Military Vehicle Electrification Market

Market Definition

Military vehicle electrification refers to the integration of electric propulsion systems and associated technologies into military vehicles, including land, sea, and air-based platforms. This process involves replacing traditional internal combustion engines with electric or hybrid powertrains to enhance operational efficiency, reduce fuel dependency, and improve overall sustainability in military operations. 

The transition to electric or hybrid military vehicles aims to provide benefits such as lower emissions, quieter operations, increased energy efficiency, reduced logistics costs, and advanced capabilities such as silent running and better maneuverability in combat situations. Additionally, electrification can improve the resilience and autonomy of military fleets by utilizing renewable energy sources and energy storage systems.

Military Vehicle Electrification Market Overview

The global military vehicle electrification market size was valued at USD 3.92 billion in 2023 and is projected to grow from USD 4.91 billion in 2024 to USD 24.69 billion by 2031, exhibiting a CAGR of 25.97% during the forecast period. 

The market is driven by the increasing demand for environmentally sustainable and cost-effective solutions within defense forces. Additionally, advancements in electric propulsion technology are improving vehicle performance, reducing maintenance costs, and enhancing mission capabilities. 

Governments globally are also implementing stricter environmental regulations, prompting defense sectors to adopt electrified vehicles to meet sustainability targets while maintaining operational effectiveness in diverse terrains.

Major companies operating in the military vehicle electrification industry are Oshkosh Corporation, General Motors, General Dynamics Land Systems, BAE Systems, Leonardo S.p.A., Textron Inc, ST Engineering, QinetiQ, Polaris Inc., Aselsan AS, Otokar Otomotiv ve Savunma Sanayi A.S., KNDS Deutschland, Crane Aerospace & Electronics, RENK Group AG, and ARQUUS.

The rising demand for hybrid military vehicles, which combine traditional combustion engines with electric powertrains, is driving the market. Hybrid vehicles offer a balance of extended range and energy efficiency while maintaining operational flexibility in diverse terrains.

Hybrid solutions are increasingly integrated into military fleets, hence, they offer a transitional pathway toward full electrification, contributing to the overall expansion of the market.

• In February 2024, ST Engineering introduced a new infantry fighting vehicle, which the company claims to be "the world's first hybrid-electric 35-ton armored fighting vehicle." The Terrex S5, with its conventional drive, delivers 711 horsepower and has a range of 1,000 kilometers. However, with the hybrid range extender, which includes a lithium-ion battery, the vehicle's power output increases to 1,200 horsepower, offering an additional 50 kilometers of silent operation.

Key Highlights:

1. The military vehicle electrification industry size was valued at USD 3.92 billion in 2023.
2. The market is projected to grow at a CAGR of 25.97% from 2024 to 2031.
3. North America held a market share of 31.11% in 2023, with a valuation of USD 1.22 billion.
4. The combat vehicles segment garnered USD 1.69 billion in revenue in 2023.
5. The electric segment is expected to reach USD 15.70 billion by 2031.
6. The less than 50 V segment secured the largest revenue share of 39.08% in 2023.
7. The autonomous segment is poised for a robust CAGR of 26.02% through the forecast period.
8. The power generation segment is projected to hold 31.85% market share in 2031.
9. The market in Asia Pacific is anticipated to grow at a CAGR of 27.36% during the forecast period.

Market Driver

"Environmental and Sustainability Goals Driving Market"

The growing focus on reducing carbon emissions and the environmental impact of military operations is significantly driving the military vehicle electrification market. Governments and defense organizations globally are under pressure to align with global sustainability targets. 

Electrification presents a viable solution to minimize reliance on fossil fuels and reduce the environmental footprint of military vehicles. Transitioning to electric or hybrid military vehicles enhances the ecological responsibility of defense operations while supporting broader national and international environmental goals, contributing to the market expansion.

• The UK Ministry of Defence (MoD) is progressing with its initiative to create and implement an all-electric fleet of military vehicles. In April 2023, Babcock International revealed that it had secured a contract to re-engineer four British Army Land Rovers by integrating an electric propulsion system. This initiative aims to assist the military in gaining a deeper understanding of the potential operational limitations of electric vehicles (EVs).

Market Challenge

"Limited Charging Infrastructure in Remote and Combat Zones Poses Challenge"

A significant challenge hindering the growth of the military vehicle electrification market is the lack of adequate charging infrastructure in remote and combat zones. Military operations often take place in austere environments where access to charging stations is limited, posing a challenge for sustained vehicle deployment.

Companies are developing mobile charging units, hybrid energy storage systems, and self-sustaining microgrids to provide reliable power in remote locations. Innovations such as solar-powered charging stations and fast-charging battery technologies are also being explored to enhance operational readiness and support long-duration missions.

Market Trend

"Technological Advancements in Electric Powertrains Driving Adoption"

Continuous innovation in electric powertrain technologies, including improved motors, controllers, and energy management systems, is driving the military vehicle electrification market. These advancements enhance the efficiency, performance, and adaptability of electric military vehicles, making them viable for a range of defense applications. 

Electrified military vehicles offer greater operational capabilities as technology progresses, further increasing their adoption across military fleets globally.

• The British Army’s vehicle electrification initiative, initiated in April 2023 under Project Lurcher, aims to reduce its carbon footprint. Project Lurcher was initially conceived by Electrogenic, a company known for developing EV technology to prolong the life of classic cars, in collaboration with Babcock International. Lurcher will provide Army engineers with the opportunity to delve into a new area of engineering, while the partnership with McLaren will introduce race-winning innovations into concepts designed for combat success.

Military Vehicle Electrification Market Report Snapshot

Market Segmentation:

• By Vehicle (Combat Vehicles, Support Vehicles, Unmanned Armored Vehicles): The combat vehicles segment earned USD 1.69 billion in 2023, due to the increasing demand for advanced hybrid and electric armored vehicles that enhance battlefield mobility, reduce thermal and acoustic signatures, and support energy-efficient operations in modern warfare.
• By Technology (Hybrid, Electric): The electric segment held 63.96% share of the market in 2023, due to the increasing adoption of fully electric military vehicles, driven by government mandates for zero-emission defense fleets, advancements in high-energy-density batteries, and the need for stealth operations with reduced thermal and acoustic signatures.
• By Voltage (less than 50 V, less than 50-600 V, and more than 600 V): The Less than 50 V segment is projected to reach USD 9.31 billion by 2031, owing to its cost-effectiveness, simpler integration into existing military systems, and suitability for lightweight vehicles requiring less power.
• By Operation (Manually-operated, Semi-autonomous, and autonomous): The autonomous segment is poised for significant growth at a CAGR of 26.02% through the forecast period, due to its ability to enhance operational efficiency, reduce human risk, and optimize mission execution in challenging and remote environments.

Military Vehicle Electrification Market Regional Analysis

Based on region, the global market has been classified into North America, Europe, Asia Pacific, Middle East & Africa, and Latin America.

North America accounted for around 31.11% military vehicle electrification market share in 2023, with a valuation of USD 1.22 billion. The increasing integration of hybrid and autonomous military vehicles in defense operations is driving the demand for electrified solutions. 

Hybrid models offer flexibility, while autonomous EVs support next-generation defense technologies. These evolving trends are contributing to the accelerated adoption of electric military vehicles in North America.

• In January 2025, the U.S. Army began testing a hybrid next-generation tactical vehicle prototype in the snowy terrain of Bavaria, as reported by the U.S. Army Europe and Africa on its website. The vehicle, developed by GM Defense, is the Next Generation Tactical Vehicle-Hybrid (NGTV-H), a diesel-electric light reconnaissance vehicle. It was first introduced by the company at the Association of the U.S. Army's annual conference in October 2024.

Additionally, governments in North America, particularly the U.S., are heavily investing in military modernization, including the electrification of defense vehicles. Increased defense budgets and funding for green technologies are accelerating the development and deployment of electric military vehicles. This governmental backing is crucial in advancing electrification projects and expanding market adoption.

The military vehicle electrification industry in Asia Pacific is poised for significant growth at a robust CAGR of 27.36% over the forecast period. Countries in Asia Pacific, particularly China, India, and Japan, are significantly increasing their defense spending as part of modernization efforts. 

These countries are investing in advanced technologies, including electric and hybrid military vehicles, to enhance their defense capabilities. This substantial funding is a critical driver for the growth of the market in the region.

Furthermore, strategic partnerships between local defense contractors and global manufacturers of EV technologies are facilitating the adoption of electrified military vehicles in Asia Pacific. These collaborations promote technology transfer, help to localize production, and ensure that EVs meet the specific needs of the region’s armed forces, further boosting the market.

Regulatory Frameworks:

• The U.S. Department of Defense (DoD) is actively pursuing the electrification of its vehicle fleet. In December 2022, the National Defense Authorization Act mandated all new non-combat military vehicles purchased by the DoD to be electric by 2035.
• The UK Ministry of Defence (MoD) is actively pursuing the electrification of military vehicles to reduce carbon emissions and enhance operational efficiency. Initiatives like Project Lurcher aim to integrate electric propulsion into defense vehicle. The UK government’s overarching climate policy, enshrined in the Climate Change Act of 2008, sets binding targets for reducing emissions. This includes defense sector efforts to reduce carbon footprints, with military electrification being a key component.
• The government of Germany is investing in the development of hybrid and electric military vehicles through its Federal Ministry of Defence (BMVg). This aligns with Germany’s commitment to EU-wide green defense procurement practices, ensuring that military operations are more sustainable.
• China’s defense modernization policies are closely aligned with the country’s efforts to lead in EV technology. The Ministry of Industry and Information Technology (MIIT) promotes the development of electric technologies, and this has extended into the military sector, with a focus on hybrid and electric military vehicles. As part of its Defense White Paper, China’s military is gradually incorporating advanced propulsion systems, including EVs, to enhance energy security and reduce reliance on traditional fuels.
• India’s military is gradually adopting EV technologies to reduce fuel dependency and improve energy efficiency. The government’s Electric Mobility Mission Plan 2020-2030 focuses on fostering EV adoption across sectors, including defense. The Ministry of Defence is exploring collaborations with local manufacturers to develop hybrid and fully electric military vehicles, leveraging India’s growing EV infrastructure and policy incentives.

Competitive Landscape:

The military vehicle electrification industry is characterized by a number of participants, including established corporations and rising organizations. Leading market players are adopting strategies such as expanding their product lines to meet the increasing demand for off-road EVs in military bases, significantly contributing to the growth of the market. 

By focusing on the development and integration of electric propulsion systems in off-road military vehicles, these companies are positioning themselves to address the operational needs of modern military forces. 

Expanding product portfolios allows these players to offer more diverse and specialized vehicles tailored to military applications, such as reconnaissance, transportation, and tactical operations, ensuring higher efficiency and reduced environmental impact. This strategy is aligned with the growing emphasis on sustainability and energy efficiency within defense sectors globally, fueling the market.

• In October 2023, Polaris introduced its latest all-electric off-road vehicle into production, aligning with the federal government's mandate for a transition to zero-emission vehicles. The Ranger XP Kinetic utility vehicle is being positioned as a replacement for pickup trucks and other off-road work vehicles used across military bases, park services, and various state and federal agencies. In December 2023, the U.S. Army released a climate strategy outlining plans to deploy an all-electric, light-duty, non-tactical vehicle fleet by 2027—covering models like the Ranger XP Kinetic—and achieve full electrification of its non-tactical fleet by 2035.

List of Key Companies in Military Vehicle Electrification Market:

• Oshkosh Corporation
• General Motors
• General Dynamics Land Systems 
• BAE Systems
• Leonardo S.p.A.
• Textron Inc
• ST Engineering
• QinetiQ
• Polaris Inc.
• Aselsan AS
• Otokar Otomotiv ve Savunma Sanayi A.S. 
• KNDS Deutschland
• Crane Aerospace & Electronics 
• RENK Group AG
• ARQUUS

Recent Developments (Collaboration/Partnerships/New Product Launch)

• In June 2024, General Motors, collaborated with the University of Texas at Arlington (UTA) Pulsed Power and Energy Laboratory (PPEL) and the Naval Surface Warfare Center Philadelphia Division (NSWCPD) to support advancements in commercial battery electric technology. The initiative, titled "Evaluation of Electric Vehicle Batteries to Enable Directed Energy" (EEVBEDE), is backed by the U.S. Department of Defense (DoD) through its Operational Energy Capability Improvement Fund (OECIF) under the Operational Energy Innovation office. This project aims to assess the potential of EV batteries in enhancing directed energy capabilities for defense applications.
• In October 2024, BAE Systems announced plans to develop networked armored combat vehicles designed for various battlefield roles, including armored ambulances, mortar carriers, engineer vehicles, and command vehicles. This initiative is part of a contract valued at USD 184.4 million, aimed at enhancing the versatility and operational efficiency of military ground forces. BAE Systems' initiative aligns with the broader industry trend of modernizing armored fleets with electric and hybrid propulsion systems.
• In March 2024, Polaris introduced two new military snowmobiles, the 2025 Military 650 TITAN 155 and the 2025 Military 850 PRO RMK 155, incorporating advanced technology and ride-enhancing upgrades from the 2025 Polaris Snowmobile lineup. These models feature modifications such as 12V outlets, enabling the powering or charging of handheld electronics and other mission-critical equipment.
• In September 2024, QinetiQ and RENK Group AG entered a strategic partnership to collaboratively develop next-generation mobility solutions for military land platforms. This collaboration will focus on advancing hybridization & electrification technologies, as well as enhancing the capabilities of uncrewed ground vehicles (UGVs), reinforcing the growing adoption of electric and hybrid military vehicle systems.