The global AC market hit $67.32 billion in 2024. China alone contributed $15.98 billion to the total revenue. Heat pumps are surging even faster, almost 4.12 million sold in US alone in 2024. Europe’s heat pump sales rise each year, also showing a lot of promise. With events around the world, the market shift isn’t surprising.
In this blog, we will discuss the heat pump and air conditioning demand around the world and how the market is shaping to shift across different regions.
Key Takeaways
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Global Market Overview
Global temperature rise and growth in the construction sector led to more popularity in air conditioning and heat pumps worldwide over the years.
Air Conditioner Demand
2019 experienced a new peak of air conditioner sales. The global HVAC market size was valued at $240.8 billion. Approximately 115.87 million AC units were sold worldwide.
Among them,
- Room air conditioners accounted for 101.95 million units.
- Packaged air conditioners made up 13.92 million units.
Last year, in 2024, the global market revenue from air conditioners alone was $67.32 billion. It is growing at a CAGR (cumulative annual growth rate) of 6.41%. So, the projected revenue is going to hit $91.86 billion in 2029.
China leads the generated revenue at $15.98 billion in 2024 as a singular country.
Heat Pump Adoption
In contrast, heat pumps are experiencing a more significant growth. The all-year usability feature makes these systems more popular than air conditioners or furnaces individually.
In 2019, a total of 84 gigawatt of heat pump capacity was sold globally. The regional distribution was:
- China: 31 GW
- United States: 23 GW
- European Union: 13 GW
- Japan: 7 GW
- Rest of the world: 10 GW
Heat pumps that were installed since 2019 have contributed to 50 million CO2 emissions saved annually.
In 2024, the heat pump sales can be summarized as:
| Region | Sales Data | Key Cause/Trend |
| US | 4.12M units (+14% YoY) | IRA tax credit drives growth |
| EU | France (546K units) Italy (394k units) | Germany sales drop (almost 47%) |
| Asia Pacific (APAC) | $39.92B | Low penetration causing high growth |
| China | Leading AC revenue as a country ($15.98B) | Manufacturing hub |
Key Trends Driving Heat Pumps and Air Conditioning Growth
- The global temperature is rising. With this rise comes the rise in the need for cooling. Air conditioners and heat pumps provide direct cooling or heat transfer to cool indoor spaces. Besides, heat pumps can also be an alternative to traditional split HVAC systems for both cooling and heating (furnaces), as they can do both all year.
- Air conditioner growth, although upward, is rising towards a saturated rate. On the other hand, heat pumps are expected an exponential growth. Trending desire for greener solutions accelerated this growth.
- Heat pumps replacing gas furnaces have been reported to reduce carbon emissions by 72% on day one. Over a 15-year lifespan, it is expected to be 92%. Even states like Wisconsin can also reduce the impact by up to 62% over the 15-year period.
- Government incentives and tax returns are responsible for huge heat pump growth. In 2024, approximately 453,000 tax returns were filed for heat pump installations. They averaged $11,213 for electric or gas furnaces.
- Technological shifts are another key reason behind heat pump and air conditioner sales. Despite being an active user, people often look for an upgrade for better features. Although air-to-air heat pumps show a steady increase in sales, air-to-water heat pumps experienced a 41.1% in 2021 and a 49.3% increase in 2022 in Europe.
Regional Breakdowns
United States
- 2020: Heat pump shipments rose to 3.42 million units. 15% of single-family detached homes and 30% of mobile homes had heat pumps. The air conditioner market revenue from North America was $7.04 billion. 10.2 million AC units were in retail in North America, and 399 million in the whole US. It was the second highest reported by regions.
- 2021: Air-to-air heat pump sales increased by 15%, and AC shipments increased to 6.28 million units. The US had a 49.2% market share of heat pump sales globally. North America alone reported a revenue of $8.12 billion.
- 2022: The United States’ air conditioner shipment was 6.05 million units. The US’s heat pump market share increased to 52.6%.
- 2023: 23 million metric tons of CO2 were avoided from 2019-2023, and the US was the largest contributor to this heat pump-related emission reduction. The air conditioner market made $14.92 billion in revenue, although the total number of units rebounded to 5.56 million.
- 2024: The air-source heat pump shipments reached 4.12 million. Residential heat pump stock reached 24.5 million units. The average tax return for heat pump installation was $11,213. Increased demand for smart AC has dropped the market revenue to $8.52 billion.
Europe
- 2020: The European Union had 41.9 million heat pumps in operation. Aerothermal heat pumps were more common than ground ones. The COVID pandemic during and before this period caused the market to take a hit.
- 2021: There was a 41.1% growth in air-to-water heat pump sales. France had the most, leading 1.2 million sales (66% of them were air-to-air and 21% were air-to-water). France’s market share was 42.9% of Europe. Poland had 79,300 air/water heating heat pumps sold.
- 2022: Europe had another 49.3% increase in air-to-water and 19% increase in air-to-air heat pump sales. France’s market share reached 55.9%. In terms of numbers, the UK had 55,168. Germany’s max thermal capacity for heat pumps also reached 9.9 GW.
- 2023: Italy and France led the installed max thermal capacity (still aerothermal-based). Germany’s air-to-water heat pump sales reached a record 330,000 units. Sweden, Poland, and Norway reported the highest shares of final gross energy consumption from aerothermal heat pumps (3.56-4.1%).
- 2024: Europe’s air conditioner market reached $9.46 billion in revenue. France led the heat pump sales with 546,910 units. Italy follows with 394,370 units. In their stock, France had 6.55 million and Italy had 4.58 million heat pumps.
Asia
- 2020: Asia had a $28.85 billion revenue from the air conditioner market and 115.8 million AC units in stock. China had 730 million units installed. Meanwhile, Japan and Korea had 218 million units combined.
- 2021: Asia generated $31.63 million from air conditioner sales. Among them, India experienced significant sales with Voltas sharing 21% and LG sharing 16% of the market. The Indian market was projected to reach 9.7 million units by 2023 at this point.
- 2022: Asia was a major contributor to the global 117.77 million air conditioner demand. India’s overall air conditioner demand reached 7.7 million (7.4 million domestic).
- 2023: China produced 244.87 million air conditioning units. Philippines’ residential air conditioner demand was 922,000 units, and commercial air conditioner demand was 71,000 units. Malaysia produced 3.34 million air conditioner units, and had a demand of 913,000 units.
- 2024: China had $15.98 billion in air conditioner revenues. The APAC region had $39.32 billion in air conditioner revenue.
Other Regions
- EMEA (Europe, Middle East, and Africa) invested $17 billion in heat pumps in the year 2020.
- UAE’s air conditioner demand was 516,000 units in 2021. Meanwhile, Kuwait’s demand was 133,000 units.
- Australia experienced a $167.40 per household revenue for air conditioners in 2024.
- Mexico was the largest recipient of the US’s $40.62 million heat pump exports.
- MENA’s (Middle East and North Africa) air conditioner market reached $2.98 billion in 2024. It is expected to grow 5.51% annually from there.
Challenges and Barriers
- High Upfront Cost: The long-term operation cost of a heat pump is low. However, the initial cost is high enough to average $11,213 in US tax returns in the 2024 fiscal year. It is a signficant barrier for many consumers.
- Climate Sustainability Concerns: There’s a perception of heat pumps being less effective than furnaces in colder climates. Although it is true for some older models, the newer, efficient models are just as good if not better. However, the public concern hasn’t changed about the topic.
- Installation Complexity and Skills: With newer technologies, like air-to-air, air-to-water, and ground source heat pumps, comes the need for skilled technicians for proper installation and maintenance.
- Building Stock Compatibility: 15% of single-family homes and 30% of mobile homes had heat pumps in 2020. This is a challenge in retrofitting existing building stock, which is a significant portion of the market.
- Trade Deficits and Import Reliance: This varies with country. The US imported $428.26 million worth of heat pumps and exported $161.31 million worth of heat pumps in 2024. China was the largest non-reversible heat pump importer in this transaction.
- Market Uncertainty and External Factors: Although the growth is positive worldwide for obvious reasons like global warming, some drops are noticeable regionally. In 2024, Germany’s sales dropped to 234,500 from the previous year’s 438,500.
The COVID-19 pandemic caused a slight drop in the retail volume of air conditioners in 2020 across many regions. So, the market is highly dependent on unforeseen events on a global scale.
- Growing Demand in Developing Regions: Regions like Asia have a large population base, low penetration rates, and weather conditions to depend on air conditioners. Although this is a good opportunity to explore, the rapid growth can put a strain on the energy infrastructure if inefficient units are widely adopted.
Future Outlook
Both the air conditioner and the heat pump markets are expected to continue their growth globally. The $67.38 billion air conditioner market in 2024 has a 6.41% CAGR from 2024-2029. Similarly, the heat pump market capacity is expected to reach 1943 GW globally by the end of 2030.
- The Paris Agreement stated the 1.5°C climate scenario, where the surface temperature is expected to rise by the end of this century. Projections suggest the extra need of 793 million cooling units, like AC and heat pumps. The numbers could be even higher depending on how the global temperature shifts.
- The Asia Pacific will be a key driver for air conditioner growth, with increasing cooling demand for the large population. China’s 31GW heat pump capacity in 2019 already creates a strong base.
- North America shows great promise among the US regions. The region had $14.92 billion in air conditioner revenue in 2024, and has yet to show a decline in revenue despite all the challenges.
- Europe can be a key region for heat pump adoption. Although Germany had a sales drop in 2024, the air-to-air and air-to-water heat pump increases in the previous years and rest of the Europe is still promising.
- Already reduced carbon emissions results show a consumer inclination towards efficient and greener solutions, either by preference or regulations. More focus on greener solutions with lower environmental impact will still have the most return on investment for manufacturers’ R&D departments.
Conclusion
The global demand for air conditioners and heat pumps is on the rise overall. However, their growth patterns differ. AC sales remain strong, particularly in Asia and emerging markets, due to rising incomes and extreme weather conditions. On the other hand, heat pumps are experiencing exponential growth. Government policies, energy efficiency benefits, and their dual heating-cooling functionality are accelerating this growth.
Methodology
The blog uses existing market and forecast data from Statista. It focuses on heat pumps and air conditioning market data around the world and across different regions. Revenue figures are in US dollars. Capacity measurements are done in units and GW (unit capacity). Some additional data was included for larger insights in some cases.
I’m Francis Kaspar, a 35-year-old HVAC technician with over 10 years of experience in the industry. I hold a certification in HVAC technology from Texas State Technical College, where I gained hands-on skills that shaped my career.
Currently, I’m working at The Chill Brothers, specializing in AC installation, repair, and energy-efficient solutions. Outside of work, I enjoy spending time with my wife and two kids.
I’m also passionate about sharing my HVAC knowledge written by articles that provide practical tips and tricks for homeowners.
