The global industrial motors market is expected to grow at a CAGR of 8.7% from 2022 to 2027 and is projected to reach $101 billion in 2027 from $61 billion in 2021. An industrial electric motor is an electromechanical machine found in major industrial products worldwide. Industrial electric motors translate electrical energy into mechanical energy and are used in conveyors, pumps, fans, and other industrial machinery. The industrial motors market is segmented into AC and DC motors. These motors can be further classified into low, medium, and high voltage types and are distributed through various sales channels.
Increasing infrastructural development in emerging nations and residential construction in the U.S., the growth of the oil & gas industry, and the growing production in the chemical industry are expected to drive the growth of the global industrial motors market. Further, China is expected to grow at the highest CAGR during the forecast period owing to a vast population pool, industrial establishments, a growing economy, and increasing industrial expenditures.
The industrial motors market sales in the APAC region will see steady growth driven by expenditure on infrastructure and industrial production growth. Many APAC countries, including China and India, are expected to announce remarkable gains in the industrial motors market, with essential infrastructure expansion in the industrial sector and building services during the forecast period. The U.S. remains the third-largest industrial motors market in 2021 due to its robust process manufacturing and oil & gas industries. However, APAC and Europe remained the top two regions with higher demand for motors in various sectors.
OPPORTUNITIES & CHALLENGE ANALYSIS
Demand For IE4 Efficiency Low Voltage Motors
Worldwide electricity consumption is projected to double by 2050. It has been expected that around the same time, policymakers would reduce their country's CO2 emissions by half to mitigate climate change. Electric motors account for around 40% of global energy use. Industries are another primary global energy user, and motors used in industrial plants usually consume between 65 and 80% of total plant electricity. Thus, an energy-efficient motor is anticipated to create a trend in the industrial motors market during the forecast period. In Europe, the upcoming transition from IE2 or IE3 motors to IE4 was scheduled to begin in 2017, which will continue in the forecast period. Also, to meet the efficiency level, fitting a VFD, which has ratings equivalent to IE3, has been permitted during this phase to increase the efficiency of IE3 motors.
Increase In Automation Expenditure
The global industrial motors market is growing continuously as the demand for integrated and scalable products is at an all-time high. This rise is seen in highly industrialized economies and developing countries as companies look to bypass old technologies and jump directly into the latest trends. Also, as conventional IT principles combine with manufacturing technology, companies use the concept of “digital manufacturing works or factory,” which provides a distinctive competitive advantage to companies in their respective industries. Various industries have used a high level of automation to quicken processes and precision. Hence, motors that provide higher frequency and accuracy and are automated after reset have been increasing in demand, including servomotors, electric motors, and others.
Increasing Raw Material Costs
Steel prices have become highly volatile in global markets. Consequently, input costs for many steel-consuming industries have fluctuated dramatically. Steel is the predominantly used raw material in the industrial motors market, and price fluctuations for steel will have an adverse impact. Volatility in raw material price also affects the estimations and predictions of vendors and end-user industries, which disrupts their growth strategies. Therefore, fluctuations in raw material costs, specifically steel and aluminum, could hinder the global industrial motors market’s growth.
IMPACT OF COVID-19
The global industrial motors market suffered a slowdown because of the COVID-19 crisis, as most economic activities were halted in 2020, especially during Q1 and Q2 2020. Most of the major revenue-generating end-users, such as mining, warehousing, manufacturing, and more, were affected, leading to a decline in sales in the industrial motors market. The curfew and lockdown procedures prevented the extensive application of industrial motors by workers and contractors, thereby affecting the overall revenue generation for the market during the period. According to the UNCTAD, the outbreak of COVID-19 could result in global FDI declining by 5−15%. The primary reason for this decline is the slowdown in the manufacturing sector and the shutdown of non-essential factories and production lines. The negative impact of COVID-19 on domestic and foreign investments is high in the automotive, energy, and aerospace industries.
Most major revenue-generating end-users of HVAC, automotive, machinery, F&B, and aerospace manufacturing activities were affected, leading to a decline in demand for new industrial motors, including fulfillment of previous orders by MRO clients. This, in turn, harmed the demand for industrial motors. China and South Korea considered the major automotive parts and electronic component manufacturing markets, were under complete lockdown in Q1 2020, which has residual negative demand in Q2 as well. Hyundai, Kia, and Ssang Yong had shut down their factories in South Korea temporarily, thereby impacting the industrial motors market.
INSIGHTS BY PRODUCT TYPE
The global industrial motors market includes two major types of motors – AC and DC motors. These motors are further categorized into different types and are used in various applications. The AC motor market is expected to grow at a CAGR of over 9% during the forecast period. Further, to reduce the environmental impact, there is a need to improve the efficiency and precision of motors. With the increased use of elevators, conveyors, compellers, and other industrial machinery, the adoption of IE4 and higher-efficiency motors is expected to flourish in the industrial motors market.
INSIGHTS BY POWER OUTPUT
The industrial motors market by power output can be categorized as IHP and FHP. The IHP motor majorly sees applications in automotive, mining, power generation, food & beverage, and HVAC industries. The end-users of FHP motors include food & beverage, electrical, and mechanical machinery components such as power drills and routers, among others. The automotive market has immense scope for integral horsepower motors and is expected to see a decline in the short term due to COVID-19 but will notice a gradual rise over the forecast period. The Asia-Pacific region is projected to witness robust growth due to the involvement of developing nations such as India and China, which have undergone aggressive industrial development over the years.
INSIGHTS BY VOLTAGE
The global industrial motors market comprises various voltage brackets, including low, medium, and high voltage industrial motors. During the forecast period, the low voltage market is anticipated to dominate and witness a CAGR of 9.24%, reaching USD 63.04 billion by 2027. The low voltage motor market is governed by energy efficiency legislation in the four types – IE1, IE2, IE3, and IE4. The regional efficiency transition regulations in countries will require buyers of low voltage motors to purchase higher efficiency low voltage motors, which are more expensive. This has a dramatic effect on revenue growth, but not necessarily unit growth. During the forecast period, medium and high voltage are expected to thrive in the industrial motors market due to advantages such as suitability for advanced machines and long life.
INSIGHTS BY LOW VOLTAGE AC MOTOR BY EFFICIENCY
Key factors driving the growth of the energy-efficient motor industry are energy savings and resulting costs over conventional motors, growing funding from policymakers around the world for energy-efficient motors, increasing need to reduce the greenhouse effect, and the implementation of energy-efficient motors in the manufacturing sector. However, the high cost of premium performance (IE4) motors is the crucial limiting factor for the development of this market.
Australia, Canada, and the United States are some major countries with a higher penetration rate. As a result, other countries are anticipated to transform their motors to IE4 levels, thus raising the demand for IE4 motors in the future. Thus, the industrial motors market shall witness increasing growth opportunities in the forecast period. Government agencies have encouraged purchasing IE4 motors in the industrial sector, which can boost electricity savings.
INSIGHTS BY SALES CHANNEL
Based on the sales channel, the global industrial motors market is categorized into the following segments:
- Direct Channel
- Indirect Channel
Direct sales channels allow the consumer to buy goods directly. Many customers prefer to buy directly from vendors to reduce the extra cost incurred via third parties in the sales channel, such as dealers or distributors. Strategic partnerships are expected to reduce operational costs in the market. In the industrial motors market, there are three scenarios in the direct sales channel – direct to OEM, direct to end-user, and direct to the system integrator.
The indirect sales channel involves a third-party purchase through a distributor or dealer. There are several reasons customers choose the indirect method – lack of awareness of various brands, variety, price, and long-term contracts. In the industrial motors market, there are three scenarios in the distribution sales channel – distributor to OEM, end-user, and system integrator. Distributor to OEM is expected to grab most of the industry share and grow at a CAGR of 5.35% by revenue during the forecast period.
INSIGHTS BY END-USER
The demand for industrial motors is anticipated to grow due to increased industrial production and replacing old motors with new energy-efficient motors. The demand in the industrial motors market is expected to rise in the coming years due to expansions and investments by private and public players. Oil & gas, chemical, mining, and other industries have strengthened their position in the Middle East, North America, and APAC, expanding in various countries.
APAC accounts for the highest global industrial motors market share in value and volume, accounting for around 34% and 48%, respectively. With the continuous adoption of industrial automation in APAC, manufacturing, construction, power generation, and mining are driving the regional market. Various countries have shown considerable demand for motors in 2020, while some have a lower requirement for motors due to economic disruptions and slower industrial productivity. Countries such as Germany, the U.S., the U.K., and others have adopted higher-efficiency motors such as IE3 and IE4 AC motors, thereby driving the industrial motors market growth. Investor confidence declined to owe to the COVID-19 pandemic in a majority of countries across the globe.
Strong emphasis is placed on the expansion of oil reserves, primarily through discovering unconventional sources, which drives the need for industrial motors while aiding industry development. The U.S. accounts for one of the highest shares in the global industrial motors market and over one-third of revenues generated by industrial motors in North America. The demand for packaging machinery in North America will continuously rise with growing concerns for food safety, a healthy lifestyle, and regulatory bodies to ensure superior-quality food packaging; this will boost the demand for industrial motors from the packaging industry.
There is currently an intensification of the competitive scenario in the global industrial motors market. Vendors are likely to be adversely affected by the rapidly evolving technological climate, as the characteristics of this sector are continuous developments and improvements according to schemes and government policies. The rivalry between vendors for market share is severe. The entrance into the industry of large motor firms presents a big challenge to domestic sellers. The present scenario pushes suppliers to adjust and refine their specific value propositions to maintain a strong market presence. The industry is highly divided by numerous manufacturers operating and selling industrial motors worldwide.
Although the industry is characterized by diversified international and regional suppliers, with global players growing their industry footprint, it is becoming increasingly difficult for regional suppliers to compete with them, particularly concerning quality, technology, and price. Large companies like ABB, Siemens, Eaton, Johnson Electric, Mitsubishi, and others are all set to explore the worldwide market. These businesses have a global presence in at least three major geographical areas: North America, APAC, and Europe. However, local vendors are selling goods at low prices with identical requirements.