Ethanol Vehicle Market size was valued at USD 40.96 billion in 2024 and is projected to reach USD 149.46 billion in 2037, registering more than 10.47% CAGR during the forecast period i.e., between 2025-2037. In 2025, the industry size of ethanol vehicle is evaluated at USD 45.25 billion.
A major driver of the ethanol vehicle market is the advancements in flexible-fuel vehicles (FFVs) designed to operate on gasoline, ethanol, or any blend. The increase in adoption of FFVs is expected to drive the production demand for ethanol fuel blends boosting the sector’s growth. In June 2024, the Renewable Fuels Association released a study documenting the environmental and economic benefits of the world’s first plug-in electric hybrid flex fuel vehicle (PHEFFV). The study took into account rigorous emissions testing, 34 thousand miles of real-world driving, and lifecycle greenhouse gas analysis to offer results that PHEFFV offers benefits over electric vehicles (EVs). With the global push to radically reduce emissions, the commercial production of PHEFFVs is projected to drive adoption owing to the benefits it provides over EVs which augurs well for the ethanol vehicle sector.
Increasing government support is a significant factor in the ethanol vehicle market’s growth. With studies indicating the benefits of ethanol blends, governments have amped their programs to incentivize ethanol projects. The U.S. Department of Energy states that E8 with 83 ethanol content has about 27 less energy per gallon than gasoline, and ethanol vehicles running on higher ethanol blends are poised to boost the fuel economy owing to heightened engine efficiency. In terms of government-backed incentives, in April 2023, the U.S. Environmental Protection Agency (EPA) issued an emergency fuel waiver for E15 gasoline blended with 15% ethanol to be sold during the summer driving season in a bid to offer consumers more choices at the pump and mitigate the impact of the Russia and Ukraine conflict in fuel prices.
E15 is comparatively cheaper than gasoline which is expected to drive adoption and benefit the ethanol vehicle market. Furthermore, the U.S. remains a major market in ethanol vehicles, and favorable market trends in the U.S. stand to impact the global market. Additionally, countries are investing to improve the supply chain of ethanol to mitigate dependence on imports and build a robust domestic supply chain. For instance, in October 2024, the U.S. Department of Agriculture (USDA) announced grants worth USD 239 million to improve access to domestic biofuels in the country. The ethanol vehicle industry is expected to leverage the favorable trends of countries investing to increase biofuel production and increasing push for FFVs to maintain its robust growth by the end of the forecast period.
Growth Drivers
Challenges
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Base Year |
2024 |
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Forecast Year |
2025-2037 |
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CAGR |
10.47% |
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Base Year Market Size (2024) |
USD 40.96 billion |
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Forecast Year Market Size (2037) |
USD 149.46 billion |
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Regional Scope |
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Vehicle Type (Passenger Cars, Commercial Vehicles, Two Wheelers)
Passenger cars segment is expected to capture over 44.1% ethanol vehicle market share by 2037. The segment’s growth is attributed to rising demand for ethanol blend fuels for passenger cars with governments across the world releasing mandates for oil wholesalers to forward ethanol blended fuel solutions. For instance, in November 2024, Japan announced the decision to urge automakers to make all new passenger cars compatible with biofuel from 2030.
Furthermore, flexible-fuel passenger cars are proven to have lesser emissions and ethanol improves the engine life which benefits the fuel economy while assisting reduction in emissions. The favorable trends drive adoption boosting the segment’s growth. For instance, in August 2023, a 100% ethanol-powered car by Toyota was unveiled in India that is deemed as the world’s first BS-VI electrified flex-fuel vehicle.
Fuel Source (Corn Ethanol, Cellulosic Ethanol)
The corn ethanol segment of the ethanol vehicle market is poised to register a dominant share by fuel source. The segment’s growth is attributed to rising demand for renewable fuels amid environmental concerns. Corn ethanol serves as a cleaner burning alternative to traditional gasoline, assisting in curbing GHG emissions which drives demand. Furthermore, research indicating the positive energy balance of corn ethanol is poised to drive production. For instance, in April 2022, the Renewable Fuels Association published results of their research indicating that corn ethanol provides energy that is nearly three times the energy used to produce it.
Additionally, the segment’s growth is evident from rising government investments to increase corn ethanol production. For instance, in October 2024, the Advanced Research Projects Agency-Energy (ARPA-E) announced up to USD 36 million in funding to develop technologies to lower nitrous oxide (N2O) emissions by 50% from the cultivation of corn and sorghum used for U.S. ethanol production.
The cellulosic ethanol segment of the ethanol vehicle market is poised to expand its revenue share by the end of the forecast period. Unlike first-generation biofuels, cellulosic ethanol utilizes diverse feedstocks which reduces competition with food resources. Increasing production, led by India, is poised to benefit the global supply chain. Furthermore, companies operating in the sector are leveraging strategic agreements to expand their cellulosic ethanol portfolio to cater to rising ethanol vehicle market demand. For instance, in November 2022, Shell and Raizen announced an agreement to sign a cellulosic ethanol deal where the former agreed to buy 3.2 billion liters of sugar-cane cellulosic ethanol, and the low-carbon fuel is poised to be produced in large amounts by five plants that Raizen plans to build in Brazil to increase its portfolio.
Additionally, the advent of commercial production of cellulosic ethanol by emerging ethanol vehicle market players is beneficial for the sector’s growth. For instance, in March 2024, Blue Biofuels Inc. announced the production of its first batch of cellulosic ethanol by advancing its cellulose-to-sugar technology towards commercial scale.
Our in-depth analysis of the ethanol vehicle market includes the following segments:
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Vehicle Type |
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Fuel Source |
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Engine Type |
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Application |
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North America Market Forecast
North America ethanol vehicle market is set to dominate revenue share of around 43.7% by the end of 2037. The market’s growth in the region is attributed to rising government support and investment to increase ethanol production and support ethanol fuel blends. Additionally, the abundance of agriculture in North America ensures a steady supply of feedstocks for ethanol production creating a robust regional supply chain.
Furthermore, companies are investing to expand ethanol production in the region which benefits the North America ethanol vehicle industry. For instance, in August 2024, Verbio North America Holdings Corporation announced the commencement of the commercial production of corn-based ethanol at its biorefinery facility in the U.S. with a total capacity to produce 60 million gallons of corn-based ethanol per year.
The U.S. ethanol vehicle market is poised to hold a dominant revenue share in North America. The market’s growth is fueled by federal mandates such as the Renewable Fuel Standard (RFS) requiring a specific volume of renewable fuel to be incorporated into transportation fuel. This has led to a substantial increase in ethanol production, with the U.S. becoming a major producer and exporter of ethanol which assists the growth of the ethanol vehicle sector. For instance, in November 2024, the U.S. Energy Information Administration reported that U.S. fuel ethanol exports have increased due to strong international demands and low prices with the country averaging 121,000 barrels per day of ethanol exports in the first eight months of 2024. Furthermore, in October 2024, the U.S. Energy Information Administration stated that the U.S. capacity to produce biofuels has increased by 7% in 2023, reaching 24 billion gallons per year by the start of 2024.
The automotive industry of the country has responded to the rising production of ethanol by driving the production of flex-fuel vehicles capable of operating on high ethanol blends. Additionally, ongoing research efforts aim to enhance ethanol production efficiency and vehicle compatibility to ensure sustained growth of the sector.
The Canada ethanol vehicle industry is poised to expand during the forecast period. The push to reduce carbon emissions in the country is a major driver of the sector and government mandates supporting innovations in the clean fuel industry are poised to assist the sector’s growth. For instance, in June 2022, the Government of Canada announced support for the final Clean Fuel Regulations to support innovations in the fuel industry. The government support for investors and stakeholders to bring low-carbon fuels to the ethanol vehicle market in Canada is poised to drive demand for hybrid plug-in vehicles that support ethanol blended fuels. Additionally, Canada has a well-established agricultural industry, particularly wheat and corn, ensuring a steady domestic supply of primary feedstocks for ethanol production.
Europe Market Forecast
The Europe ethanol vehicle market is poised to grow rapidly during the forecast period. The market’s growth in Europe is attributed to mandates supporting ethanol blends in fuel driving the adoption of vehicle engines that can support biofuels. For instance, the Red II mandate by the European Union that by 2030, at least 32% of Europe’s energy should be from renewable resources, and at least 14% of all energy in road and rail transport fuels to be produced from renewable energy sources by 2030. Additionally, countries in Europe have implemented national policies to promote the use of biofuels driving the sector’s expansion.
Companies are investing to improve the ethanol supply chain in Europe which is poised to drive the growth of the ethanol vehicle sector. For instance, in December 2024, ArcelorMittal and LanzaTech announced the ethanol production milestone and the shipment of the first barge from the flagship Steelanol facility in Belgium.
The Germany ethanol vehicle sector is poised to exhibit growth during the forecast period. The Energiewende policy of Germany remains a major driver for the ethanol vehicle market as the country has emphasized a transition to renewable energy sources across all sectors, including the transportation sector of Germany. Furthermore, the cost-effectiveness of ethanol-blended gasoline such as E10 has led to increased usage in the country creating opportunities for manufacturers to launch ethanol fuel-supporting vehicles. Furthermore, the deal between the EU and the government of Germany bodes positively for automakers in the country as the continued usage of ICE vehicles is expected to continue after 2035 provided, they are integrated with CO2-neutral fuels.
The Belgium ethanol vehicle sector is poised to expand during the forecast period owing to rising demand for biofuel integration in the transportation sector. For instance, in 2021, E10 accounted for 79% of gasoline consumption in the country, highlighting a heightened consumer acceptance of ethanol blended fuels. Furthermore, the country’s commitment to biofuels consumption in the transport sector drives the ethanol vehicle market growth coupled with increasing ethanol production. For instance, in March 2023, ArcelorMittal announced the first industrial production of ethanol at its Steelanol plant in the country.
The ethanol vehicle market is poised to expand during the forecast period. Leading companies in the sector are leveraging strategic initiatives to expand revenue share and strengthen market presence. Partnerships with automakers to promote and develop flex-fuel vehicles leveraging higher ethanol blends to penetrate various markets is projected to assist in market expansion. Furthermore, investments in marketing campaigns to emphasize the environmental benefits of ethanol and appealing to policymakers for favorable regulations is poised to assist the ethanol vehicle market growth. In September 2024, Gevo Inc., announced a definitive agreement to acquire the ethanol production plant and carbon capture and sequestration assets of Red Trail Energy, LLC for USD 210 million in a bid to expand its ethanol portfolio.
Here are some key players in the ethanol vehicle market:
Author Credits: Saima Khursheed
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