Global Electric Ships Market Size to grow by US$ 10.82 billion by 2028
The electric ships market size was valued at USD 5.50 billion in 2019 and is projected to grow USD 10.82 billion by 2028, exhibiting a CAGR of 11.2% during the forecast period.
The utilization of electric ships in maritime transportation is environment-friendly due to electric ships are electrically driven ships equipped with batteries and run on electricity instead of conventional fuel. Electric ships use a battery bank as their source of power to drive electric motors. There are various battery banks utilized in ships such as lithium-ion batteries, lead-acid batteries, and others. Therefore, these ships are reduced exhaust gases such as sulfur oxides, soot particles and fine dust, nitrogen oxides, and also carbon dioxide (CO2) during maritime transportation across the globe. Also, the rising need for reduction of greenhouse emissions and lower fuel wastage has led to rising demand for the electric-operated marine ship during the forecast period.
With the rise in cases of COVID-19, most industries have been adversely affected due to the disturbed supply chain in 2020. Due to the pandemic, electric ship manufacturers and investors are forced to stop all funding and production operations. Countries such as Japan and China are the prominent suppliers of raw materials such as nickel, lithium, cobalt, and others. They are essential for the batteries powering the propulsion systems on electric ships. However, trade restrictions owing to the pandemic-induced lockdown have created halt for their supply. The shortage of raw materials may result in a significant price hike during the pandemic and a decrease in the production of electric ships. Therefore, the delay in shortage of supply for essential battery materials and autonomous operation funding is expected to be the key negative effects of the pandemic on the market.
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Growing Adoption of Electric Ships owing to Environmental Concerns
Increased seaborne trade and maritime tourism are the major factors that are driving the Electric Ships Market during the forecast period. Most of the world’s goods are carried by ships therefore the global economy is dependent on the shipping market. The market is expected to play a significant role in the shipping sector as environmental causes have increasingly come to the forefront in this sector. Further, fully electric and hybrid types of ships cause less emission and save the environment from getting polluted more, which are growing adoption of electric ships in the coming year.
The increasing government support to promote the utilization of electric ships to reduce emissions is likely to help market growth during the forecast period. In 2020, the South Korean government announced a USD 870 million between 2022 to 2031 to encourage the development of eco-friendly shipping to reduce pollution caused by the country’s marine sector.
Implementation of the IMO 2020 Global Sulphur Cap is Promoting Growth
In January 2020, the International Maritime Organization (IMO) implemented a new limit on the Sulphur content in the fuel oil used on board ships came into force, marking a significant milestone to improve air quality, preserve the environment, and protect human health. According to IMO 2020, ships need to utilize fuels with a Sulphur content of 0.5% or less, as compared to the previous limit of 3.5% or less. However, unlike the residual fuels utilized by the majority of the ships, the cost of compliant fuels is expected to be around 50% higher. Therefore, it increases the operating cost of the ships. Hence, ship operators are expected to divert towards electric ships. It can also help to reduce operating costs. These factors are set to fuel the electric ships market growth.
By Type Analysis
Based on the Type, the market is segmented into Fully Electric and Hybrid. The hybrid segment is expected to dominate the market growth due to this technology can reduce CO2 emissions from ships and fuel consumption. These ships can also enable sailing with fully electric propulsion for a short time (15 to 30 minutes for large ships). Hence, the reduced risk of failure and the environmental sustainability of hybrid ships are boosting the market demand for this segment.
Europe is the largest market for electric ships due to the growing popularity of electric recreational and leisure vessels in marine tourism, water adventures, and fishing activities in the region. Several government initiatives would propel the adoption of electric ships. In June 2019, the U.K. announced the Clean Maritime Plan. According to this plan, all new ships ordered for the European waters from 2025 have to be equipped with batteries and run on electricity instead of conventional fuel. The plan is part of the government's long-term Maritime 2050 strategy; under which it aims to achieve net-zero greenhouse gases by 2050. Hence, governmental support in terms of stringent greenhouse gas emission regulations is projected to increase the demand for electric ships in Europe during the forecast period.
The Asia Pacific is the second-largest market for electric ships owing to improved battery storage systems, rising seaborne trade, and marine tourism in the region. The countries China and Japan are focused on the electrification of large ships is anticipated to influence the market growth.
North America is the third-largest market for electric ships due to the growing adoption of all-electric ships by the U.S. Navy such as the USS Zumwalt which is the most advanced and largest stealth destroyer in its fleet is expected to drive the market growth during the forecast period.
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KEY INDUSTRY DEVELOPMENTS:
In October 2021, Groupe Beneteau has announced the acquisition of STARFISHER, which has become GB PORTUGAL, to strengthen its production capacity for 25 to 35-foot powerboats by establishing itself in Portugal.
In June 2021, South Korea’s first commercialized hydrogen-electric boat was unveiled at the 2021 Busan International Boat Show, where the Hydrogenia vessel is powered by a Danfoss Editron electric drivetrain and sub-system.
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