Automotive Thermal Systems Market Size, Share, Growth Analysis, By Components(Compressor, HVAC, Powertrain cooling, Fluid Transport), By Vehicle Type(Passenger vehicles, Commercial vehicles), By Propulsion Type(IC engine vehicles, Electric vehicles, Hybrid vehicles), By Application(Front & rear A/C, Engine, Transmission, Seat), By Region - Industry Forecast 2025-2032

Automotive Thermal Systems Market Driver

• Surge in demand for electric vehicles

Leading market participants are now required to offer electric vehicles all over the world due to increasing demand for low-emission transportation and governments’ encouraging long-range, zero-emission vehicles through subsidies and tax breaks. The market is seeing an increase in demand for electric vehicles as a result. It was projected that with an increase in demand for electric vehicles, battery prices would decline. Battery electric vehicle sales are increasing as a result of this. An electric motor, a battery, and power electronics cooling are needed for battery electric cars. Automotive thermal management systems are in increasingly high demand as the number of electric and hybrid vehicles on the road rises. Such automotive thermal management systems address the challenges that the automotive industry faces. They help to lower the amount of pollution that cars with internal combustion engines emit. Additionally, in hybrid and electric vehicles, automotive temperature management systems maximise battery range and durability. They also safeguard the passengers' health and safety. Therefore, the increased demand for electric vehicles is fuelling the growth of the global automotive thermal systems market.

• Demand for CO2 reduction and fuel-efficient thermal systems will increase as emission laws become more strict.

Controlling GHG emissions from vehicles has become a significant concern as the number of vehicles on the road worldwide has increased. Regulatory organisations like the European Commission (EC) and the United States Environmental Protection Agency (US EPA) have imposed fuel economy standards and controlled fuel sulphur content limits to combat the exponential effect of emissions. By recycling waste heat and carefully controlling the vehicle's heating and cooling systems, advancements in thermal system technology can maximise CO2 reduction and boost vehicle efficiency. Engine thermal mass reduction, predictive powertrain control, integrated liquid-cooled exhaust/EGR, transmission rapid warm-up, dynamic engine thermal control, and thermoelectric capture and generation are some of the thermal system technologies that are currently used in luxury vehicles to meet the reduced CO2 emission targets (TEG). Furthermore, Rankine cycle and thermal electric exhaust heat recovery systems are emerging thermal system technologies.

Thermal technologies improve the efficiency of the engine, transmission, and HVAC systems in conventional automobiles. These technologies allow for a reduction in the size, mass, and price of the powertrain subsystem in electric vehicles, as well as an increase in the electric powertrain's range (e.g., motor, power electronics, or battery).

Automotive Thermal Systems Market Challenges

• The high cost of thermal system technology

OEMs have used innovative technology to accomplish desired outcomes in response to the imposition of strict pollution and fuel economy requirements. Rising demand for in-vehicle comfort amenities has forced manufacturers to concentrate on thermal systems for the powertrain, drivetrain, and in-cabin comfort. The performance of a thermal system can be measured by comparing the cost incurred to the overall CO2 reduction achieved with these methods. OEMs have previously embraced and incorporated technologies with substantial ROI and CO2 reductions into their premium models. Despite the fact that there are more than 60 thermal system technologies, only a few of them are now in use because of their cost-benefit ratio. Utilizing expensive technologies raises the system's cost, which raises the overall cost of the vehicle and negatively impacts market demand, especially in emerging economies where customers are typically price-sensitive.

• Lack of standardization

Local or regional manufacturers are required to abide by the regulations set forth by the regulating body regarding emission requirements. The export of thermal systems, however, may be hampered by a lack of standardisation due to regional variations in emission restrictions. For instance, in Europe, it is required that the emissions should be reduced. However, poorer nations like South Africa do not have such regulations. As a result, the absence of uniformity makes it difficult for producers to find raw materials or inventory, which negatively impacts the export industry. Low-volume manufacturing is used by producers, which raises production costs. According to the European Commission and US EPA, engine technology must be upgraded to Euro III/IV/V and Tier 3/4 standards. Therefore, the demand for after-treatment devices and enhanced thermal technologies that adhere to the upgraded technology has increased. Thus, the absence of uniform technical standards and high manufacturing costs may limit the market's expansion.