Tankless Electric Water Heaters Sales Market Outlook

The global tankless electric water heaters market is projected to reach USD 3.8 billion by 2035, growing at a CAGR of 7.5% from 2025 to 2035. This growth is fueled by an increasing consumer demand for energy-efficient solutions, which are more environmentally friendly than traditional water heaters. Additionally, the growing trend of home automation and smart home technologies has amplified the usage of smart water heating systems. The rise in real estate development, particularly in urban areas, is also driving the demand for space-saving solutions like tankless electric water heaters, as these units take up significantly less room compared to conventional models. Moreover, advancements in technology have led to the development of more efficient and reliable tankless systems, further enhancing their appeal to both residential and commercial users.

Growth Factor of the Market

Several key factors are expected to drive the growth of the tankless electric water heaters market over the coming years. The increasing focus on energy efficiency and sustainability has compelled consumers to shift towards tankless systems, which provide hot water on-demand without the need for large storage tanks. Additionally, government initiatives promoting green technologies and energy-saving appliances further encourage this transition, providing financial incentives for homeowners to upgrade their water heating systems. The rapid urbanization and population growth, especially in emerging markets, contribute to the rising demand for reliable and efficient water heating solutions in residential and commercial properties. Furthermore, the ongoing technological innovations in heating systems, including smart features and enhanced energy management capabilities, play a crucial role in capturing consumer interest. The rise of online retail and the growing availability of these products through various distribution channels also support market expansion.

Key Highlights of the Market

• The market is projected to grow at a CAGR of 7.5% from 2025 to 2035.
• Demand for tankless systems is driven by their energy efficiency and environmental benefits.
• Advancements in technology are making tankless systems more efficient and user-friendly.
• The increasing trend of smart homes is boosting the adoption of tankless electric water heaters.
• Government incentives are promoting the use of energy-efficient water heating technologies.

By Product Type

Point-of-Use:

Point-of-use tankless electric water heaters are designed to provide hot water directly at the location where it is needed, such as under sinks or in bathrooms. This type of system is particularly advantageous in smaller spaces or secondary units where hot water demand is low. The installation of point-of-use systems can lead to significant energy savings since they eliminate the need for long piping runs and reduce heat loss associated with traditional storage tanks. Furthermore, the convenience of having immediate access to hot water makes these systems highly desirable for residential applications. The growing trend of home renovations and improvements is also driving the demand for point-of-use heaters, as homeowners look for solutions that enhance their bathroom and kitchen functionalities while saving on space. Overall, the point-of-use segment is expected to exhibit substantial growth over the forecast period, fueled by these numerous practical advantages.

Whole House:

Whole house tankless electric water heaters are designed to supply hot water to an entire home, making them ideal for larger households or commercial applications. These units are capable of delivering a continuous flow of hot water, accommodating multiple outlets simultaneously, which is essential in busy settings. The ability to install whole house systems with higher flow rates and more robust heaters contributes to their popularity among consumers who prioritize efficiency and performance. While the initial installation cost may be higher compared to traditional water heaters, the long-term energy savings and reduced operational costs justify the investment for many homeowners. As the trend towards energy-efficient appliances grows, the whole house segment is anticipated to capture a significant share of the market, particularly as manufacturers innovate to create more compact and efficient systems that fit modern home designs.

By Application

Residential:

The residential application segment holds a substantial share of the tankless electric water heaters market, driven primarily by the increasing demand for energy-efficient and space-saving solutions among homeowners. As more consumers become environmentally conscious, they are seeking alternatives to traditional water heaters, which tend to consume more energy and space. Tankless systems provide hot water on demand, which not only reduces energy consumption but also ensures that users do not run out of hot water during peak usage hours. The growth in the residential sector is also supported by the renovation and remodeling market, where homeowners are upgrading to tankless systems to enhance the efficiency of their homes. Additionally, the availability of government incentives for energy-efficient appliances further propels the adoption of tankless electric water heaters in residential settings.

Commercial:

In the commercial sector, the demand for tankless electric water heaters is gaining momentum as businesses seek out solutions that enhance operational efficiencies and reduce energy costs. Industries such as hospitality, healthcare, and food services require consistent and reliable hot water supply, making tankless systems an attractive option due to their ability to provide continuous hot water without the limitations of storage tanks. Additionally, the compact nature of these systems allows for flexible installation in various commercial environments, including kitchens, restrooms, and laundry facilities. As the commercial sector increasingly prioritizes sustainability and operational cost reduction, the market for tankless electric water heaters is expected to experience significant growth, catering to the specific needs of various industries.

By Distribution Channel

Online Retail:

Online retail has emerged as a key distribution channel for tankless electric water heaters, offering consumers the convenience of browsing a wide array of products from the comfort of their homes. The rise of e-commerce has enabled manufacturers and retailers to reach a broader audience, allowing customers to compare prices, features, and reviews before making a purchase decision. Online platforms often provide better deals and discounts, making it an attractive option for consumers looking to save money. Additionally, the ability to easily access detailed product specifications and user feedback enhances the shopping experience, influencing purchasing choices. This trend is further amplified by the growing comfort of consumers with online shopping, especially in the wake of the COVID-19 pandemic, which has accelerated the shift toward digital channels for home improvement purchases.

Specialty Stores:

Specialty stores play a vital role in the distribution of tankless electric water heaters, particularly for consumers seeking expert advice and personalized service during their purchase journey. These stores typically offer a curated selection of high-quality products, often featuring knowledgeable staff who can provide valuable insights into the best options for specific needs and applications. The hands-on experience of visiting specialty stores allows consumers to better understand the features and benefits of various models, contributing to more informed decision-making. As consumers prioritize quality and service in their purchasing decisions, specialty stores are likely to remain integral to the distribution landscape, providing tailored solutions and support.

Home Improvement Stores:

Home improvement stores are essential distribution channels for tankless electric water heaters, as they cater to a wide range of DIY enthusiasts and homeowners undertaking renovation projects. These large retail outlets typically carry a diverse selection of products, making it convenient for customers to find everything they need for their home improvement endeavors in one location. Moreover, home improvement stores often provide additional services such as installation assistance, which can be particularly appealing for consumers who may feel overwhelmed by the installation process of tankless systems. As the trend of home renovation continues to grow, these stores are expected to remain popular destinations for consumers looking to upgrade their water heating solutions.

Direct Sales:

Direct sales represent another important distribution channel for tankless electric water heaters, allowing manufacturers to engage directly with consumers and provide tailored offerings. This approach facilitates a more personalized shopping experience, enabling customers to receive direct support and answers to their specific questions regarding product features and benefits. Additionally, direct sales often include installation services, which can be a significant advantage for consumers unfamiliar with the installation process. As manufacturers recognize the value of building relationships with their customers, the direct sales channel is expected to expand, further enhancing accessibility to tankless electric water heaters for consumers seeking efficient and reliable solutions.

By Energy Source

Electric:

Electric tankless water heaters are increasingly popular due to their energy efficiency and eco-friendly attributes. These systems utilize electricity to heat water on demand, eliminating the need for storage tanks and reducing the associated energy losses typically seen in conventional water heating methods. The convenience of electric models is particularly appealing for residential users, as they can be easily installed in various locations without the need for gas line installation. Furthermore, the technology behind electric tankless heaters has advanced significantly, resulting in units that can deliver a consistent and reliable supply of hot water while maintaining low operational costs. As consumers continue to prioritize energy savings and sustainability, electric tankless water heaters are expected to capture a significant share of the market.

Gas:

Gas-powered tankless water heaters offer a robust alternative to electric models, providing high flow rates and quick heating capabilities. These systems are particularly favored in larger households or commercial applications, where there is a higher demand for hot water. Gas units tend to heat water more quickly than electric models, making them suitable for simultaneous use in multiple outlets. However, the installation of gas tankless systems requires proper venting and access to a natural gas line, which can complicate the installation process. Despite these considerations, the growing trend toward high-efficiency gas appliances, coupled with advancements in technology, is expected to drive the adoption of gas tankless water heaters among consumers seeking reliable and efficient hot water solutions.

By Region

The North American region remains a dominant market for tankless electric water heaters, attributed primarily to the high consumer awareness regarding energy-efficient solutions and the increasing adoption of green technologies. The market is expected to reach approximately USD 1.5 billion by 2035, with a CAGR of around 7.2% during the forecast period. A significant factor driving growth in this region is the rise in residential construction and renovation activities, where homeowners are increasingly looking for efficient alternatives to traditional water heating systems. Additionally, government initiatives promoting sustainable energy consumption have played a pivotal role in encouraging the adoption of tankless electric water heaters across the region, further solidifying North AmericaÔÇÖs position as a key market.

In Europe, the tankless electric water heaters market is also witnessing steady growth, driven by similar trends in energy efficiency and sustainability. The market is projected to reach around USD 1.2 billion by 2035, with a CAGR of approximately 6.8%. Governments across Europe are actively promoting energy-efficient appliances to combat climate change, which has led to increased consumer interest in tankless systems. Additionally, the growing trend of urbanization is contributing to higher demand for space-saving water heating solutions in densely populated areas. As consumers are becoming more environmentally conscious, the adoption of tankless electric water heaters in Europe is set to accelerate over the forecast period.

Opportunities

The tankless electric water heaters market presents numerous opportunities for growth in the coming years. Innovations in technology are expected to play a crucial role in enhancing product performance and energy efficiency. Manufacturers are continually investing in research and development to improve the capabilities of tankless systems, such as integrating advanced smart features that allow for remote monitoring and control of water heating systems through mobile applications. This aligns with the broader trend of smart home technology, as more consumers seek integrated solutions that enhance convenience and efficiency in their daily lives. Additionally, the increasing focus on sustainability and energy conservation among consumers is driving the demand for eco-friendly appliances, creating a favorable environment for the growth of tankless electric water heaters. Manufacturers who can capitalize on these trends by offering innovative and energy-efficient products will likely gain a competitive edge in the marketplace.

Another significant opportunity lies in the expansion of distribution channels, particularly through online retail and direct sales. The growing trend of e-commerce has transformed how consumers shop for home improvement products, creating a need for manufacturers to adapt their sales strategies to meet changing consumer preferences. By establishing a strong online presence and offering products through various digital platforms, manufacturers can reach a wider audience and enhance their sales potential. Furthermore, collaborating with home improvement stores and specialty retailers can help manufacturers showcase their products in a way that fosters consumer trust and provides expert guidance at the point of sale. By strategically positioning their products across multiple distribution channels, businesses can capitalize on the growing demand for tankless electric water heaters and drive market growth effectively.

Threats

Despite the promising growth prospects for the tankless electric water heaters market, several threats could impede progress. One significant concern is the increasing competition from alternative water heating solutions, such as traditional storage water heaters and other tankless systems powered by gas. These alternatives may offer lower initial costs or be perceived as more reliable by certain consumer segments, leading to challenges for electric tankless water heaters in gaining market share. Additionally, fluctuations in energy prices could affect consumer purchasing behavior, as rising electricity costs may deter some homeowners from investing in electric models, prompting them to consider gas alternatives instead. Furthermore, ongoing supply chain disruptions and raw material shortages could impact manufacturersÔÇÖ ability to meet consumer demand, potentially stalling growth in the market.

Another restraining factor for the tankless electric water heaters market is the higher upfront costs associated with these systems compared to traditional tank heaters. While tankless systems offer long-term energy savings and efficiency benefits, the initial investment can be a barrier for budget-conscious consumers. Many homeowners may opt for lower-priced conventional water heaters, particularly if they are unfamiliar with the benefits of tankless technology. Moreover, the complexity of installation and the need for professional assistance can further deter consumers from making the switch. To overcome these challenges, manufacturers must focus on educating consumers on the long-term benefits of tankless systems and explore financing options that can help make these products more accessible to a broader audience.

Competitor Outlook

• Rinnai Corporation
• Stiebel Eltron
• Ecosmart
• Noritz Corporation
• Takagi
• Atmor
• American Water Heaters
• Bradford White Corporation
• Ruud
• Whirlpool Corporation
• Haier Group
• Ferroli
• GE Appliances
• Bosch
• Viessmann

The competitive landscape of the tankless electric water heaters market is characterized by a mix of established players and emerging companies vying for market share. Industry giants such as Rinnai Corporation and Stiebel Eltron lead in terms of technology advancement and product innovation. These companies have established strong brand recognition and customer loyalty, enabling them to capitalize on the growing demand for energy-efficient solutions. Their extensive product portfolios include various models of tankless electric water heaters designed to cater to different consumer needs, from residential to commercial applications. Additionally, these companies invest heavily in research and development to enhance their offerings with smart features, further appealing to the tech-savvy consumer base. The competitive rivalry in this market is intense, with companies striving to differentiate their products by focusing on energy efficiency, compact design, and user-friendly features.

Emerging players like Ecosmart and Atmor are also making their mark in the tankless electric water heaters market, focusing on value propositions that emphasize affordability, ease of installation, and customer service. These companies often target niche markets, providing tailored solutions that meet specific consumer needs. For instance, Ecosmart is known for its energy-efficient designs that cater to eco-conscious consumers, while Atmor emphasizes quick heating capabilities and compact designs that fit small spaces. As competition continues to grow, these emerging companies are likely to challenge traditional players by offering innovative products at competitive prices, thereby driving market change.

Another notable trend in the competitive landscape is the rise of partnerships and collaborations among manufacturers, retailers, and technology firms. By collaborating with tech companies, manufacturers can integrate smart home technologies into their products, enhancing their appeal to modern consumers. Additionally, partnerships with retailers can ensure better product visibility and accessibility for consumers, leading to increased sales. Companies like Bosch and GE Appliances are actively engaging in such collaborations to expand their reach and enhance their product offerings. Overall, the tankless electric water heaters market is witnessing dynamic competition, with companies continuously exploring new strategies to capture consumer interest and grow their market presence.