Electric Vehicle HVAC Market Size, Share & COVID-19 Impact Analysis, By Technology (Automatic, Manual), By Vehicle Type (Passenger Car, Commercial Vehicle), By Component Type (Electric Compressor, Heat Exchanging Equipment, Expansion Valve, Receiver-Drier) and Regional Forecast, 2020-2027

The global electric vehicle HVAC market size was USD 840.4 million in 2019. The global impact of COVID-19 has been unprecedented and staggering, with electric vehicle HVAC witnessing a negative impact on demand across key regions amid the pandemic. Based on our analysis, the market exhibited a decline of -7.6% in 2020. The market is projected to grow from USD 776.6 million in 2020 to USD 2,144.4 million in 2027 at a CAGR of 15.6% in the 2020-2027 period. The rise in CAGR is attributable to this market’s demand and growth returning to pre-pandemic levels once the pandemic is over.

The heating, ventilation, and air-conditioning (HVAC) system is a part of the vehicle that provides effective cabin comfort for its occupants. These systems consume a high amount of the total energy stored and with the current limitations of charging times and battery capacity there is an increasing demand for efficient HVAC solutions. Hence, manufacturers are increasing their R&D efforts to offer more optimized solutions that will provide effective thermal management without significantly affecting the range of the electric vehicle (EV). Thus, these factors will influence the growth of the market.

Increased Government Support for the Production and Sale of EVs amidst COVID-19 to Aid the Market

Automotive factory shutdowns, primarily in the first half of 2020, have been the primary impact of COVID-19 on the market. For instance, in Europe, the automotive assembly plants were shut down for 30 days on average. According to the International Energy Agency (IEA), this led to production losses of 2.4 million vehicles.

Hence, new stimulus programs are being implemented by several governments to support the automotive sector. For instance, in June 2020, Germany unveiled a EUR 130 billion stimulus plan, with EUR 8 billion earmarked specifically to support electric vehicle production and sales. Furthermore, as part of the recovery budget, incentives for hybrid and electric cars have also been doubled. Similarly, France also increased purchase subsidies for EVs and Italy approved additional incentives for buying EVs.

In China, owing to the COVID-19 crisis, the subsidy program for plug-in hybrid and battery electric vehicles (scheduled to end in 2020) has been extended to 2022 to support the automotive sector. Such programs are expected to enhance the adoption of electric vehicles and also support the development of charging station infrastructure and electrification of public transport. This will positively impact the demand for electric vehicle HVAC systems. Hence, increased government funding is a key driving factor amid COVID-19 for the electric vehicle HVAC market growth.

LATEST TRENDS

Heat Pump-based HVAC Systems to be the Design Direction for EV Companies

Significant energy savings can be enabled with the use of a heat pump-based HVAC system that is capable of heat recovery. For instance, average energy savings of around 17% to 52% can be achieved during cabin heating by replacing the positive temperature coefficient (PTC) heater with a heat pump-based system. Hence, the increased adoption of heat pump-based HVAC systems is expected to positively influence the growth of the market. For instance, in 2019, MAHLE developed the Integrated Thermal System (ITS), a heat pump-based system for heating EV cabins. The new system provides range improvement in winter cruising of up to 20% and provides design flexibility among other benefits. These factors will positively influence the adoption of heat pump-based HVAC systems.

DRIVING FACTORS

Increasing Demand for Electric Vehicles to Drive Market Growth

According to the International Energy Agency (IEA), more than 2.1 million electric cars were sold in 2019, accounting for around 2.6% of the global car sales in 2019. Additionally, in 2019, they also accounted for around one percent of the global car stock, which represents a 40% year-on-year increase as compared to 2018. Furthermore, technological advancements, especially with regards to battery technology, are enabling the rapid electrification of trucks, buses, and other vehicles.

Hence, the increased demand for electric vehicles will, in turn, drive the demand for electric vehicle HVACs over the forecast period.

Stringent Emission Regulations to Augment Growth

Government initiatives to increase electrification across several transport modes have intensified significantly over the last few years. According to the IEA, around 60% of car sales across the globe are covered by the Zero-Emission Vehicle (ZEV) mandate (in Canada and selected US states), the EU CO2 emission regulations, and the New Energy Vehicle (NEV) mandate in China. For example, in 2019, a new fuel economy standard and CO2 emission standard were approved by the EU for cars & vans and heavy-duty vehicles, respectively.

Therefore, the increasing stringency of emission regulations and ambitious targets are leading to the rapid adoption of EVs, especially in Europe and China. These factors will, thus, fuel the demand for EVs, which will in turn drive the demand for electric vehicle HVACs through the forecast period.

RESTRAINING FACTORS

High Power Requirements of EV HVAC Systems to Restrain Growth

To provide tractive & accessory power to the vehicle, EVs utilize energy from electric grids. However, owing to the energy storage systems’ (battery pack) limited specific energy the high power requirements of HVAC systems for cabin conditioning can significantly reduce vehicle range between charges. For instance, according to the International Quality & Productivity Center (IQPC), an EV’s battery capacity will be reduced by around 36% by running the cabin climate control system at full power. Hence, the high power requirements of electric vehicle HVAC systems are expected to restrain the growth of the market.

SEGMENTATION

By Technology Analysis

Automatic Segment to Hold Largest Electric Vehicle HVAC Market Share Backed by Convenient Operations

By technology, the market is segmented into automatic and manual. Automatic air conditioning system is highly convenient as the system operates at a specific level set by the occupant. The cabin air is regulated by sensors that automatically adjust air distribution and blower speed according to external conditions. Hence, the automatic segment is expected to dominate the market during the forecast period.

Owing to the convenience offered by automatic climate control systems and the increasing consumer preference for automatic systems the share of manual systems used in EVs is declining rapidly. Therefore, the share of the manual segment is expected to decrease during the forecast period.

By Vehicle Type Analysis

Passenger Car Segment Dominated in 2019 Fueled by Decreasing TCO

Based on vehicle type, the EV HVAC market is segmented into passenger cars and commercial vehicles (which includes light commercial vehicles and heavy commercial vehicles). The commercial vehicles segment is expected to show significant growth in the market owing to the increasing adoption of battery-electric buses in developed regions and the rising demand for medium-duty electric trucks among fleet operators.

The passenger car segment is also expected to show considerable growth in the market owing to decreasing battery prices that will reduce the total cost of ownership (TCO) and significant progress with regards to range improvement.

By Component Type Analysis

Electric Compressor Segment to Exhibit a High CAGR till 2027

By component type, the market is segmented into electric compressors, heat exchanging equipment, expansion valve, and receiver-drier. The electric compressor segment is expected to show significant growth in the market owing to the benefits offered, such as less noise and controlled revolution speed that leads to less energy consumption and extended battery range.

The heat exchanging equipment segment is also anticipated to show considerable growth in the market. The technological advancements of key components, such as the high performance of the condenser while reducing the required installation space, are some of the factors fueling the growth of this segment.

REGIONAL INSIGHTS

The Asia Pacific market is expected to exhibit exponential growth over the forecast period. China accounted for a larger share of the market, with 1.06 million electric cars being sold in 2019. Furthermore, the demand for electric buses has continued to increase in China, with many cities operating fully electrified fleets. The procurement of electric vehicles, particularly for public transport in India, has also been ramped up under Phase 2 of the FAME (Faster Adoption and Manufacturing of Electric Vehicles) scheme. Hence, these factors are fueling the demand for electric vehicles, which in turn, will propel the growth of the market in this region.

The market in Europe is characterized by strict emission standards and supportive policies that have led to an increased deployment of EVs. For instance, according to the IEA, electric car sales accelerated by 50% in Europe in 2019 compared to 2018. Hence, Europe is expected to show significant growth in the market in the foreseeable future.

The market in North America is anticipated to show steady growth owing to the attractive subsidies and tax incentives for the purchase/lease of EVs, along with an extensive recharging network.

KEY INDUSTRY PLAYERS

Sanden Holdings, MAHLE GmbH, and Hanon Systems are the Leading Players in the Market

Key players in the market include Hanon Systems, Denso Corporation, Sanden Holdings Corporation, and MAHLE GmbH, among others. The central area of focus for these players is reducing the high power requirements of cabin climate systems. For instance, in December 2020, Hanon Systems started supplying a new, innovative, & eco-friendly refrigerant R744-based heat pump component to Volkswagen. The new solution, designed specifically for pure electric vehicles in partnership with Volkswagen, enables lower power consumption even in sub-zero temperatures.

Hence, the technological advancements of electric vehicle HVAC components will positively influence the growth of the market.

LIST OF KEY COMPANIES PROFILED:

• Sanden Holdings Corporation (Gunma, Japan)


• Hanon Systems (Daejeon, South Korea)


• Denso Corporation (Munich, Germany)


• Valeo S.A. (Chennai, India)


• MAHLE GmbH (Stuttgart, Germany)


• Brose Fahrzeugteile SE & Co. KG (Coburg, Germany)


• Panasonic Corporation (Osaka, Japan)


• Marelli Holdings Co., Ltd. (Corbetta, Italy)

KEY INDUSTRY DEVELOPMENTS:

• October 2020 – Sanden Holdings Corporation automated the assembly process of the electric compressor production line at its Yajima Plant and started the mass production of electric compressors to meet the growing demand.


• October 2020 – MAHLE GmbH acquired the air-conditioning business of Keihin Corporation in the USA, Japan, and Thailand. The acquisition enables the company to strengthen its air conditioning technology for electric vehicles.

REPORT COVERAGE

The electric vehicle HVAC market research report covers a detailed analysis of the market and focuses on key aspects, such as leading companies, product types, and leading applications of the product. Besides this, the report offers insights into the current key market trends and highlights key industry developments. In addition to the aforementioned factors, the report delivers an in-depth market analysis of several factors that have contributed to its growth over recent years.

Report Scope & Segmentation