Electric Water Heaters Sales Market Outlook

As of 2023, the global electric water heaters market is estimated to be valued at approximately USD 19 billion, with a projected compound annual growth rate (CAGR) of 7.5% from 2025 to 2035. This growth can be attributed to the increasing demand for energy-efficient and reliable heating solutions, along with the rising awareness of the importance of sustainability and energy conservation in residential, commercial, and industrial applications. The growing population and urbanization trends in developing regions further fuel the demand for electric water heaters, as they provide a convenient and efficient means of heating water. Additionally, advancements in technology and an increasing number of product offerings tailored to meet diverse customer needs are expected to contribute significantly to market expansion over the forecast period. Furthermore, the shift towards electric heating solutions, driven by the need to reduce carbon footprints and reliance on fossil fuels, is expected to bolster the market growth.

Growth Factor of the Market

The electric water heaters market is experiencing substantial growth due to several interrelated factors. One of the primary drivers is the increasing focus on energy efficiency, as consumers and businesses alike seek to minimize energy consumption and reduce utility costs. This trend has led to the development of advanced electric water heater technologies that not only provide greater efficiency but also come equipped with smart features that allow users to monitor and control their energy usage remotely. Additionally, the ongoing shift towards eco-friendly products is propelling the demand for electric water heaters, particularly models that are Energy Star certified. The rise in disposable income and changing lifestyles have also resulted in higher demand for residential water heating solutions, driven by the growing preference for comfort and convenience in everyday living. Moreover, innovations in manufacturing processes, such as the use of advanced insulation materials, are improving the performance and longevity of electric water heaters, further appealing to environmentally conscious consumers.

Key Highlights of the Market

• The market is projected to witness a CAGR of 7.5% from 2025 to 2035.
• Growing urbanization and population density in developing regions are driving demand.
• Energy-efficient electric water heaters are gaining popularity among consumers.
• Technological advancements are enhancing product offerings and performance.
• Increasing awareness of sustainability and eco-friendliness is boosting market growth.

By Product Type

Storage Electric Water Heaters:

Storage electric water heaters are widely used for their capability to provide a continuous supply of hot water. These units have a reservoir that stores hot water until it is required, making them ideal for applications where high demand is expected, such as in households with multiple bathrooms or in commercial establishments. The insulation surrounding the storage tank is crucial, as it minimizes heat loss and enhances energy efficiency. As a result, many consumers prefer these heaters for their reliability and consistency in delivering hot water, contributing to their popularity in both residential and commercial sectors. The market for storage electric water heaters is expected to maintain a robust growth trajectory due to the increasing number of households and the growing trend of home renovations, which often include the replacement of outdated heating systems.

Tankless Electric Water Heaters:

Tankless electric water heaters, also known as on-demand water heaters, have gained traction due to their compact size and energy-saving features. Unlike traditional storage heaters, these units heat water directly as it flows through the device, eliminating the need for a storage tank. This results in significant energy savings, as users only consume energy when hot water is needed. Additionally, their space-saving design makes them an ideal choice for smaller homes or apartments where installation space is limited. The rising demand for energy-efficient appliances and the growing trend toward minimalist living are propelling the market growth of tankless electric water heaters. Furthermore, advancements in technology have improved the performance and longevity of these products, making them an increasingly attractive option for consumers.

Heat Pump Electric Water Heaters:

Heat pump electric water heaters have emerged as an innovative solution that utilizes renewable energy to heat water efficiently. These systems capture heat from the air or ground and transfer it to the water in the tank, significantly reducing energy consumption compared to traditional electric water heaters. With increasing awareness of environmental issues and a shift towards sustainable living, heat pump electric water heaters are gaining popularity among eco-conscious consumers. As energy prices continue to rise, homeowners and businesses are seeking cost-effective solutions that align with their sustainability goals. The adoption of government incentives and rebates for installing energy-efficient appliances further boosts the market for heat pump electric water heaters, positioning them as a viable option for both residential and commercial applications.

Solar Electric Water Heaters:

Solar electric water heaters are at the forefront of the green energy movement, as they harness solar energy to heat water, substantially reducing reliance on traditional energy sources. These systems are particularly advantageous in regions with abundant sunlight, as they can significantly lower energy bills and carbon emissions. With the increasing emphasis on renewable energy and sustainability, the demand for solar electric water heaters is expected to rise. Moreover, government initiatives and subsidies promoting the adoption of solar technology are further enhancing the market potential of these systems. However, the initial investment cost remains a barrier for some consumers; as technology advances and costs decrease, the market is poised for growth in the coming years.

Point-of-Use Electric Water Heaters:

Point-of-use electric water heaters are designed to be installed close to the point of demand, providing instant hot water without the wait associated with traditional systems. This results in minimized water wastage and improved efficiency, making them ideal for sinks, showers, and other areas where hot water is needed immediately. Their compact size allows for flexible installation, making them suitable for both residential and commercial applications. The growing trend towards water conservation and efficiency is driving the adoption of point-of-use electric water heaters, especially in urban areas where space is at a premium. Additionally, advancements in technology have enhanced the performance and reliability of these systems, making them an increasingly attractive choice for consumers looking to balance convenience with efficiency.

By Application

Residential:

The residential segment is one of the largest markets for electric water heaters, driven by the growing demand for reliable and efficient hot water solutions in households. As lifestyles change and more families prioritize comfort and convenience, the need for effective water heating systems has become paramount. This segment encompasses a wide range of applications, from residential showers and baths to kitchen use, significantly influencing consumer preference towards energy-efficient models that offer cost savings in utility bills. With an increasing number of households undergoing renovations and upgrades to modernize their plumbing systems, the residential market for electric water heaters is expected to grow steadily in the coming years, as homeowners invest in high-quality, reliable systems that meet their daily needs.

Commercial:

The commercial application of electric water heaters includes usage in various establishments such as hotels, restaurants, schools, and healthcare facilities. The need for consistent hot water supply for daily operations makes electric water heaters indispensable in these environments. With the increasing number of commercial establishments being built and the renovation of older facilities to meet modern standards, demand for electric water heating solutions is on the rise. Additionally, the emphasis on energy efficiency and sustainability in commercial properties is pushing businesses to invest in advanced electric water heaters that minimize energy consumption and reduce operating costs. Innovations in technology and design are also enhancing the appeal of electric water heaters in the commercial sector, as businesses seek to provide superior service while maintaining energy efficiency.

Industrial:

Electric water heaters are also utilized in various industrial applications, where they play a critical role in processes that require hot water, such as manufacturing and food processing. Industries are increasingly adopting electric water heating solutions due to their efficiency, reliability, and the ability to provide a constant hot water supply. The industrial sector is characterized by its demand for large-scale and heavy-duty systems that can withstand rigorous usage and deliver consistent performance. As environmental regulations become more stringent, industries are turning to electric water heaters that offer energy-efficient solutions to meet compliance standards while reducing overall energy costs. The growing industrialization in emerging economies is expected to further boost the demand for electric water heaters in this segment, contributing significantly to the market's overall growth.

By Distribution Channel

Online Sales:

The online sales channel has seen a significant uptick as consumers increasingly turn to e-commerce for purchasing electric water heaters. The convenience of shopping from home, coupled with the ability to compare prices and products easily, has made online platforms a preferred choice for many customers. E-commerce websites often provide extensive options, customer reviews, and detailed product specifications, allowing consumers to make informed decisions. Moreover, many manufacturers and retailers are offering exclusive online discounts and promotions, further driving sales through this channel. As internet penetration continues to grow, especially in developing regions, the online sales channel is expected to capture a more substantial share of the electric water heaters market.

Offline Sales:

Despite the growing popularity of online sales, the offline sales channel remains a vital component of the electric water heaters market. Retail outlets, home improvement stores, and appliance showrooms provide customers with the opportunity to see and examine products before making a purchase. Many consumers prefer the tactile experience of assessing product quality, size, and features in person, which can influence their purchasing decision. Additionally, offline sales provide personalized customer service, where sales representatives can offer valuable insights and recommendations based on individual needs. The offline channel benefits from strong brand loyalty and established relationships, particularly in regions where consumers tend to favor traditional shopping methods. As such, a balanced approach between online and offline channels will be crucial for manufacturers and retailers to maximize their market reach.

By Energy Efficiency

Energy Star Certified:

Energy Star certified electric water heaters are increasingly sought after due to their superior energy efficiency and environmental benefits. These products meet stringent energy performance criteria set by the Environmental Protection Agency (EPA), enabling consumers to significantly lower their energy bills while reducing their carbon footprint. As awareness of climate change and energy conservation continues to grow, the demand for Energy Star certified models is expected to rise among environmentally conscious consumers. Furthermore, government incentives and tax rebates for purchasing energy-efficient appliances are driving the market for Energy Star certified electric water heaters, making them an appealing choice for those looking to invest in sustainable solutions.

Non-Energy Star Certified:

Non-Energy Star certified electric water heaters are still prevalent in the market, primarily due to their lower initial purchase cost compared to their energy-efficient counterparts. While these models may not offer the same level of energy savings, they can still provide reliable performance for consumers who may prioritize upfront affordability over long-term efficiency. This segment caters predominantly to budget-conscious consumers and those who require hot water solutions for short-term usage. However, as energy prices continue to rise and environmental considerations gain traction, the demand for non-Energy Star certified electric water heaters is expected to decline, prompting manufacturers to innovate and improve the efficiency of their product offerings to remain competitive in the market.

By Region

The North American electric water heaters market is one of the most established and significant segments, driven by high demand for reliable and energy-efficient heating solutions in both residential and commercial applications. The region's market is projected to reach USD 8 billion by 2035, growing at a CAGR of approximately 6.5%. The increasing focus on energy efficiency and sustainability is encouraging consumers to adopt modern electric water heating solutions, particularly Energy Star certified models. In addition, the ongoing urbanization and growth in the construction sector are further supporting market expansion in North America, as new residential and commercial buildings often incorporate advanced electric water heating systems to meet modern energy standards.

In the European region, the electric water heaters market is witnessing robust growth, attributed to the increasing emphasis on energy efficiency regulations and sustainability initiatives. The market is anticipated to grow significantly, with estimates suggesting a valuation of USD 5 billion by 2035. The European market is characterized by a high adoption rate of energy-efficient appliances, driven by government incentives and consumer awareness campaigns focused on reducing carbon footprints. Additionally, countries such as Germany and the UK are leading the charge in promoting renewable energy solutions, including solar electric water heaters, which are becoming increasingly popular among environmentally conscious consumers.

Opportunities

The electric water heater market is ripe with opportunities, particularly as the trend towards energy efficiency and sustainability continues to shape consumer preferences. One of the key opportunities lies in the growing demand for innovative technologies such as smart water heaters that offer advanced functionalities, including remote monitoring and scheduling. These features not only enhance user convenience but also contribute to energy conservation efforts by allowing consumers to manage their energy usage more effectively. Manufacturers that invest in R&D to develop smart electric water heaters can capitalize on this trend, offering products that align with modern consumer expectations and lifestyles. Furthermore, the increasing focus on renewable energy sources presents an excellent opportunity for the growth of solar electric water heaters, which can provide significant energy savings and reduce overall reliance on traditional energy sources. With government incentives and subsidies encouraging the adoption of such technologies, there is a substantial market potential for manufacturers willing to innovate.

Another significant opportunity exists in emerging markets, where rising disposable incomes and urbanization are driving demand for home appliances, including electric water heaters. As developing regions experience economic growth, there is a heightened demand for modern conveniences and reliable hot water solutions. Manufacturers have the chance to expand their market presence in these regions by tailoring products to meet local needs and preferences while addressing energy efficiency concerns. Additionally, forming strategic partnerships with local distributors and retailers can enhance market penetration and reach a wider consumer base. By focusing on innovation and adapting to changing consumer dynamics, manufacturers can effectively leverage these opportunities to drive growth in the electric water heaters market.

Threats

The electric water heaters market faces several threats that could impede its growth trajectory. One of the primary challenges is the increasing competition from alternative water heating solutions, such as gas and solar-powered systems. As consumers become more environmentally conscious, they may opt for renewable energy solutions that promise lower operational costs and reduced carbon footprints. Additionally, fluctuations in raw material prices, such as metals and plastics used in the production of electric water heaters, can impact manufacturing costs and profitability. This volatility poses a significant risk, particularly for smaller manufacturers with limited financial flexibility. Furthermore, changing government regulations and standards related to energy efficiency could impose additional compliance costs for manufacturers, potentially leading to increased product prices, which could deter consumers from investing in electric water heaters.

In addition to competition and regulatory challenges, the electric water heaters market is also threatened by economic uncertainties that may impact consumer spending. Economic downturns can lead to reduced disposable income, resulting in consumers delaying or forgoing investments in home appliances. This can particularly affect the residential segment of the market, where consumers may prioritize essential expenditures over discretionary purchases like electric water heaters. Finally, the rapid pace of technological advancements means that manufacturers must continuously innovate to keep pace with changing market dynamics. Failure to adapt to new technologies or consumer preferences can result in market share loss to more agile competitors. Therefore, companies must remain vigilant and proactive in addressing these threats to sustain their market position and foster growth.

Competitor Outlook

• A.O. Smith Corporation
• Rheem Manufacturing Company
• Bradford White Corporation
• Stiebel Eltron
• Bosch Thermotechnology
• Whirlpool Corporation
• Ariston Thermo Group
• GE Appliances
• Noritz Corporation
• American Water Heaters
• Ferguson Enterprises
• Navien Inc.
• EcoSmart
• Taxandria
• GROVE

The competitive landscape of the electric water heaters market is characterized by the presence of several key players, each striving to enhance their market position through innovation and strategic initiatives. A.O. Smith Corporation, for instance, is renowned for its commitment to quality and energy efficiency, consistently releasing new products designed to meet evolving consumer needs. The company invests significantly in research and development, focusing on advanced technologies that improve the performance of electric water heaters while optimizing energy consumption. Similarly, Rheem Manufacturing Company excels in offering a diverse range of electric water heating solutions, with an emphasis on sustainability and eco-friendliness, aligning with the growing consumer preference for energy-efficient appliances. Their product lines include both traditional and innovative models, ensuring they cater to a wide audience.

Bradford White Corporation has also carved a niche in the market by emphasizing craftsmanship and durability in its electric water heaters. The company has a strong reputation for producing high-quality products and offers a comprehensive warranty, which appeals to consumers seeking reliability. Their commitment to customer service and after-sales support further differentiates them in a competitive environment. Additionally, Stiebel Eltron is recognized for its advanced tankless electric water heaters, which are popular among environmentally conscious consumers. The company's focus on energy-efficient technologies and user-friendly designs positions it favorably in the growing segment of tankless water heating solutions.

Moreover, Bosch Thermotechnology and Whirlpool Corporation represent strong contenders in the electric water heaters market, each leveraging their extensive distribution networks and brand recognition to capture market share. Bosch focuses on integrating smart technology into its appliances, promoting energy savings, while Whirlpool is known for its wide array of affordable and reliable water heating solutions. As the market landscape evolves, these companies will likely continue to adapt to changing consumer demands, technological advancements, and regulatory challenges, ensuring their ongoing competitiveness in the electric water heaters market.