Tankless Water Heater Market to Reach USD 7.38 Bn by 2032, Growing at a CAGR of 6.3% (2022-2032) | Persistence Market Research

The global tankless water heater market has witnessed substantial transformation over the last decade. Shifting consumer preferences toward energy-efficient and space-saving technologies have boosted the adoption of tankless systems in both residential and commercial spaces. As per recent market data, global sales of tankless water heaters reached US$ 4 billion in 2022 and are expected to expand at a CAGR of 6.3%, crossing US$ 7.38 billion by 2032. The residential segment, driven by rising awareness of energy conservation, remains the dominant application, while North America leads geographically, owing to rising smart home integration and climate-driven water heating needs.

The market's growth is strongly fueled by technological innovations, the replacement of traditional storage heaters, and rising investments in smart infrastructure. The condensing technology segment, known for superior energy efficiency, dominates the product landscape, while electric-powered tankless heaters are increasingly favored due to easy installation and adaptability in regions with underdeveloped gas pipeline infrastructure.

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➤ Key Highlights from the Report

➤ The tankless water heater market is forecasted to reach US$ 7.38 Bn by 2032.
➤ Electric tankless heaters are projected to capture over 75% market share by the end of 2022.
➤ Condensing technology held a 77.5% market share in 2021 due to higher energy efficiency.
➤ The residential sector accounts for a dominant 70.6% market share.
➤ North America, especially the U.S., is a major regional market with an 8.7% CAGR.
➤ Growing e-commerce adoption is enhancing product visibility and boosting global sales.

Market Segmentation: Understanding the Product Landscape

Tankless water heaters are broadly segmented based on technology, energy source, and energy efficiency. Among these, condensing tankless water heaters are gaining significant traction due to their ability to reuse heat from exhaust gases, thus optimizing energy consumption. Non-condensing units, although more affordable, are gradually losing preference due to higher operational costs. From an energy source standpoint, electric tankless water heaters are leading the market, owing to lower installation complexity and compatibility with existing infrastructure, especially in developing regions.

In terms of end-user segmentation, the market is bifurcated into residential and commercial users. The residential sector dominates, thanks to increasing urbanization, consumer awareness about environmental sustainability, and smart home trends. Commercial establishments-hotels, hospitals, and salons-are also increasingly transitioning to tankless models to meet efficiency standards, enhance space utilization, and lower operational costs.

Regional Insights

In North America, the tankless water heater market is booming with rising consumer demand for smart appliances. The United States leads the charge due to its cold climatic conditions, rapid urban development, and technological integration, with demand growing at an impressive 8.7% CAGR through 2032.

Meanwhile, in Europe, the United Kingdom holds a significant share (18.5% in 2021), driven by its push toward carbon neutrality and high adoption of energy-efficient appliances. Enhanced government regulations on emissions and a strong emphasis on smart city initiatives continue to fuel growth.

Market Drivers

The primary growth driver in the tankless water heater market is the surge in demand for energy-efficient appliances. As consumers become more environmentally conscious, they are seeking alternatives that reduce carbon footprints and utility bills. Technological innovations-such as Wi-Fi-enabled control systems, integration with smart assistants, and high energy factor ratings-are further attracting tech-savvy buyers.

Additionally, infrastructure development in emerging economies is contributing to market expansion. Countries such as India and China are investing in urban residential projects, where the demand for space-saving and efficient water heating solutions is high. The proliferation of smart cities and carbon-neutral buildings also enhances adoption rates.

Market Restraints

Despite its growth, the market faces a few hurdles. High initial costs of tankless systems, especially condensing models, deter price-sensitive buyers in developing regions. Moreover, installation complexities and the need for upgraded electrical or gas systems may discourage widespread adoption in older buildings.

Another restraint is consumer reluctance to change, especially in markets where traditional tank-based water heaters are deeply entrenched. Misinformation about the capabilities, savings, or reliability of tankless systems can also hamper sales growth.

Market Opportunities

Emerging markets such as Southeast Asia and Latin America present significant opportunities due to rapid urbanization and rising disposable incomes. The expansion of e-commerce is another lucrative avenue, as online platforms allow brands to reach a wider audience with comparative ease and lower marketing costs.

Technological advancements such as AI-driven energy optimization, smart recirculation systems, and solar-compatible units open up additional prospects. Manufacturers that invest in R&D and sustainability are well-positioned to capture a larger market share over the forecast period.

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➤ Frequently Asked Questions (FAQs)

➤ How Big is the Tankless Water Heater Market?
➤ Who are the Key Players in the Global Tankless Water Heater Market?
➤ What is the Projected Growth Rate of the Tankless Water Heater Market?
➤ What is the Market Forecast for Tankless Water Heaters for 2032?
➤ Which Region is Estimated to Dominate the Tankless Water Heater Industry through the Forecast Period?

✦ Company Insights

✦ A.O. Smith Corp.
✦ Ariston Thermo Spa
✦ Bradford White Corporation
✦ Haier Smart Home Co Ltd.
✦ NORITZ Corp.
✦ Rheem Manufacturing Co.
✦ Rinnai Corporation
✦ Robert Bosch GmbH
✦ Bajaj Electricals Ltd.
✦ Kyungdong Navien Co. Ltd.
✦ Whirlpool Corporation
✦ Atmor
✦ Hubbell Electric Heater Company
✦ Stiebel Eltron Inc.
✦ EcoSmart Green Energy Products, Inc.

■ Recent Market Developments

■ In 2020, Bradford White Corporation acquired Keltech, a leading commercial electric water heater manufacturer, to expand its product capabilities and market presence.
■ Rinnai integrated Amazon Alexa compatibility into its tankless water heaters, enabling voice-activated system control and smart home integration.

Conclusion

The tankless water heater market is poised for significant growth, supported by robust technological advancements, rising consumer demand for eco-efficient solutions, and increased penetration in both developed and emerging economies. While challenges such as high upfront costs and installation issues persist, innovation and sustainability-focused strategies will play a critical role in shaping the future of this industry. As key players deepen their footprint through mergers, product development, and digital sales channels, the tankless water heater market is on track to redefine water heating across the globe.

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