The automotive natural gas vehicle market is estimated to reach USD 15.64 billion in 2025. It is anticipated to grow at a CAGR of 7.1% during the assessment period 2025 to 2035 and reach a value of USD 31.06 billion by 2035.
Attributes | Description |
---|---|
Estimated Automotive Natural Gas Vehicle Market Size (2025E) | USD 15.64 billion |
Projected Automotive Natural Gas Vehicle Market Value (2035F) | USD 31.06 billion |
Value-based CAGR (2025 to 2035) | 7.1% |
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Many countries are heavily investing in reducing carbon emissions. For example, in July 2023, the Department of Energy (DOE) announced to spend over USD 23 million to decrease carbon emissions across the USA Moreover, natural gas is climate-neutral and can be a feasible approach toward sustainability.
Thus, the rising concerns about carbon emissions among governments of different nations has led to the adoption of natural gas vehicles.
Many companies are investing huge amounts in the production of natural gas vehicles such as Honda, Suzuki, and others. In this regard, they are engaged in intense research and development activities for the launch of new and innovative capabilities of products.
Additionally, many companies are formulating important strategies to deploy sustainable fuel cell technology due to the growing concern for decreasing carbon emissions. For instance, in July 2024, Suzuki announced that it has started the construction of biogas plant in Haryana, India.
Many consumers are beginning to adopt natural gas vehicles for their fleets. Companies that rely on delivery services are finding natural gas vehicles (NGVs) to be cost-effective.
According to the USA Energy Information Administration, total sales of battery electric vehicles, hybrid vehicles, and plug-in hybrid electric vehicles rose from 19.1% of total new light-duty vehicle sales in the USA in 2024 to 21.2% in 2034.
The governments of various developed and developing nations are also providing subsidies on the purchase on electric vehicles, which is working in favor of the market growth.
The general public is becoming more aware of the benefits of NGVs, due to rising educational initiatives. As per the USA Department of Energy in October 2020, the USA Department of Energy’s Office of Fossil Energy announced the launch of a new report that showed the benefits of natural gas.
Moreover, government-led campaigns also focus on educating the community about the benefits of NGVs. These factors, coupled with rising per capita income of people backed by the growing working class population is encouraging them to invest in natural gas vehicles.
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Technological Innovations in Vehicles
Natural gas vehicles have witnessed many technological innovations. Nowadays, dual-fuel engines are being integrated in these vehicles, which helps decrease range anxiety.
Additionally, advanced manufacturing methods and materials are resulting in stronger tanks, which boosts storage capacity while cutting down vehicular weight. Moreover, advancements in refueling systems have also been made which are making it convenient to refill natural gas vehicles.
Many automobile manufacturers are also focusing on sourcing natural gas through virtual pipelines. Now, this gas can be distributed with the help of specialized containers, which may expand the reachability in remote locations across the world.
Improvement in Refueling Infrastructure
The establishment of refueling locations specifically for natural gas is ramping up. With more stations available, drivers feel more comfortable choosing natural gas vehicles as their primary vehicles.
The Indian government is investing significantly in increasing the network of natural gas refueling places across the nation. This is part of a broader effort to promote the use of natural gas as a cleaner and extra-cheap transportation fuel.
High Cost of Natural Gas May Hamper Market Growth
The price of natural gas is influenced by many factors, such as rising demand, economic growth, and energy transition. The political unrest and war scenario also affects the price of natural gas, which restrains its adoption among many automobile manufacturers. Extreme weather events, such as cold winters, hurricanes, or unusually can also disrupt production or surge demand, disrupting prices.
Scarcity of Natural Gas Reserves May Affect Product Sales
The occurrence of natural gas can differ significantly from region to region due to many factors including weather. Thus, the finite availability of this resource is leading to insufficient infrastructure specifically in developed and developing regions across the world. Additionally, the number of refueling stations for this resource is less, which is a major barrier to market growth in developing countries.
Government Investment in CNG vehicles to Drive Segment Growth
Attributes | Details |
---|---|
Top Fuel Type | Compressed Natural Gas (CNG) |
Market Share in 2024 | 70% |
Based on fuel type, the automotive natural gas vehicle market is divided into compressed natural gas (CNG) and liquefied natural gas (LNG). The compressed natural gas (CNG) segment captured 70% market share in 2024. As per the UN environment program, CNG passenger vehicles contribute 5-10% less CO2 than gasoline-powered passenger vehicles.
The government is also investing heavily in CNG-powered vehicles, which is driving the segment growth. Moreover, enhancements in CNG engine technology are resulting in better performance, decreased emissions, and fuel efficiency. The segment growth can also be credited to the growing number of CNG refueling stations globally, making it more suitable for drivers to refuel.
Emission Reduction Ability of Natural Gas-Based Passenger Vehicles to Propel their Demand
Attributes | Details |
---|---|
Top Vehicle Type | Passenger Vehicles |
Market Share in 2024 | 65% |
Based on vehicle type, the market is divided into passenger vehicles and commercial vehicles. The passenger vehicles segment captured 65% market share in 2024. Natural gas decreases emissions to burn much cleaner than gasoline or diesel, producing considerably lower levels of harmful pollutants such as nitrogen oxides, carbon monoxide, and particulate matter.
Moreover, natural gas is getting less expensive than petrol, diesel, and other traditional fuels. Several governments are promoting NGVs and providing subsidies and tax incentives to encourage uptake and decrease reliance on fossil fuels.
China
The Asia Pacific continues to dominate in NGV uptake, credited to nations such as India and China. Moreover, a considerable rise in the number of LNG-powered trucks have been reported owing to China’s emphasis on decreasing emissions, which has resulted in a reduction in demand for diesel.
The region is also observing a significant rise in the uptake of LNG-powered heavy-duty trucks specifically in China where LNG trucks made up 42% of heavy-duty truck sales in early 2024.
The government in the country is also providing financial assistance for buying LNG trucks, which amounts 20-50% of the vehicle’s price. The government has built more than 5,000 LNG refueling networks countrywide. It is also mandating public buses in key cities to switch to CNG/LNG.
India
The Indian government is also providing financial assistance for the retrofication of vehicles with CNG kits. It also levies 50% decreased road taxes in many states. Additionally, it has made CNG buses and three-wheelers in urban centers compulsory and is offering financial aid for fleet conversion.
USA
The USA held 16.7% market share in 2024. The USA government offers credits to natural gas vehicle owners for using RNG fuel under the Low Carbon Fuel Standard (LCFS).
Additionally, under California's Advanced Clean Trucks Program, the government provides grants and rebates for natural gas vehicles, specifically for transit and freight vehicles. The USA also leads the charge in NGV acceptance, encouraged by stringent government policies and an established infrastructure.
Germany
In Germany, no tax has been levied on natural gas vehicles till 2026. It also offers funding for the establishment of LNG and CNG refueling stations under the National Hydrogen and Fuel Cell Technology Innovation Program. Moreover, for fleet operators, discounts on the purchase of natural gas vehicles and special leasing terms are also offered by the government.
France
The French government offers up to €3,000 for shifting from diesel to natural gas vehicles. Additionally, decreased excise duties on natural gas fuel are being levied as compared to petrol and diesel. The government also offers subsidies for commercial vehicles and offers assistance to businesses to switch to LNG trucks.
UK
The UK held 5.8% market share in 2024. Countries such as the UK are at the forefront in Europe, promoting NGVs as a major part of their sustainability goals. Additionally, Europe’s regulatory environment often favors natural gas as an in-between fuel to help replacements.
There is a healthy competition among companies such as Volkswagen, Fiat Chrysler Automobiles, Honda, and Scania, which are investing in R&D to enhance fuel efficiency and vehicle presentation. Moreover, these companies are working to ensure that the user experience aligns with what drivers anticipate from modern vehicles, focusing on comfort and ease of use.
Original Equipment Manufacturers (OEMs) companies such as General Motors, Honda, and Ford offer factory-built NGV models, using their recognized supply networks and brand credit.
Moreover, aftermarket conversion companies have expertise in converting traditional vehicles to run on natural gas, providing a wider range of vehicle models and offering more reasonable alternatives for consumers.
Company | Area of focus |
---|---|
Suzuki Motor Corporation | Selling technologically advanced CNG vehicles |
Hyundai Motor Company | Advanced systems for comprehensive carbon emissions management |
Honda Motor Co. Ltd. | Shifted to a new generation of hybrids, plug-ins, and fuel cells. |
Ford Motor Company | Innovations in natural gas vehicles |
The automotive natural gas vehicle market is on a rising course, driven by scientific developments, better infrastructure, and changing consumer preferences. As this market grows, it presents an opportunity for both automakers and drivers to reconsider their roles in creating a more ecological future.
Furthermore, the market is observing improved competition from technology companies, traditional automakers, and new entrants. Established automakers are emerging their own NGV models, while new players are concentrating on innovative technologies and business models.
In terms of fuel type, the automotive natural gas vehicle market is segmented into compressed natural gas (CNG) and liquefied natural gas (LNG).
In terms of vehicle type, the market is segmented into passenger vehicles and commercial vehicles.
The market size reached USD 15.64 billion in 2025.
The market is predicted to reach a size of USD 31.06 billion by 2034.
The prominent companies in the market include Hyundai Motor Company, Honda Motor Co. Ltd. Suzuki Motor Corporation, and Ford Motor Company.
China is a lucrative country for many automotive natural gas vehicle manufacturers.
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