially crucial for new businesses and smaller enterprises that are still expanding and might not have the capital to invest in their production plants. Decreases in indirect manufacturing costs can also be achieved by scalability.
The Battery Electric Vehicle (BEV) segment is expanding rapidly, driven by increasing consumer demand for zero-emission vehicles, government regulations on emissions, and incentives promoting EV adoption. As a result, both established automakers and new entrants need to ramp up production quickly to meet market demand, which often requires outsourcing manufacturing to third parties. The BEV segment is highly competitive, with numerous automakers launching new electric models to capture market share. Contract manufacturing helps companies speed up production timelines and bring vehicles to market more quickly by leveraging the established production capabilities of third-party manufacturers. This is especially beneficial for startups or traditional automakers entering the BEV space, as it allows them to focus on innovation while contract manufacturers handle production scalability.
Competitive Landscape
Some of the Major Key Players in the EV Contract Manufacturing Market are
- BMW AG
- BYD Company Ltd.
- Daimler AG
- Faraday Future Inc.
- Fisker Inc.
- Foxconn Technology Group
- LG Chem
- Magna International Inc.
- Rivian Automotive LLC
- Stellantis N.V.
- Valmet Automotive Inc.
- Other Prominent Players
Market Segmentation
The EV Contract Manufacturing Market is segmented based on the services, vehicle type, and propulsion type. Based on the services, the market is divided into design and development, vehicle assembly, automotive electronics, and component manufacturing. Based on the vehicle type, the market is divided into passenger vehicles and commercial vehicles. Based on the propulsion type, the market is categorized into battery electric vehicle (BEV), plug-in hybrid electric vehicle (PHEV), and fuel cell electric vehicle (FCEV).
The Vehicle Assembly Segment is Expected to Have the Highest Growth Rate During the Forecast Period
Based on the services, the market is divided into design and development, vehicle assembly, automotive electronics, and component manufacturing. Among these, the vehicle assembly segment is expected to have the highest growth rate during the forecast period. Vehicle assembly involves integrating various components such as the battery, electric drivetrain, chassis, and other essential systems into a functional electric vehicle. This process requires high precision, extensive labor, and advanced manufacturing facilities, making it a key area for outsourcing. As the demand for electric vehicles grows, automakers need to quickly scale production to meet market needs. Contracting out vehicle assembly allows them to expand their production capacity without investing heavily in building or upgrading assembly plants. This is especially important for companies that are launching new models or entering new markets.
The Battery Electric Vehicles (BEVs) Segment Dominates the Market
Based on the vehicle type, the market is divided into passenger vehicles and commercial vehicles. Among these, Battery Electric Vehicles BEVs are leading the transition to electric mobility due to their zero-emission profile, simpler architecture (fewer moving parts compared to PHEVs and FCEVs), and increasing government regulations focused on reducing emissions. The growing market size of BEVs creates a higher demand for contract manufacturing services. Governments globally are increasingly promoting BEVs through incentives, stricter emissions regulations, and investments in charging infrastructure. This has created a robust market for BEVs, pushing automakers to increase production and rely on contract manufacturers to meet growing demand.
Asia-Pacific Has the Largest Market Share During the Forecast Period.
The Asia-Pacific region, especially China and South Korea, dominates the global battery supply chain, which is a critical component for EVs. This cost advantage encourages automakers, including foreign OEMs, to outsource manufacturing to this region. Lower operational costs make the region attractive for contract manufacturing of EV components and complete vehicle assembly. Governments across Asia-Pacific, particularly in China, Japan, and South Korea, have implemented strong policies to promote the development and adoption of electric vehicles. These include subsidies for EV production, incentives for R&D, tax benefits for EV manufacturers, and investments in EV infrastructure.
Recent Developments
- In Jan 2023, BYD Company Ltd., a Chinese electric vehicle manufacturer, is focusing on the potential growth of the Indian EV market and is looking into contract manufacturing agreements to produce passenger electric vehicles there.
- In January 2020, General Motors said that it is collaborating with LG Chem to construct a battery cell assembly facility in Ohio, USA. The plant is expected to be among the biggest EV battery cell manufacturing facilities in the world, with an annual production capacity of over 30 gigawatt-hours (GWh).
EV Contract Manufacturing Market Report Scope
|
Report Attribute |
Specifications |
|
Market Size Value In 2023 |
USD 9.8 Bn |
|
Revenue Forecast In 2031 |
USD 68.5 Bn |
|
Growth Rate CAGR |
CAGR of 27.7% from 2024 to 2031 |
|
Quantitative Units |
Representation of revenue in US$ Bn and CAGR from 2024 to 2031 |
|
Historic Year |
2019 to 2023 |
|
Forecast Year |
2024-2031 |
|
Report Coverage |
The forecast of revenue, the position of the company, the competitive market structure, growth prospects, and trends |
|
Segments Covered |
By Services, Vehicle Type, and Propulsion Type. |
|
Regional Scope |
North America; Europe; Asia Pacific; Latin America; Middle East & Africa |
|
Country Scope |
U.S.; Canada; U.K.; Germany; China; India; Japan; Brazil; Mexico; The UK; France; Italy; Spain; China; Japan; India; South Korea; Southeast Asia; South Korea; South East Asia |
|
Competitive Landscape |
BMW AG, BYD Company Ltd., Daimler AG, Faraday Future Inc., Fisker Inc., Foxconn Technology Group, LG Chem, Magna International Inc., Rivian Automotive LLC, Stellantis N.V., Valmet Automotive Inc. |
|
Customization Scope |
Free customization report with the procurement of the report and modifications to the regional and segment scope. Particular Geographic competitive landscape. |
|
Pricing and Available Payment Methods |
Explore pricing alternatives that are customized to your particular study requirements. |
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