Automotive Thermal System Market Size - By Vehicle, By Fuel, By Sales Channel, By Application, By Component, Growth Forecast 2025 – 2034

Automotive Thermal System Market Size

The global automotive thermal system market size was valued at USD 42.5 billion in 2024 and is estimated to register a CAGR of 4.5% between 2025 and 2034. Increasing demand for luxury vehicles provides significant opportunities for the market. In 2024, the revenue of luxury car market generated revenue of USD 21.7 billion and is expected to grow at a CAGR of 7.4% during 2025 to 2034. Increasing usage of automotive system for features such as seats and steering heating or cooling, advanced polymer materials for heat exchange, and temperature monitoring for safety, inside of luxury vehicles have fostered the market growth.
 

The rise of electric vehicles (EVs) in the last five years has greatly influenced the automotive thermal system market. Highly developed heat management technologies are increasingly required as EV production continues to grow. Heat generated by EV batteries during discharging and charging must be properly controlled through proper thermal solutions. Improved thermal management improves overall vehicle efficiency and the life and performance of electric vehicle batteries. As the EV market grows, there will be a greater demand for these technologies, which will continue to drive innovation in high-performance thermal systems to serve the needs of future electric vehicles.
 

The automotive thermal systems market is also influenced by the government's regulation of climate control and vehicle emissions. Because of these stringent policies, manufacturers have come up with thermal systems to satisfy these regulatory requirements by the government. Automakers must come up with thermal systems that maximize energy efficiency and reduce the environmental impact in an attempt to meet such regulations.
 

Sophisticated thermal solutions must be used to ensure that automobiles comply with such stringent standards without compromising comfort features such as air conditioning and heating. With stricter pollution standards, the automotive sector is investing in thermal systems to assist in developing green, energy-efficient vehicles compliant with government regulations.
 

Automotive Thermal System Market Trends

• One of the major trends in the automotive thermal system market is the rise in autonomous vehicles. This led the automotive industry to create more advanced thermal systems solutions to ensure optimal performance for autonomous vehicles under varying and complex operational conditions. Over 90% of North America's market for autonomous vehicles was in the United States in 2024, and by 2034, it is projected to have a revenue of USD 1 trillion. Autonomous vehicle growth is fueling demand for sophisticated thermal systems that would be able to handle heat within intricate electronic parts.
   
• Automotive thermal system technology is being upgraded to include AI and sensor functionality that optimize HVAC controls, waste heat recovery, and cooling operations. Smart thermal systems regulate temperature across various zones more intelligently based on a combination of internal and external climate conditions, vehicle occupancy, and driving patterns in order to reduce energy wastage while enhancing passenger comfort and the overall vehicle efficiency.
   
• Automobile waste heavy recovery systems capture excess heat from engines, exhaust systems, batteries and other components to be repurposed for HVAC and powertrain functions, which allow for greater vehicle energy efficiency. Developers are refocusing their attention from traditional methods on WHR technologies to fuel economic improvement implementations, notably in hybrid and plug-in hybrid vehicles.
   
• The demand for fuel efficiency and lower emissions in the automotive market has put high-pressure on the design of the thermal system, and hence the industry is focusing on lightweight materials. Manufacturers continue to use heavy cast iron and steel, using increasingly aluminum, composites and advanced polymers to help lighten things like cooling systems, radiators, and heat exchangers.
   

Automotive Thermal System Market Analysis

Based on vehicles, the automotive thermal system market is categorised into passenger cars and commercial vehicles. The passenger car segment dominated the market with revenue of around USD 28 billion in 2024.
 

• Passenger’s cabin comfort requirements are enhancing development of HVAC systems to match consumer needs. Along with purifying air and regulating humidity, innovators are adopting dual-zone and multi-zone climate control systems. These improvements are crucial for effective temperature control in areas with extreme climates, that improve overall driving experience and influence demand in advanced automotive thermal management solutions for passenger vehicles.
   
• Automobile manufacturers are forced to adopt innovative thermal management systems of automotive due to new CO? emission regulations. The introduction of low-GWP refrigerants, efficient engine cooling, heat recovery systems greatly reduced the environmental impact of vehicle manufacturing. While the use of light-weight radiators and heat exchangers along the highly efficient ones ensure the stringent regulations on fuel optimization are met, vehicle performance is vastly increased. This combination leads to an increased fuel efficiency and strengthens compliance with new regulations, leading to a broad use of new generation automotive thermal systems in passenger vehicles.
   
• Consumer interest in electric and hybrid cars leads to the increased use of battery thermal management systems (BTMS) for passenger vehicles. A vehicle's range can be increased, battery life can be extended, and overheating can be avoided with efficient cooling solutions.
   
• In order to increase energy efficiency and meet customer demands for longer driving range, automakers are adopting liquid cooled battery packs, heat pumps, and phase change materials as they offer faster charging capabilities and improved consumer satisfaction.
   

Based on sales channel, the automotive thermal system market is segmented into OEM and aftermarket. The OEM segment dominated the market and is expected to grow significantly over forecast time frame
 

• OEMs are working towards developing eco-friendly thermal solutions such as lightweight heat exchangers and low-global warming potential refrigerants to meet tough emission and fuel economy standards. Governments are implementing CO2 reduction policies which in turn forces automakers to invest in energy saving HVAC, cooling, and waste heat recovery systems. This transition is boosting OEM supremacy since manufacturers are directed towards more efficient thermal solutions.
   
• With the rising volume in electric vehicle (EV) manufacturing, OEM are paying special attention to the battery thermal management systems (BTMS) to maintain battery temperatures, extend their life, and improve range. Nowadays, liquid cooling systems, heat pumps, and phase change materials are standard features of OEMs manufactured EVs. With the increasing portfolio of electric and hybrid vehicles, OEMs are spending more on sophisticated BTMS solutions, which strengthens their position in the automotive thermal system market.
   
• OEMs are also known to develop vehicle-specific thermal solutions that address safety, efficiency, and performance challenges. Multi-zone climate control is a must for high-end passenger vehicles, while commercial vehicles focus attention on the engine cooling and heat recovery systems. OEMs are also working in collaboration with thermal system manufacturers to design battery cooling, aerodynamic and HVAC thermal solutions that are distinct. This strengthens OEM market position, offering crafted thermal management systems across multiple applications.
   

Based on fuel, the automotive thermal system market is categorised into gasoline, diesel, all-electric, hybrid, and FCEV. The gasoline segment dominated the market in 2024.
 

• Governments are implementing stringent emission regulations which require gasoline vehicles to incorporate sophisticated thermal management technologies. To save fuel and cut CO? emissions automakers are adding high-efficiency radiators, engine cooling systems, and low GWP refrigerants. EGR coolers, thermal insulation, and improved heat exchangers enable gasoline engines to function under different temperatures while meeting requirements of harsh environmental policies, which improve engine life.
   
• As fuel prices rise, and consumers expect higher mileage, OEMs are concentrating on ways to boost gasoline engine performance through better combustion and thermal management. New methods of waste heat recovery, turbocharger cooling, and variable valve timing cooling lower thermal losses and improve fuel efficiency. Spending on thermal efficiency technologies is growing as gasoline is one of the dominant fuels worldwide, and so is investment in the automotive thermal system market.
   
• Regenerative hybrid powertrain system requires integrated thermal management to control the internal combustion engine (ICE) temperature and battery temperatures simultaneously. Higher-level hybrid electricity driven vehicle integration for optimal cooling of the ICE, battery and HVAC system extends the performance range and life of the vehicles. Expanding the model lineup of hybrid gasoline vehicle has forwarded the demand for innovative automotive thermal systems.
   

Based on application, the automotive thermal system market is categorised into powertrain cooling, HVAC, Battery thermal management, waste heart Recovery, and seat heating and cooling. The powertrain cooling segment dominated the market with the in 2024.
 

• As automakers shift towards improving fuel efficiency and reducing emissions, advanced powertrain cooling systems are necessary for optimal engine performance. High-performance radiators, intercoolers and water pumps are effective in controlling engine temperature, which relieves thermal stress and helps with maintaining the engine's durability. All forms of automobiles, whether commercial or from passengers’ vehicles, benefit from advanced coolant technologies and thermostatic controls as they dissipate heat effectively, leading to longer engine life, improved vehicle reliability and enhanced coolant technology. 
   
• Turbocharged and hybrid powertrains produce enormous amounts of heat and require efficient cooling solutions to mitigate loss of performance and degradation of components. Advanced liquid cooled charge air coolers, intercoolers, and electronic water pumps are being integrated by manufacturers in turbocharged and hybrid gasoline engines. Due to the shift towards downsized, high-power engines, there is an increasing demand for new thermal management technologies in the powertrain cooling sector.
   
• Issues ranging from the governance of the world increasing concern toward stringent emission regulatory policies are stimulating automobile manufacturers to implement efficient powertrain cooling practices. Lesser global warming potential refrigerants, thermal insulation materials as well as active cooling systems are integrated to lower excess fuel burn while optimizing the powertrain heat management. Also, investment in waste heat recovery systems (WHRS) aid in improving energy efficiency, making these systems contribute to market growth.
   
• As powertrains for hybrid and electric vehicles gain popularity, the management of temperature for the electric motors and batteries is becoming more important. To ensure that batteries cool down and operate optimally, liquid cooling systems, heat exchangers, and active thermal management units are being integrated. Further adoption of high voltage powertrains is increasing the need for advanced cooling solutions, which strategically position powertrain cooling as a focal point of growth within the automotive cooling infrastructure market.
   

Asia Pacific dominated the automotive thermal system market with a major share of 35% and China is leading the region generating revenue of USD 5.8 billion in 2024.
 

• China is comprehensively ahead of the curve when it comes to the global EV market which indicates the need for battery cooling, power electronics, and cabin comfort thermal management solutions. The ramping up of government subsidies and strict emissions regulations are leading automakers to deploy advanced cooling technologies in EV and hybrid vehicles. Efficiency and range enhancements from liquid cooled battery packs and waste heat recovery systems are gaining popularity which is expanding the automotive thermal systems market in China.
   
• China VI emission standards mandate government with the automobile manufacturers to implement effective powertrain cooling practices to minimize CO2 and NOx emissions. Adoption of low GWP refrigerants, advanced intercoolers, and high efficiency radiators is on the rise. The requirement for policies is resulting in OEMs and suppliers directing funds toward energy saving HVAC systems and engine cooling, steeping the growth of the market in thermal systems.
   
• There is a shift in the automotive industry in China toward local production of thermal system parts due to government support along with lower production costs. Major Chinese automotive manufacturers and suppliers are assembling competitively priced cooling components in China instead of buying them. Global joint ventures with providers of thermal systems are speeding up the transfer of new technology and innovation to give China an edge in the automotive thermal system market.
   

The automotive thermal system market in North America is anticipated to witness lucrative growth between 2025 – 2034.
 

• The CAFÉ regulations are aimed at automakers in North America, who are now required to produce vehicles with better fuel economy and more efficient internal heating systems. Thermal systems in automobiles are getting a boost from changes to exhaust heat recovery systems, low global warming potential refrigerants, and thermal barrier coatings that are being integrated to reduce fuel consumption and emissions simultaneously. 
                                                                                                                                                                                                                                                                                                                                                                     
• Along with other major players such as GM and Ford, Tesla is increasing its production of EVs. As a result, there is higher demand for efficient cabin thermal management, power electronics cooling, and battery cooling. Adopting new technology such as liquid-cooled battery packs, heat pumps, and advanced thermal insulation materials are expected to increase the efficiency and range of EVs, further fueling the growth of the thermal system market.      
                                                                                                                                                                                                                                                                                                              
• The North American market has been characterized by the presence of massive pickup trucks and SUVs, which will always need sophisticated thermal management technologies for efficient engine cooling, optimal HVAC utilization, and transmission cooling. The liberalization of turbocharged engine integration and hybrid powertrain adoption are also strong contributors of high-level performance thermal solutions.
   

The automotive thermal system market in Europe is anticipated to witness lucrative growth between 2025 – 2034.
 

• The EU’s Euro 7 emission regulations require a decrease in vehicle emissions which forces automakers to implement better cooling and HVAC system designs. To achieve demanding CO2 objectives, novel waste heat recovery systems, lightweight radiators, and thermoelectric cooling are becoming popular.
   
• With the gradual growth in Electric Vehicles (EVs) and considerably favorable government policies, the focus on thermal management for the battery, power electronics, and cabin comfort becomes essential. To promote EV efficiency, automakers are adopting liquid-cooled battery packs, advanced heat pumps, energy-efficient thermal insulation, which is driving competition in the market.
   
• The strong luxury car demand in Europe led by automakers BMW, Mercedes-Benz, and Audi is forcing innovation in HVAC and powertrain cooling systems. Innovations in automotive thermal systems are enabled by multi-zone climate control, predictive thermal management, and energy-efficient cabin heating.
   
• The growing interest in hydrogen fuel cell vehicles (FCEVs) in Europe brings a need for new specialized thermal systems for fuel cell stack, hydrogen storage tank, and power electronics cooling. These developments in Europe are accelerated with the innovation of liquid cooling, phase change materials, and heat recovery techniques.
   

Automotive Thermal System Market Share

• The top 7 companies in the automotive thermal system market are Hanon Systems, Denso, MAHLE, BorgWarner, Bosch, Valeo, and ZF, collectively holding a market share of around 60% in 2024.
   
• As one of the world’s leading companies in the automotive thermal system industry, Hanon Systems has been proactively investing in innovations related to electrification and thermal energy management solutions. The company is placing significant resources into EV (electric vehicle) thermal systems including battery thermal management and heat pump systems. In addition, Hanon is building new production sites and establishing new partnerships which helps expand the company’s global presence.
   
• The company is shifting towards lightweight materials and refrigerants which not only helps sustain global environmental objectives but also assists to win contracts with major automakers to provide next generation thermal management systems.
   
• To retain competitiveness in the industry, Denso is also improving vehicle efficiency with advanced thermal management technologies, such as vehicle performance enhancement. The company’s focus lies on integrated thermal systems and their ability to manage heating and cooling for the traditional and electric powertrains.
   
• Denso has further strengthened its position in the EV segment with their extensive R&D expenditures on heat pump systems, energy efficient HVAC units, and battery cooling systems. Denso is able to respond to market needs in an environmentally friendly way while maintaining high performance through strategic partnerships with automakers, investment in AI controlled thermal management systems, and high efficiency building HVAC units.
   
• As an established participant in the automotive thermal system field, MAHLE makes use of its knowledge in powertrain cooling, air conditioning, and battery thermal management. The firm is working towards the creation of electric and hybrid vehicle-specific cooling systems and heat exchangers with maximum efficiency.
   
• MAHLE is also working on the intelligent energy expenditure optimization through digitalization and smart thermal management solutions. Company collaborations with OEM has been able to remain active in the global market due to its constant innovation in light materials, eco-friendly refrigerants, and many other rapidly changing fields.
   

Automotive Thermal System Market Companies

Major players operating in the automotive thermal system industry include:

• BorgWarner
• Bosch
• Denso
• Hanon Systems
• Kendrion
• MAHLE
• Modine
• Schaeffler
• Valeo
• ZF
   

In the automotive market, as companies pursue new and more sustainable ways to provide energy, competition has increased in the automotive thermal system market. Currently, electric and hybrid vehicles are gaining popularity, due to which companies, Hanon Systems, Denso, and MAHLE are investing into next generation electric and battery thermal management technologies. Innovations are being made within lightweight cooling components, advanced heat pumps, and battery thermal management systems.
 

Furthermore, companies are taking a more strategic approach by collaborating with OEMs and other technology companies to implement smart thermal features inside the vehicle, which lowers the energy needed to power the vehicle while improving its range and comfort.
 

Companies are competing with one another through emerging market expenditures and increasing production, which is required to compete in the quickly growing EV market. At the same time, regulatory interactions along with changing customer preferences concerning the functionality and ecofriendly nature of thermal systems influence the market. In order to safeguard the strict emission laws, these companies are adopting lower global warming refrigerants and more sophisticated heat recovery systems. The market is continuing to change through increased spending on research and development as well as purchasing other firms, with other firms investing significantly to dominate in the new market.
 

Automotive Thermal System Industry News

• In January 2025, DENSO announced an update to its leadership responsibilities and organizational structure in its North America region. These changes signify DENSO's dedication in innovation, improving operational effectiveness, and solidifying its position as a major force in the mobility and automotive sectors.
   
• In December 2024, Valeo unveiled its latest thermal management system at the Automotive Engineering Exposition in Japan. This system combines intelligent sensors and sophisticated control algorithms for optimizing the heating and cooling procedures of electric cars to greatly enhance energy efficiency.  
   
• In October 2024, Hanon, a world-leading automotive thermal management supplier for electrified mobility, broke ground on a new plant in Woodbridge, Ontario, Canada, to accommodate its expanding business with global vehicle manufacturers. Approximately 26,400 square meters of manufacturing space is included in the facility, with more space becoming available depending on business requirements.
   
• In November 2023, BorgWarner reached an agreement with a major global OEM to supply its 400V high voltage coolant heaters (HVCH) for the automaker’s European light vehicle program. The anticipated start of production for HVCH technology is in 2026.
   

The automotive thermal system market research report includes in-depth coverage of the industry with estimates & forecasts in terms of revenue ($ Mn/Bn) and shipment (Units) from 2021 to 2034, for the following segments:

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Market, By Component

• Compressor
• Heat exchanger
• Electric pump
• Electric fan
• Thermoelectric module

Market, By Vehicle

• Passenger cars
  • Hatchback
  • Sedan
  • SUV
• Commercial vehicle
  • Light-duty
  • Medium-duty
  • Heavy-duty

Market, By Fuel

• Gasoline
• Diesel
• All-electric
• Hybrid
• FCEV

Market, By Sales Channel

• OEM
• Aftermarket

Market, By Sales Channel

• Powertrain cooling
• HVAC
• Battery thermal management
• Waste heat recovery
• Seat heating & cooling

The above information is provided for the following regions and countries:

• North America
  • U.S.
  • Canada
• Europe
  • UK
  • Germany
  • France
  • Italy
  • Spain
  • Russia
  • Nordics
• Asia Pacific
  • China
  • India
  • Japan
  • South Korea
  • Australia
  • Southeast Asia
• Latin America
  • Brazil
  • Argentina
  • Mexico
• MEA
  • UAE
  • Saudi Arabia
  • South Africa