Global Tankless Water Heater Market Size, Share & Industry Analysis Report By Product (Electric, and Gas), By Application (Residential, and Commercial), By Regional Outlook and Forecast, 2025 - 2032

The Global Tankless Water Heater Market size is expected to reach USD 8.06 billion by 2032, rising at a market growth of 9.7% CAGR during the forecast period.

Key Highlights:

• The Europe Tankless Water Heater Market dominated the Global Market in 2024, accounting for a 33.33% revenue share in 2024.
• The Germany Tankless Water Heater market is expected to continue its dominance in North America region thereby reaching a market size of 508.8 million by 2032.
• Among the Application segments, Residential dominated the global market, contributing maximum revenue share in 2024.
• In terms of the product segmentation, the Electric segment is projected to dominate the global market with the CAGR of 9.0% in 2032.

Recently, the tankless water heater market has developed into a mainstream component of the water-heating industry, supported by urbanization, increasing energy-efficiency standards, and consumer demand for smart and compact appliances. Initially dominated by conventional storage-tank systems, the industry transformed as on-demand heating technology developed-offering benefits like space savings, reduced standby losses, and continued hot-water availability. Regulatory initiatives, particularly from regulatory bodies such as the US Department of Energy, have played an important role by tightening energy standards and phasing out inefficient non-condensing models, encouraging manufacturers to innovate with higher-efficiency units and condensing heat exchangers. Further, global megatrends like smart-home integration and urban densification have surged adoption, with modern tankless units largely featuring remote diagnostics, digital connectivity, and compact designs suitable for smaller living spaces.

The tankless water heater market is expanding because of the strict efficiency mandates and consumer awareness. Also, the emerging nations are witnessing growth backed by infrastructure investment, urbanization, and the replacement of outdated systems. Global manufacturers such as Rinnai and A.O. Smith are expanding distribution and production in India and China, offering region specific electric and gas models and investing in R&D to improve flow rates, smart capabilities, and condensing performance. The tankless water heater market is competitive, led by large incumbents with regulatory expertise, through regional entrants are gaining popularity in emerging markets. The tankless water heater market is shifting toward a digitally connected, highly efficient, and geographically diversified market ecosystem.

COVID 19 Impact Analysis

The COVID-19 pandemic had a huge effect on the tankless water heater market. It caused factories to close, labor shortages, and supply chain problems that slowed down production and raised the cost of parts. There weren't enough heating elements and control electronics, which made prices go up and delivery times longer. Demand fell even more because of construction delays and postponed renovation projects. Homeowners put off big purchases because they weren't sure what to do. Manufacturers had to deal with lower profit margins because of higher input costs and a lack of available workers. The sector started to recover in 2021–2022 thanks to better supply-chain resilience and automation. However, the pandemic's effects were still felt in the form of delayed upgrades, slower adoption, and limited market growth. Thus, the COVID-19 pandemic had a negative impact on the market.

Product Outlook

Based on product, the tankless water heater market is characterized into electric and gas. The gas segment attained 32% revenue share in the tankless water heater market in 2024.  Gas-fired tankless water heaters remain a preferred option in regions with established natural-gas networks and high demand for continuous hot water. These systems use gas burners to heat water as it passes through, providing high flow rates suitable for larger households or commercial spaces. Publicly available manufacturer guidance notes that advances such as condensing technology and stainless-steel heat exchangers have improved efficiency and reduced emissions, making modern gas tankless systems cleaner and more durable.

Application Outlook

Based on application, the tankless water heater market is classified into residential and commercial. The commercial segment recorded 28% revenue share in the tankless water heater market in 2024.  Commercial operators value tankless systems because they can deliver hot water on demand at varying flow rates, reduce energy waste associated with idle or oversized tanks, and support building efficiency targets. OEMs serving commercial customers emphasise that tankless units allow modular expansion (multiple units in parallel) and simplify maintenance since each unit remains dedicated and responds to actual demand rather than storing heat.

Regional Outlook

Region-wise, the tankless water heater market is analyzed across North America, Europe, Asia Pacific, and LAMEA. The Europe segment witnessed 33% revenue share in the tankless water heater market in 2024.  The tankless water heater market is predicted to experience prominent growth in North America and Europe. This market is expanding due to consumer preference for sustainable technologies, the ongoing replacement of traditional tank systems, and strict energy-efficient regulations. The US Department of Energy’s standards mandating higher energy efficiency and phasing out non-condensing gas units are surging the transformation toward advanced condensing and smart-connected models. Regions, well-established housing markets, smart home integration, and increasing energy costs trends are further accelerating adoption. Manufacturers like Rheem, Rinnai, and A.O. Smith lead these markets, leveraging technological innovation, strong distribution networks, and compliance leadership. Furthermore, Europe’s focus on renewable energy integration and decarbonization-particularly in nations such as Italy, Germany, and the UK-also drives demand of hybrid and electric tankless systems designed to pair with heat-pump and solar technologies.

In the Asia Pacific and LAMEA region, the tankless water heater market is anticipated to significantly grow at a steady pace. The growth is driven by rising awareness of energy conservation, rapid urbanization, and increasing residential construction. In the Asia Pacific, nations like Japan, South Korea, India, and China are experiencing strong demand for both electric and gas tankless systems, with regional manufacturing investments by global OEMs to fulfil regional requirements. Rising disposable incomes, government energy-efficiency programs, and compact housing trends are fuelling the market expansion. Furthermore, in the LAMEA region, the adoption is increasing, supported by infrastructure development and hospitality sector demand. Key market players are targeting these regions with climate-adapted models and regional after-sales support, thereby offering lucrative market opportunities.

Recent Strategies Deployed in the Market

• Oct-2025: A. O. Smith launches its Fall Tools promotion (Oct 1–Nov 30, 2025), offering contractors a tool credit when purchasing two commercial gas water heaters from participating wholesalers, strengthening customer and partner relationships while driving sales engagement.
• Nov-2024: Stiebel Eltron and HomePro launch the WS ECO water heater in Thailand, made with 45% recycled PCR plastic from old appliances. Combining rapid heating, durability, and safety, it promotes circular economy practices while addressing e-waste and sustainability goals.
• Nov-2024: Noritz launches the upgraded EZ Series PRO residential tankless water heaters, featuring a new EZ71 model, 0.98 UEF efficiency, Bluetooth® connectivity, versatile indoor/outdoor installation, and top-mounted connections, while retaining a 25-year heat exchanger warranty for enhanced convenience and performance.
• Jan-2024: A. O. Smith launches the Adapt™ Premium Condensing Gas Tankless Water Heater line, featuring X3® Scale Prevention, integrated recirculation pump, Wi-Fi monitoring, versatile venting, and ENERGY STAR® efficiency, offering contractors flexible installation and homeowners instant, reliable, low-maintenance hot water.
• Jun-2023: EcoSmart™ launches the EcoSmart Element™ tankless electric water heaters, offering 12–27 kW models for point-of-use or whole-home applications. Compact, durable, energy-efficient, and safe, they deliver endless hot water while reducing energy waste and supporting sustainable residential solutions.

List of Key Companies Profiled

• Rheem Manufacturing Company
• Bradford White Corporation
• Robert Bosch GmbH
• Rinnai Corporation
• EcoSmart Green Energy Products, Inc.
• Stiebel Eltron GmbH & Co. KG
• Noritz Corporation
• Kyungdong Navien Co., Ltd.
• Takagi Seiko Co., Ltd.
• A. O. Smith Corporation

Global Tankless Water Heater Market Report Segmentation

By Product

• Electric
• Gas

By Application

• Residential
• Commercial

By Geography

• North America
• US
• Canada
• Mexico
• Rest of North America
• Europe
• Germany
• UK
• France
• Russia
• Spain
• Italy
• Rest of Europe
• Asia Pacific
• China
• Japan
• India
• South Korea
• Singapore
• Malaysia
• Rest of Asia Pacific
• LAMEA
• Brazil
• Argentina
• UAE
• Saudi Arabia
• South Africa
• Nigeria
• Rest of LAMEA

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