Portuguese plant achieves landmark production as CO2 compressor technology becomes European EV industry standard
Hanon Systems, a leading global automotive thermal management supplier and subsidiary of Hankook & Company Group, today announced it has surpassed 1 million units in cumulative production of electric compressors (eCompressors) using eco-friendly refrigerant R744 (CO2), marking a historic milestone in sustainable automotive HVAC technology.
The milestone for the R744 eCompressors, which are manufactured at Hanon Systems’ Portuguese plant, was achieved just eighteen months after reaching 500,000 units, demonstrating explosive growth in demand for natural refrigerant-based heat pump systems as the European electric vehicle market accelerates.
This achievement, reached just one and a half years after the 500,000-unit milestone in January 2024, demonstrates Hanon Systems’ competitiveness and growth in the electric compressor market while underscoring the automotive industry’s rapid transition toward environmentally sustainable thermal management solutions.
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Unprecedented Production Acceleration
The doubling of production from 500,000 to 1 million units in just 18 months represents one of the fastest growth trajectories in automotive HVAC component history, reflecting both surging EV adoption and the superior performance characteristics of R744 technology in electric vehicle applications.
Production of the R744 eCompressors takes place at Hanon Systems’ plant in Palmela, Portugal, which has become a center of excellence for natural refrigerant compressor manufacturing serving major European automakers’ growing EV production volumes.
Hanon Systems reports that demand for R744 compressors has increased significantly alongside the growth of the European electric vehicle market, with the technology becoming the preferred solution for automakers prioritizing both environmental sustainability and optimal heat pump performance.
The production acceleration required substantial manufacturing investments, workforce expansion, and supply chain optimization to meet customer demand while maintaining the quality standards essential for automotive applications.
R744: The Natural Refrigerant Revolutionizing EV HVAC
R744 is an environmentally-friendly alternative to traditional refrigerants with a global warming potential (GWP) of one, representing the lowest possible environmental impact for any refrigerant technology and addressing increasingly stringent EU F-Gas regulations.
Often referred to as carbon dioxide or CO2, R744 is preferred by certain automakers, primarily in Europe, for its improved heating performance in heat pump systems, which is critical for maintaining EV range during cold weather when battery performance naturally degrades.
R744 Technical Advantages:
- Zero Ozone Depletion Potential (ODP): No atmospheric impact
- GWP of 1: Lowest possible global warming impact
- Superior Heat Pump Performance: Enhanced heating efficiency in cold climates
- Natural Abundance: Widely available, non-proprietary refrigerant
- Regulatory Compliance: Meets strictest environmental standards
- Safety Profile: Non-flammable and non-toxic properties
The combination of environmental benefits and technical performance has made R744 the refrigerant of choice for European automakers developing advanced heat pump systems for their EV platforms.
Heat Pump Technology: Critical for EV Range and Efficiency
Electric vehicle heat pumps utilizing R744 compressors have become essential technology for maintaining passenger comfort and vehicle range during cold weather operations when traditional resistive heating would severely impact battery range.
The electronic compressors are built at a Portugal plant and used in Volkswagen’s MEB platform, which underpins its EV models, demonstrating the technology’s adoption by major automotive manufacturers for their highest-volume electric vehicle programs.
Heat pump systems using R744 compressors can provide cabin heating using significantly less energy than resistive heaters, potentially extending EV range by 20-30% during cold weather compared to vehicles without heat pump technology.
Heat Pump System Benefits:
- Extended Range: Reduced heating energy consumption preserves battery range
- Faster Cabin Heating: Superior heat transfer characteristics
- Battery Thermal Management: Efficient battery temperature control
- Dehumidification: Enhanced comfort through moisture management
- Energy Recovery: Waste heat utilization from powertrain components
- Year-Round Efficiency: Cooling and heating in single integrated system
The technology has transitioned from premium feature to essential equipment as consumers demand EVs that maintain performance and comfort across all weather conditions.
Portuguese Manufacturing Excellence
Hanon Systems’ Palmela, Portugal facility has emerged as a global center of excellence for R744 eCompressor manufacturing, combining strategic location with advanced manufacturing capabilities and skilled workforce development.
The Portuguese plant’s strategic position serves the European automotive market effectively, providing proximity to major automaker assembly plants while benefiting from Portugal’s competitive manufacturing environment and skilled technical workforce.
Investment in the Portuguese facility has included advanced production equipment, quality control systems, and workforce training programs ensuring that the complex eCompressor manufacturing meets automotive industry quality standards and production volume requirements.
The facility’s success demonstrates how strategic manufacturing location decisions can support rapid market growth while maintaining the quality and reliability standards essential for automotive component supply.
Market Context: European EV Growth Driving Demand
The rapid growth in R744 eCompressor production directly correlates with explosive European electric vehicle adoption, where environmental regulations, consumer preferences, and automaker strategies are accelerating the transition from internal combustion to electric powertrains.
European EV sales have exceeded projections despite economic headwinds, with heat pump-equipped vehicles becoming standard across most EV platforms as automakers recognize that cold-weather performance significantly influences customer satisfaction and repeat purchases.
The F-Gas regulation phase-down of high-GWP refrigerants has created additional incentive for automakers to adopt R744 technology, ensuring regulatory compliance while delivering performance benefits that enhance vehicle competitiveness.
Market forecasts project continued strong growth in EV heat pump adoption, with R744 technology expected to capture increasing market share as more automakers recognize its advantages over alternative refrigerant solutions.
Competitive Positioning and Technology Leadership
Hanon Systems’ achievement of 1 million R744 eCompressor units establishes the company as a clear technology and market leader in natural refrigerant-based automotive thermal management solutions.
The production volume leadership provides significant competitive advantages including economies of scale, manufacturing expertise, supply chain optimization, and customer relationships that create barriers to entry for competitors.
Automakers increasingly prefer suppliers with proven high-volume production capability and reliability records, making Hanon’s milestone achievement a significant competitive advantage in securing future business from major OEM customers.
The technology leadership position also enables continued R&D investment in next-generation eCompressor technologies that will further enhance performance, efficiency, and cost-effectiveness of R744-based systems.
Environmental Impact and Sustainability Benefits
The 1 million R744 eCompressors now in service represent significant environmental benefits compared to alternative refrigerant technologies, supporting global efforts to reduce greenhouse gas emissions and mitigate climate change.
With a GWP of 1, R744 eliminates the substantial climate impact associated with synthetic refrigerants that can have GWP values thousands of times higher than CO2, preventing millions of tons of CO2-equivalent emissions over the systems’ operational lives.
The improved heat pump efficiency enabled by R744 technology also reduces EV energy consumption, extending battery range and improving overall vehicle efficiency throughout the ownership lifecycle.
These environmental benefits align with European Union climate goals, automotive industry sustainability commitments, and consumer preferences for genuinely sustainable mobility solutions.
Technical Innovation and Product Development
Achieving reliable, high-performance R744 eCompressor production at automotive scale required significant technical innovation addressing the unique challenges of CO2 refrigerant systems including high operating pressures and specialized materials requirements.
R744 systems operate at significantly higher pressures than traditional automotive HVAC systems, requiring advanced component design, precision manufacturing, and rigorous quality control to ensure long-term reliability and safety.
Hanon Systems has developed proprietary technologies addressing these challenges while optimizing compressor efficiency, reducing noise and vibration, and minimizing package size and weight—all critical factors for automotive applications.
Ongoing development programs focus on further efficiency improvements, cost reductions through design optimization and manufacturing innovation, and expanded operating envelope to support emerging EV architectures and use cases.
Customer Relationships and OEM Partnerships
The 1 million unit milestone reflects strong partnerships with major automotive OEMs who have selected Hanon Systems as their preferred supplier for critical thermal management components supporting their EV strategies.
Long-term supply agreements with multiple automakers provide production visibility and revenue stability while enabling the investments in capacity, technology, and workforce necessary to support continued growth.
Close technical collaboration with OEM customers enables Hanon to optimize eCompressor designs for specific vehicle platforms and applications, ensuring maximum performance and integration efficiency.
These partnerships extend beyond component supply to include joint development of next-generation thermal management architectures that will define future EV performance and efficiency standards.
Global Manufacturing Strategy and Future Capacity
While the Portuguese plant currently leads R744 eCompressor production, Hanon Systems is evaluating additional manufacturing locations to support global EV growth and serve emerging markets beyond Europe.
Regional manufacturing strategies balance proximity to customer assembly plants with cost optimization, supply chain resilience, and access to skilled workforces capable of meeting automotive quality standards.
Capacity expansion decisions reflect both near-term demand visibility from existing customer commitments and long-term market growth projections as EV adoption accelerates globally over the coming decade.
The company’s global manufacturing footprint and thermal management expertise position it to capture market opportunities across all major automotive markets as R744 and heat pump technology adoption expands beyond Europe.
Industry Recognition and Market Impact
The 1 million unit milestone has garnered significant industry attention, with automotive analysts recognizing Hanon Systems’ achievement as evidence of R744 technology’s transition from niche application to mainstream automotive thermal management solution.
The production volume validates technical and business strategies pursued by automakers who early-adopted R744 technology, providing confidence for other OEMs evaluating refrigerant options for future EV platforms.
Component suppliers and technology providers across the automotive thermal management value chain are responding to Hanon’s success by increasing their own R744-related investments and development programs.
The milestone’s industry impact extends beyond immediate commercial implications to influence regulatory discussions, industry standards development, and long-term technology roadmaps for sustainable automotive HVAC solutions.
Looking Forward: Next Million and Beyond
Having achieved the 1 million unit milestone, Hanon Systems is positioned to accelerate toward 2 million units as European EV adoption continues growing and R744 technology expands into additional global markets and vehicle segments.
The doubling time from 1 million to 2 million units is projected to be shorter than the 18 months required from 500,000 to 1 million, reflecting continued market acceleration and expanded customer base.
Future growth drivers include penetration of R744 technology into mid-size and compact EV segments where it has historically been limited to premium vehicles, geographical expansion as Asian and North American markets increase EV heat pump adoption, and architectural innovations enabling R744 systems in new vehicle types.
Conclusion: Natural Refrigerants Come of Age
Hanon Systems’ achievement of 1 million R744 eCompressor units represents a watershed moment in automotive HVAC technology, demonstrating that natural refrigerant solutions can successfully transition from environmental aspiration to high-volume production reality.
The 18-month doubling from 500,000 to 1 million units provides compelling evidence of market acceleration and technology maturation, validating the technical and business strategies of both Hanon Systems and its automaker customers.
As the automotive industry continues its historic transition toward electrification, technologies like R744 heat pumps will prove increasingly essential for delivering vehicles that meet consumer expectations for comfort, range, and environmental sustainability.
The milestone establishes Hanon Systems as the clear leader in sustainable automotive thermal management while demonstrating that environmental responsibility and technical performance excellence are not competing priorities but complementary goals achievable through innovation and commitment.