Tankless Electric Water Heater Sales Market Outlook

The global tankless electric water heater market is projected to reach approximately USD 5 billion by 2035, growing at a CAGR of around 6% from 2025 to 2035. This growth can be attributed to an increasing demand for energy-efficient appliances, growing awareness about sustainability, and technological advancements that enhance the performance and reliability of electric water heaters. The tankless systems offer the advantage of providing hot water on demand, which is becoming increasingly necessary in modern households and commercial applications. Furthermore, the rising trend of retrofitting existing systems with eco-friendly alternatives contributes significantly to the overall market growth, aligning with consumer preferences for reducing energy bills and environmental footprints.

Growth Factor of the Market

The growth of the tankless electric water heater market is primarily driven by the increased demand for instant hot water solutions, which eliminates the need for bulky storage tanks. As urbanization continues to rise, consumers are seeking efficient solutions that save space and energy. Additionally, government regulations promoting energy efficiency and sustainability are encouraging consumers to transition to tankless systems, which have a longer lifespan and reduce monthly utility costs. The emergence of smart home technology is also making way for more integrated solutions that allow users to control their heating systems remotely, further boosting the appeal of tankless electric water heaters. Furthermore, the expansion of the construction and real estate sectors, with a focus on modern amenities, is propelling the demand for these advanced heating solutions. Finally, an increase in eco-conscious consumer behavior is driving the shift towards eco-friendly and energy-efficient products, thereby fostering market growth.

Key Highlights of the Market

• The market is expected to witness a strong growth trajectory due to rising consumer demand for energy-efficient water heating solutions.
• Technological advancements are leading to improved performance and user-friendly features in tankless water heaters.
• Urbanization and the growing trend of smaller living spaces are increasing the adoption of compact and efficient water heating systems.
• Government incentives and regulations are supporting the transition towards sustainable energy solutions.
• There is a significant rise in the online sales channels, making these products more accessible to consumers.

By Product Type

Point of Use:

Point of use tankless water heaters are designed to provide hot water at specific locations within a home or commercial space, such as sinks, faucets, or showers. These compact units are typically installed close to the point of demand, which significantly reduces the waiting time for hot water and minimizes energy loss associated with long pipe runs. With their ability to provide instant hot water, they are particularly popular in situations where hot water is required sporadically, such as in guest bathrooms or kitchens. The point of use heaters are gaining traction due to their energy efficiency, as they only operate when needed, thus eliminating the standby energy losses associated with traditional storage water heaters. Additionally, the growing trend of home renovations and the demand for energy-efficient solutions are driving the increased adoption of point of use models among consumers.

Whole House:

Whole house tankless electric water heaters are designed to meet the hot water demands of an entire home, making them ideal for larger households or those with high hot water usage. These systems can be set up to deliver continuous hot water throughout the home, which is particularly advantageous during peak usage times. With advancements in technology, modern whole house models offer increased flow rates and energy efficiency, enabling them to provide an uninterrupted supply of hot water. Their installation can lead to savings on electricity bills since they eliminate the need for large storage tanks that consume energy even when hot water is not in use. As households increasingly prioritize convenience and energy efficiency, the whole house tankless water heater segment is expected to experience robust growth over the forecast period, driving the overall market further.

By Application

Residential:

The residential segment of the tankless electric water heater market is witnessing significant growth due to a surge in home renovations and new construction projects. Homeowners are increasingly opting for tankless systems to enhance energy efficiency and reduce their utility costs. The ability to provide unlimited hot water on demand is particularly appealing for families with multiple bathrooms and high simultaneous usage needs. Additionally, the increasing popularity of eco-friendly home products and the push for sustainable living is driving consumers to consider the installation of tankless systems as a viable alternative to traditional water heating solutions. Moreover, the rise in property prices and the trend towards smaller living spaces are leading homeowners to invest in compact and efficient appliances, further fueling the demand for tankless electric water heaters in residential settings.

Commercial:

The commercial application segment is also experiencing substantial growth as businesses recognize the advantages of tankless electric water heaters in terms of efficiency and cost savings. Commercial establishments, such as restaurants, hotels, and schools, require a consistent supply of hot water for various operations, making tankless systems an ideal solution. These units provide instant hot water on demand, thus ensuring that businesses can maintain quality service without interruptions. Additionally, with regulatory pressures to adopt energy-efficient solutions, many commercial entities are upgrading their systems to meet sustainability goals. The increasing focus on green certifications within the building sector is further encouraging the adoption of tankless electric water heaters in commercial applications, resulting in a positive outlook for this segment.

By Distribution Channel

Online Stores:

The online sales channel for tankless electric water heaters has expanded significantly over the past few years, driven by increasing consumer preferences for convenience and accessibility. Online platforms provide customers with a wide variety of options, enabling them to compare prices and features easily. Additionally, the COVID-19 pandemic has accelerated the shift towards e-commerce, as many consumers have turned to online shopping for home improvement products. Retailers are also investing in enhancing their online presence and offering competitive pricing, further boosting sales through this channel. Furthermore, online reviews and ratings have become influential in consumers' purchasing decisions, helping prospective buyers make informed choices. This trend is expected to continue, thereby contributing significantly to the growth of the tankless electric water heater market.

Specialty Stores:

Specialty stores play a crucial role in the distribution of tankless electric water heaters, offering consumers expert advice and a variety of high-quality products. These retailers often focus on particular brands and models, providing personalized service that helps customers select the best product for their specific needs. The knowledgeable staff can guide buyers through the complexities of installation and maintenance, enhancing customer experience. Additionally, specialty stores are often able to stock the latest models and technology, appealing to a niche market that values quality and performance. Given the increasing importance of energy efficiency and water conservation, the specialty store segment is likely to maintain steady growth as consumers seek reliable solutions for their hot water needs.

Home Improvement Centers:

Home improvement centers are significant distribution channels for tankless electric water heaters, providing customers with a one-stop shop for all their renovation and repair needs. These centers typically carry a wide range of products from various brands, allowing consumers to explore different options and price points. The presence of knowledgeable staff and demonstration areas enables customers to understand the product features better and make informed purchasing decisions. Moreover, many home improvement centers offer installation services, making it easier for consumers to transition to tankless systems without the hassle of coordinating separate contractors. As homeowners increasingly undertake DIY projects and renovations, the demand for tankless electric water heaters through home improvement centers is expected to rise, contributing to the overall market expansion.

Direct Sales:

Direct sales channels, including manufacturers selling directly to consumers, are gaining momentum in the tankless electric water heater market as companies aim to improve customer relationships and offer better pricing. By eliminating intermediaries, manufacturers can provide more competitive pricing and ensure that customers receive the latest product offerings directly from the source. Direct sales also allow for enhanced customer service, as consumers can receive personalized advice and support from the manufacturerÔÇÖs representatives. This approach is particularly effective for consumers looking for specific models or those who require guidance on selecting the right unit for their needs. The trend towards direct sales is expected to continue growing as manufacturers recognize the importance of establishing a direct connection with their customer base, ultimately benefiting the market.

By Energy Source

Electric:

Electric tankless water heaters are becoming increasingly popular due to their ease of installation and operational benefits. These systems utilize electric heating elements to provide hot water on demand, making them ideal for residential and commercial applications where gas lines may not be available. Electric models are generally more compact and can be installed in smaller spaces, which is a significant advantage in urban settings where homes and businesses are limited by space. Additionally, advancements in electric heating technology have improved energy efficiency and performance, making these units a viable alternative to traditional gas-powered systems. With a growing focus on reducing carbon footprints and increasing energy efficiency, electric tankless water heaters are well-positioned for growth in the coming years.

Gas:

Gas tankless water heaters remain a popular choice for many consumers as they typically offer higher flow rates and faster heating capabilities compared to their electric counterparts. These systems utilize natural gas or propane as an energy source, making them ideal for larger households or commercial applications with high hot water demands. Gas models are known for their efficiency and can provide substantial energy savings over time, particularly in regions where gas is cheaper than electricity. As a result, the gas tankless water heater segment is expected to continue to thrive, particularly in areas with established gas infrastructure. However, the increasing regulatory focus on emissions and the push for cleaner energy sources may prompt a gradual shift toward more environmentally friendly electric options in the future.

By Region

North America is currently the largest market for tankless electric water heaters, driven by a strong demand for energy-efficient solutions in residential and commercial settings. The region is experiencing a growing trend towards home renovations, which is encouraging homeowners to switch from traditional storage water heaters to more efficient tankless systems. It is estimated that North America will account for approximately 35% of the global tankless water heater market by 2035, with a CAGR of around 7% during the forecast period. The increasing emphasis on sustainability and energy efficiency in building codes is further propelling this growth, encouraging consumers to invest in tankless technology for their hot water needs.

Europe also presents a significant market opportunity for tankless electric water heaters, with a growing focus on energy efficiency and sustainability. Countries like Germany, the UK, and France are leading the way in promoting eco-friendly heating solutions through government incentives and regulations. The European market is projected to grow steadily, accounting for around 25% of the global tankless water heater market by 2035. The ongoing transition towards renewable energy sources and the integration of smart technology in heating systems are further expected to drive demand for tankless electric water heaters in the region, ensuring that the market continues to expand over the coming years.

Opportunities

There are numerous opportunities within the tankless electric water heater market as the global demand for energy-efficient appliances continues to rise. As consumers become increasingly eco-conscious, products that offer sustainable energy solutions are likely to see heightened interest. Manufacturers can capitalize on this opportunity by innovating more energy-efficient models that meet consumer expectations for performance and sustainability. Additionally, integrating smart technology and IoT capabilities into tankless water heaters can enhance user convenience and open new markets. This trend towards smart home products is creating additional avenues for growth as tech-savvy consumers seek interconnectivity and control over their home appliances. Furthermore, as the construction industry continues to evolve, there is potential for partnerships between manufacturers and builders to incorporate tankless systems into new residential and commercial projects, further strengthening market penetration.

Another significant opportunity lies in the emerging markets of Asia Pacific and Latin America, where urbanization and rising disposable incomes are driving demand for modern home appliances. As more households gain access to electricity and a growing awareness of energy efficiency takes root, the adoption of tankless electric water heaters is likely to increase in these regions. Companies can focus on localizing their products to meet specific consumer needs and preferences, such as offering models tailored for smaller living spaces or varying power capabilities. Establishing strong distribution channels and partnerships with local retailers can help broaden market access and increase brand visibility, setting the stage for robust growth in these untapped markets.

Threats

Despite the positive outlook for the tankless electric water heater market, several threats could impede growth. The first major threat is the intense competition from established brands and new entrants that could lead to price wars and decreased profit margins. With numerous manufacturers vying for market share, maintaining product differentiation and brand loyalty will become increasingly challenging. Additionally, fluctuations in raw material costs and supply chain disruptions could impact production timelines and expenses, creating uncertainty in financial planning for manufacturers. Moreover, the regulatory landscape may also pose challenges, as new standards for energy efficiency and emissions are continually evolving, requiring manufacturers to adapt their products quickly to remain compliant.

Another threat to the tankless electric water heater market is the potential slow adoption rate in certain regions due to consumer reluctance to change from traditional systems. Many consumers may prefer the familiarity and perceived reliability of conventional water heaters, delaying the transition to tankless solutions. There is also a risk associated with technological advancements, as rapid innovation could lead to obsolescence for older models, pressuring manufacturers to continually invest in research and development. Finally, economic downturns or fluctuations in consumer spending could impact overall home improvement expenditures, subsequently affecting the demand for tankless electric water heaters.

Competitor Outlook

• Stiebel Eltron
• Rheem Manufacturing Company
• Ecosmart
• Takagi
• Noritz
• Bradford White Corporation
• American Water Heaters
• Bosch Thermotechnology
• Whirlpool Corporation
• ATWOOD
• EcoSmart
• Paloma Industries
• General Electric (GE)
• Siemens AG
• Navien Inc.

The competitive landscape of the tankless electric water heater market is characterized by a diverse range of players, from established manufacturers to emerging brands. Companies are continuously innovating to improve the efficiency, functionality, and user-friendliness of their products to cater to changing consumer preferences. Many manufacturers are also investing heavily in marketing and brand development strategies to strengthen their market presence and establish brand loyalty among consumers. Additionally, partnerships and collaborations between manufacturers and retail channels are becoming increasingly common, allowing companies to enhance product visibility and reach target audiences more effectively. Furthermore, as sustainability becomes a central focus for businesses and consumers alike, many companies are incorporating environmentally friendly practices into their operations, from sourcing materials to production processes, to align with the growing demand for eco-conscious products.

Among the leading companies in the tankless electric water heater market, Stiebel Eltron stands out with its strong commitment to innovation and energy efficiency. The company has garnered a reputation for producing high-quality tankless systems that offer advanced technology, ensuring optimal performance and customer satisfaction. Rheem Manufacturing Company is another prominent player, known for its extensive product range and commitment to sustainability. Rheem has been a pioneer in the development of smart water heating solutions, integrating IoT capabilities into its product offerings to enhance user experience. Ecosmart is also making strides in the market, focusing on eco-friendly designs and energy-efficient technologies to cater to the rising demand for sustainable home appliances.

Additionally, companies like Noritz and Takagi are renowned for their focus on gas tankless systems, yet they are expanding their portfolios to include electric options to meet diverse consumer needs. Navien Inc. is also making waves in the industry with its innovative approaches and technological advancements, contributing to the overall growth of the tankless water heater market. As competition intensifies, manufacturers will continue to face the challenge of keeping up with consumer demands while navigating regulatory requirements, but the ongoing trend toward energy efficiency and sustainability offers ample opportunity for growth and expansion.