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Price pressures drive motor suppliers into new markets

23 July, 2015

Electric motor suppliers, uncertain about the effectiveness of energy efficiency legislation and facing increasing price pressures, are venturing into other product categories to remain competitive, according to a new report from IHS.

The report, which looks at the global market for LV (low-voltage) motors, also predicts that revenues from the less-efficient IE1/Nema High Efficiency motors will decline rapidly in the period to 2019. By then, IE2/Nema High Efficiency and IE3/Nema Premium Efficiency motors will each account for a larger share of the global market than the IE1 products.

Economic difficulties in China and the Eurozone have slowed the demand for LV motors in recent years, IHS reports. These difficulties have been compounded by loopholes in efficiency regulations that have reduced their intended impact in China, Europe and even the US.

Although technological advances have led to more energy-efficient and higher-priced motor designs, the global economic problems counteracted any substantial revenue growth from these machines in 2014, and motor suppliers are facing downward pricing pressures from motor users.

While Europe and the US have taken measures to prevent less-scrupulous motor suppliers from taking advantage of the legislative loopholes, IHS says that it is not uncommon for such regulations to take 3-5 years to become truly effective. It suggests that motor suppliers need to offer attractive selling prices and installation costs to remain competitive.

Because further improvements in motor efficiency will be both expensive and, in some cases, excessive, some motor manufacturers are now offering VSDs and even pumps, fans or compressors with above-average efficiencies. There is an increased focus on system efficiency, providing end-users with more options.

Global demand is shifting from IE1 to IE2 and IE3 LV motors. The left axis shows units shipped (in thousands)
Source: IHS

Too often, says IHS, end-users buy the wrong equipment because they do not have the means to determine exactly what they need for their applications. This gives motor suppliers an opportunity to train their customers and ensure that the right-sized equipment is used in the appropriate environment.

The global LV motor market is fragmented and mature, so change often occurs slowly. However, some sectors react differently to innovation than others. For example, the pump, fan and compressor markets – which account for more than two-thirds of motor applications – are adopting IE4/Nema Super Premium class motors and VSDs more quickly than other sectors, because of their continuous-duty requirements.

More than 75% of LV motors shipped in 2014 were sold to OEMS – what IHS calls “the discrete sector” – making motors sold to this sector the most likely target of higher-efficiency requirements, because they represent potentially the biggest energy savings. These motors tend to rated 0.75–7.5kW and are typically the lowest-cost motors.

One result of the move towards higher efficiency motors is that the widely accepted estimate that integral horsepower low-voltage (LV) motors represent 28% of annual global electric energy consumption, will need to be revised downwards, IHS suggests.




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