Exhaust Heat Recovery System Market - Global Industry Size, Share, Trends, Opportunity, and Forecast, 2021-2031

The Global Exhaust Heat Recovery System Market is projected to expand from USD 35.01 Billion in 2025 to USD 54.06 Billion by 2031, registering a CAGR of 7.51%. This sector focuses on creating and deploying technologies that trap waste thermal energy from internal combustion engine exhaust streams, transforming it into functional mechanical or electrical power. Growth in this market is largely driven by strict international emissions mandates and the need for commercial fleet operators to lower total ownership costs via enhanced fuel economy. Serving as a vital interim solution, these systems help meet demanding sustainability goals while traditional engines are still utilized. The International Energy Agency noted in 2025 that near-term efficiency gains for heavy-duty trucks are expected to stay between 2% and 5%, underscoring the need for sophisticated thermal management strategies to realize necessary performance improvements.

However, market growth faces a notable hurdle due to high integration costs combined with the rapid global shift toward fleet electrification. As governments and automakers channel investments into hydrogen fuel cell and battery-electric architectures, the financial appeal of funding efficiency upgrades for fading internal combustion platforms diminishes. This evolving technological priority poses a threat of lowered adoption rates for heat recovery systems, a trend particularly evident in the light-duty vehicle category where electrification is advancing at the fastest pace.

Market Drivers

Strict government emission mandates act as the main driver for adopting exhaust heat recovery systems, pushing automakers to incorporate advanced thermal management technologies. With regulators setting lower limits on carbon dioxide and nitrogen oxides (NOx), the capacity to quickly heat engine fluids and aftertreatment components is crucial for adherence to the law. This is especially significant in the heavy-duty industry, where efficient thermal management is necessary to satisfy tough tailpipe requirements during cold starts and low-load conditions. For instance, the California Air Resources Board enforced tighter NOx standards for model year 2025 heavy-duty engines starting in January 2025, requiring the use of complex exhaust control systems to ensure compliance.

Concurrently, the market is propelled by the growing need for better fuel economy, as manufacturers aim to optimize internal combustion and hybrid models prior to the complete shift to electric vehicles. Technologies like Rankine cycle systems and cooled exhaust gas recirculation (EGR) play a vital role in capturing waste energy to boost thermal efficiency and cut fuel usage. This ongoing focus on combustion efficiency is reflected in supplier trends; BorgWarner announced in May 2025 that it extended EGR system contracts with a leading North American OEM through 2029, demonstrating persistent industry interest in efficiency improvements. Additionally, despite wider economic difficulties, the sector remains commercially vibrant, evidenced by Valeo’s July 2025 report of a 30% rise in first-half order intake to 11.8 billion euros, indicating strong demand for advanced automotive solutions including thermal systems.

Market Challenges

A major obstacle to the growth of the exhaust heat recovery system market is the substantial initial integration cost combined with the rapid worldwide shift toward complete fleet electrification. As commercial operators and automakers reallocate capital toward hydrogen and battery-electric platforms, the economic case for funding efficiency technologies for internal combustion engines becomes considerably weaker. Consequently, stakeholders increasingly regard combustion-based heat recovery options as temporary solutions with declining investment returns, resulting in the postponement of adoption or the termination of retrofit initiatives for current diesel fleets.

Recent trends in commercial vehicle registrations provide empirical backing for this hesitation, revealing a contraction in the traditional engine sector. Data from the European Automobile Manufacturers' Association (ACEA) shows that in the first three quarters of 2025, diesel truck registrations in the European Union fell by 11.5%, whereas the market share for electrically chargeable trucks rose to 3.8%. These statistics highlight the diminishing potential market for exhaust heat recovery systems, as the volume of internal combustion engines contracts to make way for zero-emission technologies.

Market Trends

The integration of Organic Rankine Cycle (ORC) technology into maritime propulsion systems is progressing quickly as shipbuilders aim to meet stricter Carbon Intensity Indicator (CII) standards. ORC systems use low-boiling-point organic fluids to recover low-grade waste heat from engine exhaust and jacket water, converting it into electricity for use onboard. This approach enhances a vessel's overall thermal efficiency and lowers dependence on auxiliary engines without needing changes to the primary fuel. In November 2025, Climeon reported in its interim statement that it achieved a milestone in Asia with a HeatPower 300 order worth MSEK 4.6 from Jiangsu New Yangzi Shipbuilding, highlighting the growing commercial feasibility of this technology for new ships.

At the same time, the use of electric turbo-compounding in long-haul commercial trucking is becoming a key method for optimizing heavy-duty vehicle efficiency. In contrast to conventional mechanical setups, electric turbo-compounding uses a secondary turbine to power a generator, which sends recovered electrical energy to the vehicle’s auxiliary systems or powertrain to ease engine strain during intense operations. This structure facilitates accurate energy management and meets the increasing power needs of modern truck electronics while acting as a bridge toward full electrification. A March 2025 study by SAE International on turbo-compound systems for heavy-duty natural gas engines showed that optimized turbines could lower fuel usage by 2% to 4%, offering significant efficiency benefits for long-haul transport.

Key Players Profiled in the Exhaust Heat Recovery System Market

• FORVIA Group
• MAHLE GmbH
• Continental AG
• DENSO Corporation
• Honeywell International Inc.
• Dana Incorporated
• Marelli Holdings Co., Ltd.
• PHINIA Inc.
• Mitsubishi Heavy Industries, Ltd.
• Cummins Inc.

Report Scope

In this report, the Global Exhaust Heat Recovery System Market has been segmented into the following categories:

Exhaust Heat Recovery System Market, by Component:

• Turbine
• TEG Module
• Compressor
• Evaporator
• EGR Valve & Cooler
• Condenser Others

Exhaust Heat Recovery System Market, by Technology:

• Exhaust Gas Recirculation (EGR)
• Thermoelectric Generator (TEG)
• Organic Rankine Cycle (ORC)

Exhaust Heat Recovery System Market, by Vehicle Type:

• Passenger Cars
• Commercial Vehicles

Exhaust Heat Recovery System Market, by Region:

• North America
• Europe
• Asia-Pacific
• South America
• Middle East & Africa

Competitive Landscape

Company Profiles: Detailed analysis of the major companies present in the Global Exhaust Heat Recovery System Market.

Available Customization

The analyst offers customization according to your specific needs. The following customization options are available for the report:

• Detailed analysis and profiling of additional market players (up to five).

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