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The variable frequency drives (VFD) market size is estimated to grow at a CAGR of 5.5% between 2022 and 2027 and the size of the market is forecast to increase by USD 7,124.1 million. The growth of the market depends on several factors, the presence of regulations that mandate the use of variable frequency drives in industries, the growing need for energy-efficient equipment, and the increasing demand from HVAC&R applications.
This report extensively covers market segmentation by end-user (food and beverage, water and wastewater treatment, oil and gas, power generation, and automotive and others), type (low voltage drives and medium voltage drives), and geography (APAC, Europe, North America, Middle East and Africa, and South America). It also includes an in-depth analysis of drivers, trends, and challenges. Furthermore, the report includes historic market data from 2017 to 2021.
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Our analysis of the adoption life cycle of the market indicates its movement between the innovator’s stage and the laggard’s stage. The report illustrates the lifecycle of the market, focusing on the adoption rates of the major countries. Technavio has included key purchase criteria, adoption rates, adoption lifecycles, and drivers of price sensitivity to help companies evaluate and develop growth strategies from 2022 to 2027.
Global Variable Frequency Drives Market Customer Landscape
Our researchers studied the data for years, with 2022 as the base year and 2023 as the estimated year, and presented the key drivers, trends, and challenges for the market. Although there has been a disruption in the growth of the market during the COVID-19 pandemic, a holistic analysis of drivers, trends, and challenges will help companies refine marketing strategies to gain a competitive advantage.
One of the key factors driving growth in the VFD market is the presence of regulations that mandate the use of variable frequency drives in industries. The change in motor regulation requires industrial operators to shift toward more energy-efficient motors. The shift toward the use of more energy-efficient motors has increased the overall CAPEX for the industrial end-users. This is because IE3-rated premium efficiency motors can cost up to 15%-20%. They can cost higher when compared with IE1-rated electric motors.
Therefore, the increase in the overall motor cost has prompted industrial operators to protect the devices from fluctuating voltage and harmonic current. They also aid in reducing the overall downtime and associated maintenance cost due to motor damage from non-linear loads. The regulation on energy efficiency for motors mandates the use of variable frequency drives with such industrial motors. Therefore, with the changing government regulation on motor efficiency, the demand for variable frequency drives is fueling market growth even during the forecast period.
Technological advances are another factor supporting the VFD market share growth. Conventional variable frequency drives make use of Active Front End (AFE) rectifiers and multi-purpose transformers to mitigate harmonics. This additional equipment helps in mitigating harmonics during operations. It also includes downsides such as an increase in wiring requirement, space requirement, and high cost. To overcome these challenges, vendors are focusing on matrix design in variable frequency drives.
As a result, the drive draws non-linear current that creates harmonics. The development of matrix bi-directional arrangement allows directing power generated from motors due to negative torque back to the power sources, ensuring optimum use of energy during the motor control operation. This arrangement not only provides protection to motors from non-linear loads but also ensures high-energy saving through the use of regenerated power from motors. With the growing focus toward energy efficiency, the demand for such regenerative variable frequency drives is expected to increase during the forecast period.
The lack of stability in crude oil prices and the stagnant growth of the mining industry will be major challenges for the VFD market during the forecast period. The oil and gas industry is a significant contributor to the market. The price of crude oil influenced the price of its by-products, such as gasoline and lubricants. Most companies are taking slow steps in investing in big projects and waiting for oil prices to stabilize fully. For the base year, and 2022, oil and gas upstream investments are expected to be slower. Post this, the investment may rise. This would drive back the demand for variable frequency drives from the oil and gas industry.
At present, the economy of China is shifting toward the consumer-led service model, which is reducing the demand for coal, copper, and iron in the country. The evolution of shale gas, increasing number of regulations, declining productivity of mines, and elevated debt levels are also adversely affecting the profits of mining companies. All these factors have drastically and adversely affected the investment scenario in the mining industry. This is negatively impacting the demand for new variable frequency drives from the industry. However, the slow growth of these industries had a direct negative impact on the sales of variable frequency drives during the forecast period.
Vendors are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
ABB Ltd.: The company offers variable frequency drive solutions such as CONTROL BOARD RDCU 12C plus Crane Software, IGBT MODULE.
Danaher Corp.: The company offers variable frequency drive solutions through its subsidiary Kollmorgen Corporation such as Bronco VFD Series.
We also have detailed analyses of the market’s competitive landscape and offer information on 20 market vendors, including:
Technavio report provides an in-depth analysis of the market and its players through combined qualitative and quantitative data. The analysis classifies vendors into categories based on their business approaches, including pure-play, category-focused, industry-focused, and diversified. Vendors are specially categorized into dominant, leading, strong, tentative, and weak, based on their quantitative data analysis.
The food and beverage segment will account for a major share of the market's growth during the forecast period. The manufacturers of food are adopting energy-efficient equipment to compete in a highly fragmented global food and beverage industry. Variable frequency drives are aiding food and beverage manufacturers not only in fulfilling the sanitary regulatory requirements but also ensuring an energy-efficient solution for food processing, which is expected to augment the demand for variable frequency drives in the food and beverage industry during the forecast period.
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The food and beverage segment was valued at USD 4,551.49 million in 2017 and continued to grow until 2021. The majority of processes in the food and beverage industry involve the use of motors and motor-related equipment. The motors are mostly used for tasks such as food processing, cold supply, and ventilation. Variable frequency drives are used to regulate and control motor applications in liquid filling, flying shear cutting, conveyor systems, and pumps for high-pressure food processing. These systems require regular cleaning to reduce the chances of food contamination.
Variable frequency drives aid in reducing energy consumption during the cleaning process. Furthermore, minor machine failures in continuous process lines can have a hugely detrimental effect on overall productivity. Therefore, features such as advanced drive diagnostics aid in reducing the overall troubleshooting time and preventing unnecessary trips in the case of a breakdown of machines. This ensures uninterrupted process flow.
Based on type, the market has been segmented into low-voltage drives and medium-voltage drives. The low-voltage drives segment will account for the largest share of this segment. As variable frequency drives find major applications in controlling low and medium voltage motors, the increasing demand for low and medium voltage motors provides a high growth opportunity for the vendors of low voltage variable frequency drives.
Moreover, adopting variable frequency drives for certain applications that demand limited functions, such as a smooth start and stop, can increase the costs and delay the overall ROI for end-users. Soft starters are more cost-efficient than variable frequency drives in low-voltage motor applications. Soft starters provide smooth motor start and stop functionalities. This factor is expected to restrain the growth rate of the low voltage variable frequency drives segment of the global variable frequency drives market during the forecast period.
APAC is estimated to contribute 36% to the growth by 2027. Technavio’s analysts have elaborately explained the regional trends, drivers, and challenges that are expected to shape the market during the forecast period.
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The operations of global food and beverage companies are expanding in APAC. Therefore, the focus on food safety and inspection systems has started increasing in the region. Many small and medium enterprises (SMEs) have also started adopting automated material handling and packaging systems to compete with global vendors. Factors such as rising demand for food and beverages, growing population, and increasing disposable income are significantly driving the growth of the industry in APAC. Growing investments in the food and beverage industry will significantly drive the demand for variable frequency drives in the region during the forecast period.
In early 2020, the outbreak of COVID-19 hindered the demand for variable frequency drives from the consumer and manufacturing industries. However, in the first half of 2021, the gradual decrease in the number of COVID-19 cases led to the lifting of nationwide lockdowns and the reopening of factories and manufacturing units, which also resulted in the resumption of construction activities. Moreover, the reopening of stores, malls, and other public places increased the demand for power generation. Such factors are expected to drive the growth of the variable frequency drives market in APAC during the forecast period.
The variable frequency drives market report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2017 to 2027.
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Variable Frequency Drives Market Scope |
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Report Coverage |
Details |
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Page number |
185 |
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Base year |
2022 |
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Historic period |
2017-2021 |
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Forecast period |
2023-2027 |
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Growth momentum & CAGR |
Accelerate at a CAGR of 5.5% |
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Market growth 2023-2027 |
USD 7,124.1 million |
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Market structure |
Fragmented |
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YoY growth 2022-2023(%) |
5.16 |
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Regional analysis |
APAC, Europe, North America, Middle East and Africa, and South America |
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Performing market contribution |
APAC at 36% |
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Key countries |
US, China, Japan, Germany, and UK |
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Competitive landscape |
Leading Vendors, Market Positioning of Vendors, Competitive Strategies, and Industry Risks |
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Key companies profiled |
ABB Ltd., Danaher Corp., Danfoss AS, Eaton Corp. Plc, Emerson Electric Co., Fuji Electric Co. Ltd., General Electric Co., Hitachi Ltd., Honeywell International Inc., Johnson Controls International Plc, Mitsubishi Electric Corp., Nidec Corp., Rockwell Automation Inc., Schaffner Group, Schneider Electric SE, Siemens AG, Spoc Automation Inc., Toshiba Corp., WEG Equipamentos Eletricos S.A., and Yaskawa Electric Corp. |
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Market dynamics |
Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, Market condition analysis for forecast period. |
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Customization purview |
If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
We can help! Our analysts can customize this market research report to meet your requirements. Get in touch
1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by End-user
7 Market Segmentation by Type
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Trends
11 Vendor Landscape
12 Vendor Analysis
13 Appendix
Research Framework
Technavio presents a detailed picture of the market by way of study, synthesis, and summation of data from multiple sources. The analysts have presented the various facets of the market with a particular focus on identifying the key industry influencers. The data thus presented is comprehensive, reliable, and the result of extensive research, both primary and secondary.
INFORMATION SOURCES
Primary sources
Secondary sources
DATA ANALYSIS
Data Synthesis
Data Validation
REPORT WRITING
Qualitative
Quantitative
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