China Galaxy Securities released a research report stating that China's heat pump exports have shown continuous recovery, while the penetration rate of heat pumps in Europe is increasing. The heat pump industry's prosperity is expected to continue into 2026. The firm anticipates that demand will gradually transmit from the complete unit end to the core components and control system end, forming a resonance across the entire industry chain. This will benefit Chinese exporters of complete heat pump units and components, as well as companies with acquisition targets in the European HVAC market. The main views of China Galaxy Securities are as follows:
December 2025 heat pump exports hit a new historical high for the month, and export prosperity is expected to continue into 2026. Europe is the primary export destination for Chinese heat pumps, and changes in its heat pump subsidy policies are a significant factor causing fluctuations in China's exports. Stimulated by European heat pump subsidies from 2021-2022, China's heat pump exports experienced high growth. During 2023-2024, the European heat pump market focused heavily on destocking, coupled with a phased reduction in subsidies, leading to a sharp decline in China's exports. Since 2024, several European countries have successively restored or strengthened heat pump subsidies. Starting in the second half of the year, the destocking cycle gradually ended, after which China's heat pump exports improved month by month. According to General Administration of Customs data, in December 2025, China's exports of complete heat pump units and related components reached 1.62 billion yuan, a year-on-year increase of 21.7%. This marks 20 consecutive months of year-on-year growth and represents a 25.9% increase compared to the previous historical high for December set in 2022, setting a new record for December exports. For the full year of 2025, China's exports of heat pump-related complete units and components totaled 16.46 billion yuan, a year-on-year increase of 17.7%. Export prosperity is projected to continue into 2026.
The potential for increasing the penetration rate of heat pumps in Europe is substantial, and market expectations are high. Promoting heat pumps for heating is a crucial measure for achieving the carbon neutrality target by 2050. The International Energy Agency estimates that by 2050, heat pumps will meet over half of the global heating demand, with a potential market size reaching trillions. Installed capacity is expected to increase to 3.3-4.3 times the 2023 level. Currently, the penetration rate of heat pumps in the European market remains relatively low, at 12% in 2024, with most countries below 20%. The top two European countries by heat pump ownership, France and Italy, had penetration rates of 20.4% and 16% respectively in 2024, indicating significant room for growth. Germany and the UK have very low penetration rates, at just 5.4% and 1.9% respectively. Starting in 2024, both countries significantly strengthened subsidy efforts from a policy perspective; for example, the UK's BUS plan repeatedly increased its public funding budget, and Germany's Building Energy Act strongly promotes the use of renewable energy, with heat pump subsidies potentially covering up to 70% of costs. The EU has set a strategic target of reaching 60 million heat pump units in operation by 2030. With ownership at 25.537 million units in 2024, there remains a gap of over 34 million units. Based on this calculation, the compound annual growth rate of heat pump ownership in Europe from 2024 to 2030 could reach 15.3%, which will drive the continued growth of China's heat pump exports.
Risks include changes in the overseas macroeconomic environment, fluctuations in sea freight costs, and rising raw material costs.
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