Passenger Car Powertrain Systems Market – Global Industry Size, Share, Trends Opportunity, and Forecast, Segmented By Drive Type (Front-wheel Drive, Rear-wheel Drive, and All-wheel Drive), By Component Type (Engine, Transmission, Differentials, and Driveshaft), By Vehicle Type (SUV, Sedan, Hatchback, MUV), By Region and By Competition, 2021-2031F

Forecast Period	2027-2031
Market Size (2025)	USD 316.22 Billion
CAGR (2026-2031)	8.12%
Fastest Growing Segment	SUV
Largest Market	Asia Pacific
Market Size (2031)	USD 505.16 Billion

Market Overview

The Global Passenger Car Powertrain Systems Market will grow from USD 316.22 Billion in 2025 to USD 505.16 Billion by 2031 at a 8.12% CAGR. A passenger car powertrain system constitutes the integrated series of components that generate power and deliver it to the road surface, encompassing the engine or electric motor, transmission, drive shafts, and differentials. The expansion of this market is fundamentally supported by the implementation of stringent global emission standards necessitating the adoption of low carbon propulsion technologies. Furthermore, increasing consumer demand for fuel efficiency and the strategic transition by original equipment manufacturers toward electrification are accelerating the development of advanced hybrid and electric drivetrain architectures.

However, the market encounters a significant challenge in the form of elevated manufacturing costs associated with electric vehicle batteries and advanced components which can impede widespread affordability and adoption. This dynamic is reflected in recent industry data regarding the adoption of alternative propulsion methods. According to the European Automobile Manufacturers Association, in 2024, battery electric cars captured a market share of 13.6 percent of new registrations within the European Union. Manufacturers must navigate these cost pressures while scaling production to meet evolving regulatory targets and consumer expectations.

Key Market Drivers

The rising global adoption of electric and hybrid vehicles is fundamentally reshaping the passenger car powertrain systems market, driving a rapid transition from internal combustion engines to electrified architectures. Manufacturers are aggressively scaling production of battery electric vehicles (BEVs) to secure market position, necessitating substantial investments in e-drive units, thermal management systems, and high-voltage battery integration. This structural shift compels suppliers to pivot their component portfolios away from traditional mechanical drivetrains to meet the industry's evolving propulsion requirements. According to the European Automobile Manufacturers' Association, July 2025, in the 'New car registrations: -1.9% in H1 2025; battery-electric 15.6% market share' release, battery-electric cars captured 15.6 percent of the European Union market share during the first half of the year, marking a notable increase from the previous baseline.

Concurrently, increasing consumer demand for fuel-efficient mobility is sustaining robust growth in hybrid electric vehicle (HEV) segments, acting as a critical bridge between conventional and fully electric technologies. As drivers seek to mitigate rising fuel costs without the range anxiety associated with pure EVs, automakers are optimizing internal combustion engines for hybridization to deliver superior thermal efficiency. According to Toyota Motor Corporation, May 2025, in the 'TMC Announces April Through March 2025 Financial Results', the proportion of electrified vehicles in the company's sales mix reached 46.2 percent for the fiscal year, led primarily by a surge in hybrid electric unit volume. This preference for efficiency is visible across the broader market, reflecting a steady resilience in demand for advanced powertrain options. According to the European Automobile Manufacturers' Association, in 2025, year-to-date new car registrations in the European Union increased by 1.4 percent through October, indicating sustained momentum for modern mobility solutions.

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Key Market Challenges

The Global Passenger Car Powertrain Systems Market faces a substantial obstacle in the form of high manufacturing costs linked to electric vehicle batteries and advanced components. This cost structure hampers growth by elevating final retail prices, effectively restricting the addressable market to affluent demographics. The expense of sourcing raw materials and integrating complex power electronics prevents the rapid price equalization between electric and internal combustion vehicles. Consequently, the mass adoption required for widespread market expansion is stalled as budget-conscious consumers remain priced out of the segment.

This disparity creates a bottleneck where supply capabilities exist, but demand is suppressed by affordability concerns. Manufacturers must balance absorbing these costs against maintaining profit margins, often limiting their ability to offer competitive pricing in lower segments. According to the European Automobile Manufacturers’ Association, in 2025, the average price of battery electric vehicles needed to cover production costs was approximately €45,000, while consumer willingness to pay stood at only €20,000. This significant gap between production economics and purchasing power restricts advanced powertrains from entering high-volume economy markets, directly slowing overall industry momentum.

Key Market Trends

The transition to 800-volt high-voltage electric drive systems is emerging as a critical trend as manufacturers prioritize ultra-fast charging capabilities and superior energy efficiency. By doubling the voltage from standard 400-volt architectures, this technology significantly reduces charging times and allows for the use of thinner, lighter wiring harnesses, thereby improving overall vehicle range and performance. This shift is rapidly expanding from premium segments into the mass market, supported by dedicated platforms designed to handle higher power throughput. According to the Korea Automobile & Mobility Association, July 2024, in the 'US Market Performance' report, Hyundai Motor Group sold approximately 61,843 electric vehicles in the United States during the first half of the year, a volume largely driven by its 800-volt E-GMP platform models which have set new benchmarks for charging speed in the volume segment.

Concurrently, the market is witnessing the widespread integration of all-in-one electric axle drive units, commonly referred to as e-axles, which combine the electric motor, power electronics, and transmission into a single compact housing. This architectural consolidation enhances power density and reduces vehicle weight while lowering manufacturing costs through shared cooling circuits and minimized component interfaces. Suppliers are aggressively scaling the production of these integrated modules to meet the growing OEM demand for streamlined, space-efficient powertrain assembly. According to BorgWarner Inc., October 2024, in the 'Third Quarter 2024 Results', the company projected its full-year eProduct sales, which include these integrated drive systems, to reach approximately $2.4 billion, representing a significant increase from the previous year driven by new program launches.

Segmental Insights

The SUV segment is identified as the fastest-growing category in the Global Passenger Car Powertrain Systems Market. This expansion is primarily propelled by the industry-wide shift toward electrification to satisfy rigorous emission mandates. Automakers are prioritizing the integration of electric and hybrid powertrains into SUVs to offset the higher carbon output associated with their weight, ensuring compliance with standards from regulatory bodies such as the European Commission and the U.S. Environmental Protection Agency. Consequently, this regulatory pressure, combined with sustained consumer preference for utility vehicles, is driving significant development and investment in this powertrain sector.

Regional Insights

Asia Pacific dominates the global passenger car powertrain systems market due to substantial vehicle manufacturing outputs in major economies like China and India. This leadership is reinforced by strict regulatory frameworks targeting emission reductions, such as the Corporate Average Fuel Consumption credits managed by China's Ministry of Industry and Information Technology. Consequently, original equipment manufacturers are increasingly integrating electric and hybrid technologies to comply with these standards. The presence of established automotive supply chains further supports the mass production and deployment of diverse powertrain configurations across the region.

Recent Developments

• In May 2024, Renault Group and Geely officially launched HORSE Powertrain Limited, a new London-based joint venture focused on leading the global market for hybrid and internal combustion powertrain components. The two automotive giants established the company with a 50-50 equity split, aiming to design, develop, produce, and sell low-emission powertrain systems, including engines, transmissions, and batteries. This strategic collaboration brought together 17 global manufacturing plants and five research and development centers to serve industrial customers worldwide. The new entity projected annual revenues of approximately €15 billion and an initial production capacity of five million powertrain units per year.
• In May 2024, Toyota Motor Corporation, Mazda Motor Corporation, and Subaru Corporation announced a major collaboration to develop a new generation of engines tailored for electrification and carbon neutrality. The three Japanese automakers committed to a "multi-pathway" approach, refining their signature powertrain technologies—such as inline-four, rotary, and boxer engines—to be more compact and compatible with electric drive units. These new engines were designed to integrate efficiently with batteries and motors while supporting carbon-neutral fuels like e-fuels, biofuels, and liquid hydrogen. This joint effort aimed to optimize vehicle packaging and aerodynamic performance while ensuring compliance with increasingly generated emissions regulations.
• In February 2024, Magna International announced that it had secured a significant contract to supply a specialized primary rear eDrive system for a high-end niche vehicle platform from a North American automotive manufacturer. The company revealed that the system would be a variant of its 800V eDS Duo, capable of delivering exceptional performance figures, including 726 kW of power and 8,000 Nm of torque. Magna stated that this highly complex powertrain solution integrated two electric motors, two inverters, and two gearboxes into a single package. The manufacturing of this system was scheduled to take place at the company's facility in Ramos, Mexico.
• In February 2024, Stellantis announced a strategic investment of €103 million to establish electric drive module (EDM) production at its manufacturing facility in Szentgotthárd, Hungary. The company planned to repurpose existing buildings at the site to house the new operations, which were scheduled to commence in late 2026. This expansion was designed to support the automaker's "Dare Forward 2030" electrification strategy by supplying EDMs for vehicles built on the BEV-centric STLA platform. The investment also included contributions from the Hungarian government and aimed to upskill the local workforce for the transition from internal combustion engines to electrified powertrain manufacturing.

Key Market Players

• Toyota Motor Corporation
• Hyundai Motor Company
• JTEKT Corporation
• ZF Friedrichshafen AG
• Volkswagen AG
• Ford Motor Company
• General Motors Company
• GKN plc
• Borgwarner Inc.
• Aisin Seiki Co. Ltd

By Drive Type	By Component Type	By Vehicle Type	By Region
Front-wheel Drive Rear-wheel Drive All-wheel Drive	Engine Transmission Differentials Driveshaft	SUV Sedan Hatchback MUV	North America Europe Asia Pacific South America Middle East & Africa

Report Scope:

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

• Passenger Car Powertrain Systems Market, By Drive Type:

• Front-wheel Drive
• Rear-wheel Drive
• All-wheel Drive

• Passenger Car Powertrain Systems Market, By Component Type:

• Engine
• Transmission
• Differentials
• Driveshaft

• Passenger Car Powertrain Systems Market, By Vehicle Type:

• SUV
• Sedan
• Hatchback
• MUV

• Passenger Car Powertrain Systems 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