The Automotive Thermal Management Market, estimated at USD 102.66 Bn in 2025, is expected to exhibit a CAGR of 6% and reach USD 154.46 Bn by 2032.
The market growth is fueled by the increasing demand for intelligent, connected, and sustainable transportation solutions, along with shifting mobility trends and wider adoption across passenger and commercial segments. Innovations in vehicle connectivity, automation, and electrification, supported by strategic investments, are enhancing safety, efficiency, and user experience. Furthermore, favorable government policies, rapid infrastructure upgrades, and the push toward greener mobility are accelerating market expansion and unlocking new growth avenues for industry participants.
Market Dynamics:
The automotive thermal management market is primarily driven by two key factors:
Increasing vehicle production across the globe especially in emerging economies, such as China and India, is supporting the growth of this market. With growing disposable income, the demand for personal vehicles is increasing rapidly which is positively impacting automotive production. According to OICA, global vehicle production increased by over 3% in 2020 despite pandemic-related challenges.
Growing focus on fuel efficiency and stringent emission norms are prompting automakers to integrate advanced thermal management systems in vehicles. Thermal management systems play a vital role in optimizing engine performance, reducing friction, and improving fuel efficiency. For instance, electric coolant pump helps in improving fuel efficiency by shutting off the coolant flow when not required.
Increasing Demand for Electric and Hybrid Vehicles is Driving Growth in the Automotive Thermal Management Market
The automotive industry is seeing rapid adoption of electric and hybrid vehicles to reduce emissions and comply with stringent environmental regulations. Electric vehicles require sophisticated thermal management systems to manage the heat generated by high power electric drivetrains and battery packs. The battery packs in EVs generate a significant amount of heat during charging and discharging which needs to be dissipated efficiently to ensure optimal performance and lifespan of the batteries. This has increased the demand for advanced thermal management solutions such as electric cooling pumps, electric fans, battery thermal management systems among others from automotive OEMs and tier 1 suppliers. According to various estimates, electric vehicles are expected to account for over 55% of new vehicle sales by 2040, driving significant growth opportunities for companies providing thermal management solutions to the EV industry.
Strict Emission Norms are Forcing Automakers to Adopt Advanced Thermal Systems
Governments across major markets like the U.S., Europe, and China are implementing increasingly strict emission norms each year to curb pollution and reduce the environmental impact of the transport sector. Automakers are under tremendous pressure to lower the CO2 emissions from their fleet of vehicles to avoid heavy fines. Advanced thermal management systems play a vital role in improving engine and transmission efficiency, reducing parasitic losses, optimal combustion which helps automakers comply with stringent emission regulations. For example, efficient thermal management of crucial components like engine, transmission, battery through cooling solutions helps lower operating temperature and improve fuel efficiency. The imminent shift towards electrification along with strict emission norms will compel automakers to invest heavily in developing innovative thermal management technologies.
High Development Costs Associated with Advanced Thermal Systems acts as a Restraint
The research and development of new thermal management technologies and solutions requires huge investment in terms of time, resources, and capital expenditures. Designing innovative concepts, extensive testing, validation, and bringing these complex systems to mass production is an expensive process. Additionally, integrating advanced thermal systems with existing vehicle architectures poses integration challenges which increases costs. The higher expenses associated with next-generation thermal management solutions especially for fuel cell vehicles and battery packs of EVs may act as a deterrent for its widespread adoption. This high cost factor could restrain automakers, especially budget OEMs, from aggressively pursuing the latest thermal technologies in the short-term.
Short Product Life Cycles of Automotive Components Hampers Investments
The automotive industry follows short product life cycles with new vehicle models and powertrain technologies being introduced frequently. This rapid pace of innovation and changing market trends makes long-term investments risky for automakers and thermal component suppliers. There is uncertainty regarding the payback period and return on investments if the technology becomes obsolete sooner than expected. Moreover, developing solutions for niche applications or low volume vehicle segments may not generate sufficient revenue due to small order volumes. The short lifecycles restrain companies from aggressively allocating R&D budgets for next-gen thermal technologies targeting long-term goals. This acts as a hindrance for the development of breakthrough innovations in automotive thermal management field.
Growing Demand for Advanced Driver-Assistance Systems (ADAS) Presents Lucrative Opportunities
Advanced driver assistance systems that enhance vehicle safety are gaining widespread acceptance. ADAS solutions like autonomous emergency braking, adaptive cruise control, blind-spot monitoring systems require comprehensive thermal management to function reliably under extreme driving conditions and ensure passenger safety. The complex sensors, cameras, radars and computing modules used in ADAS packages generate high heat levels which needs to be dissipated efficiently through thermal management. Automotive suppliers are innovating new lightweight cooling technologies, compact heat exchangers and intelligent controls compatible with ADAS architectures. This growing need for thermal solutions from robust ADAS presents multi-billion dollar opportunities for industry players supplying components, sub-systems or integrated platform solutions.
Popularity of Connected Mobility Services will Drive Demand for On-Board Computing and Thermal Management
Emerging business models involving ride-sharing apps, autonomous mobility services, vehicle connectivity are increasing the usage of advanced on-board computing systems in the automotive sector. Advanced driver assistance, infotainment, telematics, over-the-air updates rely on high-performance computers to deliver sophisticated connected services. The significant processing power and data throughput in-vehicle creates substantial thermal loads that require efficient dissipation through specialized thermal management systems. This rising need for connected cars equipped with powerful on-board computers will augment the demand for thermal management technology providers and open up new revenue streams. Automotive thermal management suppliers can capitalize on this opportunity by innovating customizable solutions optimized for diverse computing applications.
Link - https://www.coherentmarketinsights.com/market-insight/automotive-thermal-management-market-5215
Key Developments:
- In June 2024, TI Fluid Systems, a leading global supplier of automotive fluid systems technology, inaugurated its new e-Mobility Innovation Center (eMIC) in Auburn Hills, Michigan. This 48,000-square-foot facility is designed to enhance customer collaboration and accelerate the development of thermal management systems for hybrid, plug-in hybrid, and battery-electric vehicles in North America. The eMIC aims to streamline the development process, reducing prototype development time from six months to as little as two weeks, thereby promoting innovation in the automotive sector.
- In April 2024, Vitesco Technologies, a leading international supplier of advanced drivetrain technologies and electrification solutions, announced a partnership with Sanden International (Europe), a prominent provider of automotive thermal management technology. This collaboration aims to develop an Integrated Thermal Management System specifically designed for Battery Electric Vehicles (BEVs). Vitesco Technologies, which was spun off from the renowned German Tier-1 company Continental, will work alongside Sanden to create innovative solutions that enhance vehicle efficiency and sustainability.
- In February 2022, BorgWarner Inc., an American tier 1 supplier of advanced automotive technologies, secured an agreement to supply its High-Voltage Coolant Heater (HVCH) for the BMW Group's fully electric iX and i4 models. This innovative solution manages the thermal regulation of the battery and cabin heating, significantly enhancing the driving range and reliability of the battery system. BorgWarner has a long-standing partnership with BMW, having provided numerous solutions for combustion-powered vehicles for over 20 years, and is now contributing to the advancement of electric mobility.
- In September 2022, Mahle, a global leader in automotive components and systems, launched its new thermal management systems for commercial electric vehicles at the IAA Transportation trade fair in Hannover, Germany. These innovative systems are designed to enhance efficiency and reduce costs, addressing the growing demand for sustainable transport solutions in the commercial vehicle sector.
Key Players:
Aptiv Inc., BorgWarner Inc., Calsonic Kansei Corporation (Marelli Corporation), Continental AG, Dana Incorporated, Denso Corporation, Eberspächer, Gentherm Incorporated, Hanon Systems, Johnson Electric, Kendrion NV, LG Chem, MAHLE GmbH, Modine Manufacturing Company, and Robert Bosch GmbH
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