Global Automotive Powertrain Market, By Vehicle Type (Passenger Cars, Light Commercial Vehicles and Heavy Commercial Vehicles), By Drive Type (Front-Wheel Drive Powertrain, Rear-Wheel Drive (Rwd) Powertrain and All-Wheel Drive (Awd) Powertrain), By Type (Gasoline and Diesel), By Company and By Geography, Forecast & Opportunities, 2021-2031F

Forecast Period	2027-2031
Market Size (2025)	USD 883.64 Billion
CAGR (2026-2031)	15.81%
Fastest Growing Segment	Diesel
Largest Market	North America
Market Size (2031)	USD 2131.83 Billion

Market Overview

The Global Automotive Powertrain Market will grow from USD 883.64 Billion in 2025 to USD 2131.83 Billion by 2031 at a 15.81% CAGR. The Global Automotive Powertrain Market encompasses the comprehensive mechanical assemblies responsible for generating power and delivering it to the road surface, including the engine, transmission, drive shafts, differentials, and axles. This sector is primarily driven by stringent international emission regulations necessitating the adoption of low-carbon technologies and a rising consumer preference for fuel efficiency. These distinct factors are compelling manufacturers to accelerate the transition from traditional internal combustion architectures toward hybrid and electric propulsion systems.

However, the market faces significant impediments regarding the high production costs of electrified components and volatile raw material supply chains which can disrupt manufacturing continuity. According to the China Association of Automobile Manufacturers, in 2024, the sales of new energy vehicles reached 12.87 million units, representing 40.9 percent of total vehicle sales in the region. This statistic underscores the rapid scale of powertrain diversification, yet the industry must navigate complex infrastructure and cost barriers to ensure sustainable global expansion.

Key Market Drivers

The implementation of stringent global emission regulations and carbon neutrality targets is fundamentally reshaping the Global Automotive Powertrain Market. Governments are enforcing rigorous exhaust standards, compelling manufacturers to redesign propulsion systems and transition away from conventional internal combustion engines. This regulatory pressure forces the industry to adopt cleaner technologies to meet fleet-wide compliance metrics and avoid penalties. For instance, according to the U.S. Environmental Protection Agency (EPA), January 2025, in the '2024 Automotive Trends Report', the fleet of new light-duty vehicles achieved a record low average CO2 emission rate of 319 grams per mile in 2023, primarily due to the increased integration of electrification technologies. Consequently, powertrain development is now centered on optimizing efficiency to align with these non-negotiable legislative mandates.

Simultaneously, the market is witnessing an accelerated adoption of electric and hybrid powertrain architectures. This shift represents a dominant commercial trend where hybrid-electric vehicles (HEVs) are capturing substantial market share driven by consumer efficiency demands. According to the European Automobile Manufacturers' Association (ACEA), November 2025, in the 'New car registrations: +1.4% in October 2025 year-to-date' report, hybrid-electric car registrations captured 34.6 percent of the EU market share. To support this transition, major OEMs are channeling capital into expanding manufacturing capabilities for electrified components. For example, according to Toyota Motor North America, November 2025, in the press release 'Toyota Invests $912 Million to Expand Hybrid Production', the company committed 912 million USD to upgrade five U.S. plants for increasing hybrid-electric vehicle assembly.

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Key Market Challenges

The high production costs associated with electrified components and the volatility of raw material supply chains present a formidable barrier to the expansion of the Global Automotive Powertrain Market. As manufacturers attempt to scale up the production of hybrid and electric propulsion systems, the elevated prices of critical minerals such as lithium and nickel significantly compress operating margins. This financial strain is exacerbated by unpredictable supply chain disruptions, which prevent companies from maintaining the consistent manufacturing output required to meet global demand. Consequently, automotive suppliers face severe liquidity challenges that force them to delay essential research and development projects or reduce workforce capacity.

This instability is evident in recent industry performance metrics. According to the European Association of Automotive Suppliers (CLEPA), in 2024, approximately 68 percent of automotive suppliers anticipated consistently low profit margins, while 38 percent expected to operate at break-even levels or incur losses due to these sustained operational pressures. Such financial fragility directly hampers the market's growth by limiting the capital available for innovation, thereby slowing the industry-wide shift from internal combustion engines to advanced electrified architectures.

Key Market Trends

The Development of Hydrogen Fuel Cell Propulsion Systems is gaining momentum as a viable alternative to battery-electric architectures, particularly for applications requiring extended range and rapid refueling. Manufacturers are diversifying propulsion strategies to include hydrogen technologies, aiming to mitigate the limitations of heavy battery packs in larger vehicle segments. This strategic shift is evidenced by major automotive players committing to long-term fuel cell commercialization to complement existing electric portfolios. According to the BMW Group, September 2024, in the press release 'Hydrogen Pioneers take collaboration to the next level', the company confirmed plans to launch its first series-production hydrogen fuel cell electric vehicle (FCEV) in 2028, underscoring a significant industry pivot towards diversified zero-emission solutions.

Simultaneously, the market is witnessing the widespread Implementation of Integrated e-Axle Drive Units, where electric motors, transmissions, and power electronics are consolidated into compact, modular assemblies. This trend is evolving further with the introduction of magnet-free technologies designed to reduce reliance on volatile rare earth supply chains while enhancing system efficiency. A notable advancement occurred when major suppliers joined forces to innovate in this high-performance space. According to MAHLE, October 2024, in the press release 'Valeo and MAHLE expand their product range of magnet free electric motors', the companies announced a joint development agreement for a new magnet-free electric axle system capable of delivering peak power between 220 kW and 350 kW, aiming to lower the carbon footprint by over 40 percent compared to permanent magnet equivalents.

Segmental Insights

Based on recent industry analysis, the Diesel segment has emerged as the fastest-growing category within the Global Automotive Powertrain Market. This expansion is primarily driven by substantial advancements in combustion technology, which enable modern diesel engines to achieve superior fuel efficiency while complying with rigorous international emission standards. As regulatory bodies enforce tighter environmental mandates, the demand for these cleaner, high-torque powertrains has surged, particularly within the commercial vehicle sector where durability and long-range performance are critical. Consequently, manufacturers are prioritizing advanced diesel solutions to meet the evolving operational needs of the global logistics and heavy transport industries.

Regional Insights

North America maintains a leading position in the global automotive powertrain market driven by the extensive production of light commercial vehicles and the strong presence of established original equipment manufacturers. This dominance is reinforced by stringent emission regulations enforced by the United States Environmental Protection Agency, which compel automakers to develop fuel-efficient internal combustion engines and electric propulsion systems. The sustained consumer demand for vehicles with high towing capacity, combined with accelerated investments in electric mobility infrastructure, further supports the expansion of the regional sector.

Recent Developments

• In September 2024, Toyota Motor Corporation and the BMW Group signed an agreement to strengthen their collaboration in the hydrogen sector, specifically focusing on the development of a third-generation fuel cell system. The companies announced plans to standardize components to reduce costs and expand the commercial and passenger vehicle demand for hydrogen powertrains in the global automotive market. As part of this partnership, the German automaker intends to launch its first mass-produced fuel cell electric vehicle in 2028, integrating the jointly developed system. This strategic move aims to create synergies in development and procurement, effectively broadening the lineup of available fuel cell options.
• In September 2024, General Motors and Hyundai Motor Company signed a Memorandum of Understanding to explore collaboration across key strategic areas, including the co-development of advanced powertrains. The agreement outlined potential joint projects involving internal combustion engines, as well as electric and hydrogen technologies for both passenger and commercial vehicles. Senior executives from both companies emphasized that this partnership aimed to leverage complementary scale and strengths to reduce costs and bring competitive vehicles to customers more efficiently. The collaboration also intended to examine combined sourcing opportunities for battery raw materials to support their respective electric vehicle supply chains.
• In May 2024, Renault Group and Geely officially launched HORSE Powertrain Limited, a newly formed company headquartered in London dedicated to hybrid and combustion powertrain solutions. The joint venture, equally owned by both automotive groups, was established to design, develop, and produce engines, transmissions, and hybrid systems for the global market. With expected annual revenues of approximately €15 billion, the independent entity targeted an 80 percent market coverage of the global hybrid and internal combustion engine demand. The company announced it would supply powertrain components to multiple industrial customers, including Volvo Cars, Nissan, and Mitsubishi Motors.
• In March 2024, Nissan Motor Co., Ltd. and Honda Motor Co., Ltd. signed a memorandum of understanding to commence a feasibility study for a strategic partnership focused on vehicle electrification and intelligence. The potential collaboration addressed the need to accelerate the development of key electric vehicle components, including e-axles and battery system technologies, to compete with emerging global rivals in the powertrain market. Senior leadership from both Japanese automakers stated that combining their strengths in powertrain development would generate synergies and reduce research and development costs. The study aimed to standardize automotive software platforms and core electric powertrain components to enhance competitiveness.

Key Market Players

• Robert Bosch GmbH
• ZF Friedrichshafen AG
• Continental AG
• Magna International Inc
• Aisin Seiki Co Ltd
• BorgWarner Inc
• Schaeffler AG
• Valeo SA
• Denso Corporation
• Hyundai Motor Group

By Vehicle Type	By Drive Type	By Type	By Region
Passenger Cars Light Commercial Vehicles and Heavy Commercial Vehicles	Front-Wheel Drive Powertrain Rear-Wheel Drive (Rwd) Powertrain and All-Wheel Drive (Awd) Powertrain	Gasoline and Diesel	North America Europe Asia Pacific South America Middle East & Africa

Report Scope:

In this report, the Global Automotive Powertrain Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• Automotive Powertrain Market, By Vehicle Type:

• Passenger Cars
• Light Commercial Vehicles and Heavy Commercial Vehicles

• Automotive Powertrain Market, By Drive Type:

• Front-Wheel Drive Powertrain
• Rear-Wheel Drive (Rwd) Powertrain and All-Wheel Drive (Awd) Powertrain

• Automotive Powertrain Market, By Type:

• Gasoline and Diesel

• Automotive Powertrain Market, By Region:

• North America
• United States
• Canada
• Mexico
• Europe
• France
• United Kingdom
• Italy
• Germany
• Spain
• Asia Pacific
• China
• India
• Japan
• Australia
• South Korea
• South America
• Brazil
• Argentina
• Colombia
• Middle East & Africa
• South Africa
• Saudi Arabia
• UAE