Revenues in the integral horsepower low voltage (LV) motor market for IE3 Premium Efficiency (and the equivalent NEMA Premium) are on course to almost double by 2018 to over $8,000 million globally.
Major LV motor markets are becoming more and more regulated towards IE2 and IE3 motors, signalling the imminent decline of the lowest efficiency class motor market, IE1.
Currently the largest regulated LV motor market in the world in terms of revenues and units, the IE1 market is mostly concentrated in the Asia Pacific, the Russian Federation and CIS, and smaller markets lacking energy efficiency regulations. Major regions have been shifting out of the IE1 market since the US began in 2002, catalysing revenue growth in the form of more expensive IE2 and IE3 LV motors being sold than in previous years.
Transitioning to the next higher efficiency class of LV motor in any region can take six years or more after the official start date, with the peak of the transition occurring in year three or four. The IE3 market is one such example, with the US and Canada in the process of phasing out IE2 and IE1 motors, and the European Union, Japan and China following suit in 2015, late 2016, and 2017, respectively.
Analyst Mark Meza explains that IE3 revenues have been growing at three-digit rates since 2010, as the current IE3 markets are fortuitously located in regional markets that have been quick to recover from the global recession, and have not experienced further economic difficulties as seen in the IE2 markets of the European Union and Brazil over the past few years.
The rapidly rising IE3 market is expected to be almost equal in revenues in 2017 to the outgoing IE1 market. While the two motor segments will be headed in opposite directions, interestingly, revenues for IE3 will overtake IE1 revenues in 2017, though IE1 units are still predicted to be double the units in the IE3 market.
Comparing the revenue and units of these two markets over time, it is clear to see the revenue-enhancing effect of energy efficiency regulations that operate independently of the market’s demand. According to growth forecasts, high revenue growth in the IE3 market will begin to cool off significantly in North America just as it begins to heat up in the Eurozone, Japan and China barring any further major economic downturns to these newest players in the IE3 market.