Military Vehicle Electrification Market (2026-2036)
The global Military Vehicle Electrification Market was valued at USD 3.9 billion in 2025. This market is expected to reach USD 15.2 billion by 2036 from an estimated USD 4.4 billion in 2026, registering a CAGR of 13.2% during the forecast period (2026-2036).
- Published
- Oct 2026
- Pages
- 288
- Format
- PDF + Excel
- Report ID
- MR-2327
- Base year
- 2025
- 2025 · BASELINE
- $3.90B
- 2036
- $15.20B
- CAGR 2026–2036
- 13.2%
2025 baseline · 2026–2036 forecast at 13.2% CAGR · hover a bar for the value
Key highlights
The global Military Vehicle Electrification Market is projected to reach USD 15.2 billion by 2036, driven by defense spending growth, rising onboard power requirements, silent operation needs, and the electrification of next-generation combat and unmanned vehicles.
North America is expected to account for the largest market share in 2026, while Europe is projected to register the fastest growth during the forecast period. General Dynamics Land Systems and American Rheinmetall delivered their first XM30 Mechanized Infantry Combat Vehicle prototypes in August and September 2026, and the U.S. Army requires a fuel-efficient hybrid-electric drive for the program.
By type, Electrified Onboard Power systems are expected to account for the largest market share in 2026, whereas Fully Electric systems are projected to witness the fastest growth through 2036. Rheinmetall has acquired the Dutch electric vehicle startup REEQ and is supplying 20 Ermine light tactical hybrid vehicles, including unmanned variants, to Ukraine under a contract signed in June 2025.
Hybrid power is extending to unmanned logistics. In August 2026, American Rheinmetall won an 18-month U.S. Army contract to develop hybrid-powered unmanned ground vehicles for frontline resupply, using a Harbinger hybrid chassis with a range of more than 500 miles and 350 kW of exportable power.
Electrified drive components are maturing. Allison Transmission received a Phase 2 contract from the U.S. Army Ground Vehicle Systems Center under the Next Generation Electrified Transmission (NGET) program in July 2025, and its eGen Force electrified transmission, selected for the American Rheinmetall XM30, generates 220 kW of electrical power.
Report summary
| Particulars | Details |
|---|---|
| Forecast Period | 2026-2036 |
| Base Year | 2025 |
| Estimated Year | 2026 |
| CAGR (Value) | 13.2% |
| Format | PDF, Excel & Cloud Portal · 288 pages |
| Market Size (Value) in 2026 | USD 4.4 Billion |
| Market Size (Value) in 2036 | USD 15.2 Billion |
| Segments Covered | By Type: Hybrid Electric (Series Hybrid, Parallel Hybrid), Fully Electric, Electrified Onboard Power (Silent Watch Systems, Exportable Power Systems). · By Platform: Combat Vehicles (Infantry Fighting Vehicles, Main Battle Tanks, Armored Personnel Carriers), Tactical & Utility Vehicles, Logistics & Support Vehicles, Unmanned Ground Vehicles, Light Special-Purpose Vehicles. · By Component: Battery Systems, Electric Motors & Generators, Power Electronics, Electrified Transmissions, Power Management & Distribution Systems. · By Fit: New-Build (Line-Fit), Retrofit & Upgrade. |
| Countries Covered | North America: U.S., Canada. · Europe: Germany, U.K., France, Italy, Netherlands, Poland, Sweden, Rest of Europe. · Asia-Pacific: China, India, Japan, South Korea, Australia, Rest of Asia-Pacific. · Latin America: Brazil, Mexico, Rest of Latin America. · Middle East & Africa: Saudi Arabia, UAE, Israel, Türkiye, Rest of Middle East & Africa. |
| Key Companies | Rheinmetall AG, General Dynamics Corporation, Oshkosh Corporation, BAE Systems plc, Allison Transmission Holdings, Inc., RENK Group AG, Leonardo DRS, Inc., GM Defense LLC, AM General LLC, Arquus, Milrem Robotics, Harbinger Motors Inc., Epsilor-Electric Fuel Ltd., Saft Groupe SAS, and QinetiQ Group plc. |
Report overview
Segments covered: type, platform, component, fit.
The growth of this market is mainly driven by rising global defense expenditure, the growing electrical power needs of electronic warfare, counter-drone, active protection, and mission command systems, the operational value of silent watch and silent drive, and the need to reduce fuel consumption and the vulnerability of fuel supply lines. In addition, the adoption of hybrid-electric drives in next-generation combat vehicles, the rapid growth of electric and hybrid unmanned ground vehicles, and advances in lithium-ion batteries and power electronics are further supporting the growth of this market.
The Military Vehicle Electrification Market, also referred to as the military hybrid-electric vehicle, electric military vehicle, or military vehicle electric drive market, comprises the electrified propulsion and onboard power systems that are integrated into military ground vehicles, along with electric and hybrid military vehicles themselves. The market includes hybrid-electric drives for combat, tactical, and logistics vehicles; fully electric light tactical vehicles, all-terrain vehicles, and unmanned ground vehicles; electrified onboard power systems that provide silent watch and exportable power; and the components that make up these systems, including battery systems, electric motors and generators, power electronics, electrified transmissions, and power management and distribution systems. The market ecosystem extends from cell, motor, and semiconductor suppliers to electric drive and battery system manufacturers, vehicle manufacturers, defense procurement agencies, and armed forces.
Military vehicles are carrying more electrical equipment than ever before. Sensors, radios, electronic warfare systems, counter-drone systems, active protection systems, and mission command computers all require power, and future directed energy weapons will require more. Rising defense budgets are increasing investment in vehicle modernization. According to the Stockholm International Peace Research Institute (SIPRI), global military expenditure reached a record USD 2,887 billion in 2025, an increase of 2.9% in real terms, with spending in Europe rising 14% to USD 864 billion and spending across Asia and Oceania rising 8.1% to USD 681 billion. Armed forces are therefore investing in hybrid-electric drives and larger onboard power systems that can generate, store, and distribute electrical power more efficiently than conventional engines and alternators.
Next-generation combat vehicles are the most significant driver of electrification in the market. The U.S. Army wants a fuel-efficient hybrid-electric drive for the XM30 Mechanized Infantry Combat Vehicle to support silent running and silent watch and to power electronic warfare, counter-unmanned aircraft systems, active protection, and mission command systems. General Dynamics Land Systems and American Rheinmetall won Phase 3 and 4 contracts worth about USD 1.6 billion in June 2023, delivered their first prototypes, the Wolf and the Lynx, at the end of August 2026 and on September 1, 2026, and are expected to face a single-vendor down-select in mid-2027. The FY2027 request includes USD 547 million in procurement funding for 19 prototype vehicles.
Electrified drive components are being developed alongside these vehicles. Allison Transmission received a Phase 2 contract under the Next Generation Electrified Transmission (NGET) program from the U.S. Army Ground Vehicle Systems Center in July 2025 to improve its eMachine and inverter system. Its eGen Force electrified transmission, selected by American Rheinmetall for the XM30 and scalable to 75-ton tracked vehicles, generates 220 kW of electrical power and allows quiet electric mobility with reduced thermal and acoustic signatures.
Tactical vehicles are also being electrified. Oshkosh Defense displayed its hybrid electric Joint Light Tactical Vehicle (eJLTV) at Eurosatory 2026, featuring silent watch, silent drive, and onboard exportable power generation, and has produced more than 24,000 JLTVs that represent a potential base for future hybrid variants. In October 2026, Oshkosh partnered with Michigan Technological University to develop a Vehicle Integrated Power Kit designed to deliver mobile, on-platform energy for battlefield operations.
Light electric and hybrid vehicles are entering service in Europe. Rheinmetall acquired the Dutch startup REEQ, whose UGV, side-by-side buggy, and quad share the same fully electric drivetrain and can act as mobile energy sources, and in June 2025, the Dutch Ministry of Defence signed a contract with Rheinmetall Defence Nederland for 20 Ermine light tactical hybrid vehicles, including manned and unmanned variants, for Ukraine, with delivery scheduled for the first quarter of 2026.
Unmanned ground vehicles are among the fastest-growing users of electric and hybrid drives. Ukraine plans to contract 25,000 ground robotic systems in the first half of 2026, most of which use electric drives, and in August 2026, American Rheinmetall won an 18-month U.S. Army contract to develop hybrid-powered unmanned ground vehicles for frontline resupply, using a Harbinger hybrid chassis with a range of more than 500 miles and 350 kW of exportable power.
Battery technology is a key enabler of electrification. Vehicle batteries are moving from lead-acid to lithium-ion, which provides more energy for silent watch and engine-off operation. In September 2025, Epsilor introduced a lithium-ion 6T battery for military vehicles with an energy capacity of 4,400 Wh (174 Ah), which it describes as the highest in the market. Lithium-ion 6T batteries can be fitted to existing vehicles, creating a large retrofit market alongside new-build vehicles.
European research programs are also supporting electrification. The European Defence Agency launched the Hybrid Drive Trains for military purpose (HybriDT) project in September 2023 to advance hybrid drive train technologies for military vehicles. Such programs, together with national vehicle modernization programs, are expected to support the adoption of hybrid drives in European combat and tactical vehicles over the forecast period.
The war in Ukraine has accelerated interest in electrified vehicles. Drones with thermal cameras observe the battlefield around the clock, and Ukraine produced more than 4 million drones in 2025, making vehicle heat and noise signatures a direct survivability concern. At the same time, the widespread use of electric unmanned ground vehicles for logistics, casualty evacuation, and combat support has demonstrated the practical value of electric drives in frontline conditions. Armed forces are applying these lessons to their requirements for new combat, tactical, and unmanned vehicles.
Vehicle manufacturers and drive system suppliers are positioning for this demand. General Dynamics Land Systems and American Rheinmetall are competing for the XM30 with hybrid-electric designs, Oshkosh is demonstrating the eJLTV, and commercial electric vehicle companies such as Harbinger are entering the defense market through partnerships with defense primes. These developments indicate that electrification is moving from research and demonstration toward procurement, with the XM30 down-select in mid-2027 expected to be a key milestone for the market.
The value of electrified content per vehicle is also increasing. A hybrid-electric combat vehicle requires an electrified transmission or electric drive, a high-voltage battery, power electronics, and a power management and distribution system, while even conventional vehicles are being fitted with larger lithium-ion batteries and exportable power systems. As a result, market value is expected to grow faster than the number of electrified vehicles over the forecast period.
This reflects the shift toward power generation as the main rationale for electrification.
This indicates that maintainability and battery safety are key requirements for hybrid combat vehicles.
This points to the value of fuel efficiency and exportable power in logistics operations.
Market dynamics
15 factors across 5 forcesRising Global Defense Expenditure and Vehicle Modernization
Rising defense expenditure is a major factor driving the Military Vehicle Electrification Market. According to the Stockholm International Peace Research Institute (SIPRI), global military expenditure reached a record USD 2,887 billion in 2025, an increase of 2.9% in real terms, with spending in Europe rising 14% to USD 864 billion and spending across Asia and Oceania rising 8.1% to USD 681 billion. Ground vehicle modernization is a priority in many of these budgets, as armed forces replace aging infantry fighting vehicles, tanks, and tactical vehicles and expand their land forces.
Higher budgets are translating into new vehicle programs that include electrification. The U.S. FY2027 request includes USD 547 million for 19 XM30 prototypes, and European armies are acquiring new combat and tactical vehicles. NATO members agreed in June 2025 to raise the Alliance spending target to 5% of GDP by 2035, and the EU SAFE instrument provides up to EUR 150 billion in loans for defense procurement, which are expected to support further vehicle modernization, including hybrid and electric vehicles.
Growing Onboard Power Requirements
Modern military vehicles require large amounts of electrical power for sensors, communications, electronic warfare, counter-drone systems, active protection, and mission command. The U.S. Army requires the XM30 hybrid-electric drive to power these systems, and the Allison eGen Force transmission generates 220 kW of electrical power. Conventional engines and alternators cannot provide this power efficiently, particularly when the vehicle is stationary.
Future systems such as directed energy weapons and high-power jammers are expected to increase power requirements further. This is making electrified power generation, storage, and distribution an essential part of new vehicle designs and a key driver of the market.
Operational Value of Silent Watch and Silent Drive
Hybrid-electric and fully electric vehicles can operate with the engine off, reducing noise, heat, and fuel consumption. Silent watch allows vehicles to power sensors and radios while stationary without running the engine, and silent drive allows vehicles to move quietly with low thermal and acoustic signatures. The Oshkosh eJLTV offers both modes, and the U.S. Army requires silent running and silent watch for the XM30.
In conflicts where drones with thermal cameras observe the battlefield around the clock, as in Ukraine, reducing the thermal and acoustic signature of vehicles can improve survivability. This is expected to increase demand for electrified vehicles and onboard power systems.
Need to Reduce Fuel Consumption and Logistics Vulnerability
Fuel supply is one of the largest logistics burdens for armed forces, and fuel convoys are vulnerable to attack. Hybrid-electric drives reduce fuel consumption, extend range, and reduce the frequency of resupply. Allison states that its eGen Force system reduces fuel consumption compared with legacy systems, and the Harbinger hybrid chassis used for U.S. Army unmanned resupply vehicles offers a range of more than 500 miles.
Electrified vehicles can also act as mobile power sources for command posts and equipment, reducing the need for separate generators. The Harbinger chassis provides 350 kW of exportable power, and REEQ vehicles can act as mobile microgrids. This capability is expected to support the adoption of electrified vehicles in logistics and support roles.
Exportable power also reduces the logistics burden of generators, which require their own fuel, maintenance, and transport. Replacing separate generators with vehicle-based power can therefore reduce the overall footprint of forward units, which is an important consideration for distributed operations.
Table of contents
12 chapters · 156 sections · 288 pages · click to expandSegmental analysis
| Segment | Largest share (2026) | Fastest growth (2026–2036) |
|---|---|---|
| By Type | Electrified Onboard Power | Fully Electric |
| By Platform | Tactical & Utility Vehicles | Unmanned Ground Vehicles |
| By Component | Battery Systems | Power Electronics |
| By Fit | Retrofit & Upgrade | New-Build |
By Type
- Military Vehicle Electrification Market Analysis by Type
- Hybrid electric systems are further segmented into Series Hybrid and Parallel Hybrid systems, and electrified onboard power systems are further segmented into Silent Watch Systems and Exportable Power Systems.
- The Electrified Onboard Power segment is expected to account for the largest share of the global Military Vehicle Electrification Market.
- The large share of this segment is mainly due to the upgrade of large existing vehicle fleets with lithium-ion batteries, silent watch kits, and exportable power systems, such as the 4,400 Wh lithium-ion 6T battery introduced by Epsilor in September 2025 and the Vehicle Integrated Power Kit under development by Oshkosh.
- However, the Fully Electric segment is projected to register the highest CAGR during the forecast period.
- The rapid growth of this segment is attributed to the growth of electric unmanned ground vehicles, as reflected in the plan of Ukraine to contract 25,000 ground robotic systems in the first half of 2026, and of electric light vehicles such as those offered by REEQ.
- Hybrid electric systems are expected to account for a significant and growing share of the market, supported by the development of hybrid-electric drives for combat and tactical vehicles, such as the XM30 and the eJLTV, and their use in vehicles such as the Ermine and the Harbinger-based unmanned resupply vehicles.
- Their share is expected to increase in the later years of the forecast period as hybrid combat vehicles move into production.
By Platform
- Military Vehicle Electrification Market Analysis by Platform
- Combat vehicles are further segmented into Infantry Fighting Vehicles, Main Battle Tanks, and Armored Personnel Carriers.
- The Tactical & Utility Vehicles segment is expected to account for the largest market share, due to the large size of tactical vehicle fleets and the adoption of lithium-ion batteries, silent watch, and onboard power systems in these vehicles.
- However, the Unmanned Ground Vehicles segment is projected to register the highest CAGR during the forecast period, driven by the rapid growth of electric and hybrid UGVs for logistics, reconnaissance, and combat support.
- Combat vehicles are expected to record strong growth in the later years of the forecast period, as hybrid-electric next-generation vehicles such as the XM30 move from prototyping to production.
By Component
- Military Vehicle Electrification Market Analysis by Component
- The Battery Systems segment is expected to account for the largest market share, as batteries account for a large share of the value of electrified systems and are used in both new and existing vehicles.
- However, the Power Electronics segment is projected to register the highest CAGR during the forecast period, owing to the growing need for inverters, converters, and high-voltage power distribution in hybrid-electric vehicles and the improvement of eMachine and inverter systems under programs such as NGET.
By Fit
- Military Vehicle Electrification Market Analysis by Fit
- The Retrofit & Upgrade segment is expected to account for the largest market share, as armed forces upgrade large existing fleets with lithium-ion batteries, silent watch kits, and exportable power systems.
- However, the New-Build segment is projected to register the highest CAGR during the forecast period, driven by the production of hybrid-electric next-generation combat and tactical vehicles and electric UGVs.
Geographic analysis
North America
Largest shareIn 2026, North America is expected to account for the largest share of the global Military Vehicle Electrification Market. The large share of this region is mainly attributed to the scale of U.S. defense spending, the hybrid-electric requirement for the XM30 program, and the presence of leading suppliers such as General Dynamics, Oshkosh Defense, Allison Transmission, American Rheinmetall, and Harbinger. According to SIPRI, the U.S. remained the largest military spender in 2025 at USD 954 billion, while Canada increased its military expenditure by 23% to USD 37.5 billion. The FY2027 request includes USD 547 million for 19 XM30 prototypes, and the Army awarded American Rheinmetall a contract for hybrid unmanned resupply vehicles in August 2026. The U.S. Army Ground Vehicle Systems Center is also funding electrified drive technology through programs such as NGET, and Oshkosh is developing the eJLTV and a Vehicle Integrated Power Kit. These programs, together with the large U.S. tactical vehicle fleet, make the U.S. the largest market for military vehicle electrification. Overall, North America is expected to remain the largest market through 2036, supported by the XM30 program and the large U.S. vehicle fleet, while Europe is expected to gain share due to vehicle modernization programs, rising defense budgets, the adoption of electric UGVs and light vehicles, and the development of hybrid drive trains by European suppliers.
Europe
Fastest growthHowever, Europe is projected to register the highest CAGR during the forecast period. According to SIPRI, military expenditure in Europe increased by 14% to USD 864 billion in 2025, with Germany increasing spending by 24% to USD 114 billion and Poland allocating 4.5% of GDP to its military. Rheinmetall has acquired REEQ and is supplying hybrid Ermine vehicles to Ukraine, and the European Defence Agency is advancing hybrid drive trains through the HybriDT project. The EUR 150 billion SAFE instrument and the NATO commitment to 5% of GDP by 2035 are expected to drive further vehicle modernization, including hybrid and electric vehicles. European armies are acquiring large numbers of new combat, tactical, and unmanned vehicles, and the war in Ukraine has accelerated the adoption of electric UGVs and light vehicles. The Netherlands, Germany, France, the U.K., and the Nordic countries are investing in hybrid and electric vehicle technologies, and European suppliers such as Rheinmetall, RENK, Arquus, and Milrem Robotics are developing electrified drives and vehicles.
Asia-Pacific
Asia-Pacific is expected to account for a significant share of the market and to record strong growth. According to SIPRI, military expenditure across Asia and Oceania increased by 8.1% to USD 681 billion in 2025, the largest annual increase since 2009, with China spending an estimated USD 336 billion, India USD 92.1 billion, Japan USD 62.2 billion, South Korea USD 47.8 billion, and Australia USD 35.3 billion. China, South Korea, and Japan have strong domestic battery and electric vehicle industries that can support military electrification. Australia is acquiring new combat and tactical vehicles as part of its land force modernization, and India and South Korea are developing unmanned ground vehicles and light electric vehicles for border and logistics roles. Regional armed forces are expected to adopt hybrid and electric technologies as they become available from domestic and international suppliers.
Middle East & Africa
The Middle East & Africa region is expected to record steady growth, supported by defense modernization and localization programs. According to SIPRI, military expenditure in the Middle East was an estimated USD 218 billion in 2025, with Saudi Arabia spending USD 83.2 billion and Israel USD 48.3 billion, and Türkiye increased its military expenditure to USD 30.0 billion. Israeli and Turkish suppliers are developing hybrid and electric vehicles and batteries, including the lithium-ion 6T batteries of Epsilor.
Latin America
Latin America is expected to account for a smaller share of the market, with Brazil increasing its military expenditure by 13% to USD 23.9 billion in 2025. In hot desert environments, silent watch and onboard power reduce the need to run engines to power air conditioning and electronics, which is expected to support the adoption of lithium-ion batteries and onboard power systems in the Gulf states. In Latin America and Africa, adoption is expected to focus on batteries, onboard power, and light electric vehicles for border and internal security operations.
Competitive landscape
The global Military Vehicle Electrification Market is fragmented, with large vehicle manufacturers developing hybrid and electric vehicles, alongside specialized suppliers of electrified transmissions, electric motors, power electronics, and battery systems, and new entrants from the commercial electric vehicle industry. Market participants compete primarily on power output, fuel efficiency, reliability, weight, safety and survivability, integration capability, and cost.
Leading companies are investing in hybrid-electric drives, electrified transmissions, high-voltage batteries, and exportable power, and are forming partnerships with commercial electric vehicle companies. Recent examples include the selection of the Allison eGen Force for the American Rheinmetall XM30, the partnership between American Rheinmetall and Harbinger, the acquisition of REEQ by Rheinmetall, and the Oshkosh partnership with Michigan Technological University on vehicle integrated power. Participation in major vehicle programs remains the main route to large-scale demand.
The report provides a comprehensive competitive assessment of the leading companies operating in the global Military Vehicle Electrification Market. The key players profiled in the report include Rheinmetall AG (Germany), General Dynamics Corporation (U.S.), Oshkosh Corporation (U.S.), BAE Systems plc (U.K.), Allison Transmission Holdings, Inc. (U.S.), RENK Group AG (Germany), Leonardo DRS, Inc. (U.S.), GM Defense LLC (U.S.), AM General LLC (U.S.), Arquus (France), Milrem Robotics (Estonia), Harbinger Motors Inc. (U.S.), Epsilor-Electric Fuel Ltd. (Israel), Saft Groupe SAS (France), and QinetiQ Group plc (U.K.).
- Rheinmetall AG
- General Dynamics Corporation
- Oshkosh Corporation
- BAE Systems plc
- Allison Transmission Holdings, Inc.
- RENK Group AG
- Leonardo DRS, Inc.
- GM Defense LLC
- AM General LLC
- Arquus
- Milrem Robotics
- Harbinger Motors Inc.
- Epsilor-Electric Fuel Ltd.
- Saft Groupe SAS
- QinetiQ Group plc
Expert perspectives
The Military Vehicle Electrification Market is moving from demonstration toward early production, driven by rising defense budgets, growing onboard power requirements, and lessons from Ukraine on signature reduction and unmanned systems. Programs such as the XM30, the eJLTV, the U.S. Army hybrid unmanned resupply vehicles, and the Rheinmetall Ermine provide early demand and indicate the direction of future programs.
Three structural changes are expected to shape competitive positions through 2036. First, power generation and distribution, rather than fuel efficiency alone, is becoming the main reason for electrification. Second, unmanned and light vehicles are being electrified first, creating a fast-growing market for electric drives and batteries. Third, commercial electric vehicle technologies and companies are entering the defense market through partnerships with defense primes.
For companies planning entry or expansion, the most defensible positions over the forecast period are likely to be found in electrified transmissions, high-voltage battery systems with military safety features, power electronics, and exportable power systems. For established suppliers, the principal risks are the pace of program decisions, battery safety and supply chain requirements, and competition from commercial entrants.
Overall, the market is expected to grow strongly from a small base, with batteries and onboard power upgrades providing near-term demand, and hybrid-electric combat vehicles and electric unmanned vehicles providing the fastest growth later in the forecast period.
The pace of growth will depend on the outcome of the XM30 down-select, the speed at which armed forces develop maintenance and charging capabilities, and the ability of suppliers to meet military safety and supply chain requirements for batteries and power electronics. Suppliers that combine electrification expertise with military vehicle integration experience and secure supply chains are expected to strengthen their positions.
Customer perspectives
Insights gathered during primary interviews with buyers, program managers, and vehicle integrators operating in this market highlight where procurement priorities are shifting. The following perspectives reflect recurring themes raised across these discussions.
Frequently asked questions
The global Military Vehicle Electrification Market is estimated at USD 4.4 billion in 2026.
Cite this report
Meticulous Research. (2026). Military Vehicle Electrification Market - Global Opportunity Analysis and Industry Forecast (2026-2036) (Report No. MR-2327). Meticulous Market Research Pvt. Ltd. https://www.meticulousresearch.com/product/military-vehicle-electrification-market-7010