The global commercial vehicle automotive thermal system market is on track to reach USD 18.11 billion by 2025, expanding at a 4.41% CAGR through 2035 to achieve USD 27.69 billion. A new study reveals that the surge in electric commercial vehicle (EV) adoption, tightening emission regulations, and the emergence of AI-driven thermal technologies are reshaping the industry landscape.

Thermal systems—crucial for cooling batteries, engines, power electronics, and cabin environments—have evolved from mechanical modules into smart, adaptive systems that boost energy efficiency and extend vehicle life. With stricter norms such as the Euro 7 standard and carbon-neutral targets worldwide, OEMs like Volvo, Daimler, and Tesla are doubling down on high-efficiency, low-emission cooling solutions.

Electrification Drives the Next Thermal Frontier

As the global transportation sector electrifies, the role of efficient thermal systems grows critical. Advanced solutions enhance battery performance, HVAC comfort, and waste heat recovery in commercial vehicles ranging from last-mile delivery vans to long-haul trucks.

Tesla’s Semi truck, for instance, uses an innovative liquid cooling loop that maintains battery stability across extreme temperatures, setting a benchmark for EV-specific thermal management. Similarly, Volvo Trucks and Daimler’s Freightliner eCascadia leverage heat pump-based systems that improve range efficiency and charging performance.

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Regional Dynamics: Four Growth Engines

The market’s expansion is globally synchronized, with APAC, Europe, the USA, and Saudi Arabia leading adoption for region-specific reasons:

• APAC (Japan, South Korea, China): Governments are investing heavily in battery and hydrogen vehicle R&D, supporting local giants like Denso, Hanon Systems, and Hyundai Mobis. South Korea is pioneering AI-based phase-change cooling, while Japan’s carbon-neutral roadmap by 2050 accelerates demand for solid-state battery thermal control.
• Europe: Regulatory pressure from the European Green Deal and Euro 7 is propelling OEMs like Volvo, Scania, and Daimler to deploy intelligent heat pumps and recyclable cooling materials. Germany and France are testing digital twin thermal simulations for predictive maintenance in electric fleets.
• USA: Backed by the Bipartisan Infrastructure Law, the country is electrifying freight fleets, fueling demand for high-performance BTMS (Battery Thermal Management Systems) and energy-efficient HVAC. Companies like Cummins, BorgWarner, and Modine Manufacturing are developing smart cooling modules to meet fleet electrification targets.
• Saudi Arabia: Under Vision 2030, the Kingdom is localizing automotive manufacturing and expanding green logistics. Fleet electrification, combined with extreme ambient conditions, has driven investments in desert-grade thermal systems designed for durability and performance.

Technology Trends Reshaping the Market (2025–2035)

Between 2025 and 2035, innovation will redefine how commercial vehicles manage heat.

Key trends include:

• AI-powered predictive cooling: Using real-time analytics to optimize performance and energy use.
• Phase-change materials (PCM): Enhancing heat absorption while cutting system weight.
• Bio-based refrigerants & recyclable coolants: Supporting sustainability and circular economy goals.
• Digital twin simulation: Enabling predictive maintenance and system optimization.
• Hydrogen cooling modules: Specialized solutions for next-gen fuel cell trucks.

These technologies represent a shift from reactive temperature control to intelligent energy orchestration, aligning with both cost reduction and carbon neutrality mandates.

Market Risks and Opportunities

The market faces headwinds from semiconductor shortages, volatile metal prices, and supply chain fragility exposed during the pandemic. Yet, the USA CHIPS Act and regionalization strategies across Europe and APAC are addressing dependency risks.

Fleet operators’ high adoption costs remain a barrier, but government incentives, carbon credit programs, and scalable local manufacturing are cushioning the transition.

The shift toward subscription-based cooling services and lifecycle pricing models is also gaining traction, enabling fleets to manage total cost of ownership while accessing the latest thermal innovations.

Segment Insights

• By Vehicle Type: Light commercial vehicles (LCVs) dominate, driven by e-commerce and last-mile logistics, requiring compact, high-efficiency cooling units.
• By Application: Front and rear HVAC systems account for the largest share, followed by battery and powertrain cooling.
• By Propulsion: ICE remains prominent in heavy-duty vehicles, but battery and fuel-cell propulsion are expanding fastest.
• By Component: Powertrain cooling continues as the backbone segment, ensuring thermal stability in both ICE and electric models.

Competitive Landscape

The market remains concentrated among key players investing in R&D and sustainable innovation.

Industry Share (2024):

• Denso Corporation: 20–25%
• Valeo S.A.: 15–20%
• MAHLE GmbH: 12–16%
• Hanon Systems: 10–14%
• BorgWarner Inc.: 6–10%

Denso leads with high-performance cooling and HVAC systems for electric trucks, while Valeo pioneers smart heat pumps for EVs. MAHLE focuses on hybrid-ready powertrain cooling, and BorgWarner scales e-thermal modules across BEVs and PHEVs. Hanon Systems is expanding battery thermal management solutions for global fleets.