Propulsion Systems Market – Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Type (Air Breathing Engines, Non-Air Breathing Engines, Electric Propulsion Engines), By Application (Aircraft, Spacecraft, Missiles, Unmanned Aerial Vehicles), By Region, Competition 2021-2031F

Forecast Period	2027-2031
Market Size (2025)	USD 320.63 Billion
CAGR (2026-2031)	7.88%
Fastest Growing Segment	Air Breathing Engines
Largest Market	North America
Market Size (2031)	USD 505.42 Billion

Market Overview

The Global Propulsion Systems Market will grow from USD 320.63 Billion in 2025 to USD 505.42 Billion by 2031 at a 7.88% CAGR. Propulsion systems comprise the mechanical assemblies and engine technologies designed to generate the thrust or power necessary to move vehicles across automotive, aerospace, and marine sectors. The primary drivers supporting market growth include the intensifying demand for fuel efficiency and the strict enforcement of global emission standards which necessitate continuous technical innovation. Additionally, the expansion of commercial logistics networks actively stimulates the requirement for reliable power units. According to the European Automobile Manufacturers' Association, in 2024, new EU van sales increased by 8.3 percent reaching 1,586,688 units. This sustained demand for commercial mobility vehicles underscores the critical role of propulsion technologies in facilitating global trade.

However, the industry encounters a substantial challenge regarding high production costs and supply chain vulnerabilities which can delay manufacturing timelines. The volatility of raw material prices required for both conventional and electric architectures further complicates long term planning for original equipment manufacturers. These financial and logistical hurdles can impede the rapid adoption of new technologies and restrict overall market expansion, particularly when companies attempt to scale production of next generation power systems.

Key Market Drivers

Resurgence in Global Air Passenger Traffic and Commercial Fleet Modernization serves as a primary catalyst propelling the market. As travel demand rebounds to pre-pandemic levels, airlines are aggressively upgrading their fleets with fuel-efficient engines to minimize operating costs and comply with tightening environmental standards. This modernization cycle directly drives the production of advanced turbofan and turboprop engines, as carriers replace aging assets with next-generation models. According to the International Air Transport Association, November 2025, in the 'October 2025 Air Passenger Market Analysis', global passenger demand increased by 6.6 percent compared to the same month in the previous year. To meet this growing capacity requirement, original equipment manufacturers are ramping up output of new airframes and their associated power units. According to Airbus, in January 2025, the manufacturer delivered 766 commercial aircraft throughout 2024, highlighting the critical industrial scale-up required from propulsion suppliers to support these elevated delivery targets.

Rapid Expansion of Commercial Space Exploration and Satellite Launch Services further stimulates market development. The deployment of mega-constellations for internet connectivity and earth observation is creating unprecedented demand for reliable rocket propulsion systems. Reusable launch vehicle technologies are lowering access barriers, allowing private entities to increase launch cadence significantly and necessitating the continuous manufacturing of liquid and solid propellant engines. According to NASASpaceFlight, January 2025, in the 'SpaceX achieves record-breaking 2024' report, SpaceX successfully completed 134 missions with its Falcon rocket family in 2024, illustrating the intense operational tempo now dominating the sector. As commercial entities and government agencies alike prioritize space access, the propulsion industry is witnessing a distinct shift toward high-frequency production and reusable engine architectures to support this burgeoning orbital economy.

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Key Market Challenges

High production costs and supply chain vulnerabilities represent a significant barrier to the expansion of the global propulsion systems market. When manufacturers face volatile raw material prices, it becomes difficult to establish stable pricing strategies or commit to long-term production schedules. This financial unpredictability affects both conventional internal combustion engines and emerging electric propulsion architectures. Consequently, companies may delay the rollout of next-generation power units, as the financial risks associated with scaling production become too high. These logistical hurdles directly impede the ability of original equipment manufacturers to meet market demand efficiently, resulting in delayed timelines for vehicle assembly and delivery.

The impact of these economic constraints is evident in recent industrial output figures, which demonstrates how manufacturing costs dampen market activity. According to the German Association of the Automotive Industry, in the first half of 2024, domestic automobile production in Germany declined by 6 percent year-on-year, totaling 2.1 million units, a downturn attributed largely to high energy and production costs. Such contraction in vehicle manufacturing volume directly reduces the installation rate of associated propulsion assemblies. When major industrial hubs struggle to maintain production levels due to cost pressures, it restricts the overall growth trajectory of the propulsion systems sector.

Key Market Trends

The Integration of Hybrid-Electric and All-Electric Propulsion Architectures is fundamentally reshaping the automotive manufacturing landscape as legacy automakers aggressively pivot toward electrification to remain competitive. This transition involves massive capital allocation for the development of dedicated electric vehicle (EV) platforms and domestic battery supply chains, moving away from reliance on traditional internal combustion engines. Companies are successfully converting these industrial investments into tangible market uptake, despite broader economic pressures affecting consumer spending. According to General Motors, January 2025, in the 'GM drives America' report, the company's U.S. electric vehicle sales jumped 50 percent in 2024 compared to the previous year, demonstrating the accelerating consumer shift toward electrified powertrains.

Simultaneously, the maritime sector is witnessing a decisive Shift Toward Liquefied Natural Gas and Dual-Fuel Marine Engines to meet rigorous international decarbonization mandates. Shipbuilders are prioritizing propulsion systems that offer operational flexibility, allowing vessels to utilize cleaner-burning fuels like LNG while retaining the ability to run on conventional marine oils during supply shortages. This strategic preference for versatile, lower-emission power units has led to a rapid expansion in order books for specialized dual-fuel commercial vessels. According to Offshore Energy, January 2025, in the 'DNV: LNG dominated alternative-fuel ship orderbook' article, the number of LNG vessel orders placed globally in 2024 reached 264 units, a figure that is more than double the volume recorded in 2023.

Segmental Insights

The Air Breathing Engines segment is recognized as the fastest growing category within the Global Propulsion Systems Market. This expansion is primarily driven by the rising production of commercial aircraft to meet increasing global travel demand. Furthermore, the defense sector is actively procuring cruise missiles and unmanned aerial vehicles that utilize these systems for sustained atmospheric flight. Compliance with stringent environmental standards set by the International Civil Aviation Organization also compels manufacturers to engineer fuel-efficient engine variants. Consequently, the combined pressure of commercial fleet modernization and regulatory compliance is fueling rapid adoption.

Regional Insights

North America maintains a dominant position in the global propulsion systems market, driven by the strong presence of key original equipment manufacturers in the aerospace and automotive industries. The region benefits from substantial investments in research and development aimed at improving fuel efficiency and reducing emissions. Stringent regulations enforced by the U.S. Environmental Protection Agency accelerate the transition toward hybrid and electric technologies. Additionally, consistent government funding for defense applications supports sustained demand. These factors collectively establish North America as the primary hub for propulsion system development and revenue generation.

Recent Developments

• In September 2025, Rolls-Royce expanded its collaboration with industry partners IHI Corporation and Avio Aero to accelerate the development of a next-generation combat air propulsion system. Under the Global Combat Air Programme (GCAP), the companies moved from separate national initiatives to a unified international team representing the United Kingdom, Japan, and Italy. The consortium focused on producing an engine demonstrator that integrates advanced materials and additive manufacturing techniques to handle the extreme thermal loads of future fighter jets. This agreement solidified the path toward delivering a shared power and propulsion solution, strengthening the defense industrial capabilities of the three participating nations.
• In April 2025, Wartsila was awarded a contract to upgrade the main propulsion engines of two bulk carrier vessels owned by a Turkey-based shipping operator to improved environmental performance. The project involved retrofitting the vessels' existing engines to align with modern operational profiles and stricter energy efficiency regulations, such as the Carbon Intensity Indicator (CII). By optimizing the propulsion machinery, the upgrade was projected to reduce carbon dioxide emissions by approximately 1,500 tons annually. This development underscored the marine propulsion market's increasing focus on lifecycle solutions that extend the operational relevance of existing fleets while meeting rigorous decarbonization targets through technological intervention.
• In November 2024, GE Aerospace commenced a significant research initiative utilizing high-performance computing to advance the development of next-generation propulsion architectures. The company secured access to supercomputers at U.S. Department of Energy laboratories to simulate the aerodynamic integration of its open-fan engine design with aircraft wings. This effort was a critical component of the Revolutionary Innovation for Sustainable Engines (RISE) program, which aims to achieve a substantial reduction in fuel consumption and emissions for future commercial aircraft. By modeling complex airflow interactions on a large scale, engineers sought to validate the installation viability of this advanced propulsion technology, supporting the aviation industry's broader sustainability goals.
• In August 2024, Safran Electronics & Defense announced the expansion of its industrial footprint in the United States to manufacture propulsion systems for the growing small satellite market. The company revealed plans to produce its EPS®X00 electric propulsion system at a new facility in Colorado, responding to increasing demand from both commercial and defense sectors. This strategic move aimed to provide locally manufactured, turnkey propulsion solutions capable of enhancing satellite maneuverability in Low Earth Orbit. The initiative also addressed emerging regulatory requirements for space sustainability, as the systems are designed to facilitate collision avoidance and the effective deorbiting of satellites at the end of their service life.

Key Market Players

• Rolls-Royce Holdings PLC
• General Electric Company
• Safran S.A.
• Northrop Grumman Corporation
• Aerojet Rocketdyne Holdings, Inc.
• Honeywell International Inc.
• Orbital ATK
• Lockheed Martin Corporation
• GKN Aerospace
• MT Aerospace AG

By Type	By Application	By Region
Air Breathing Engines Non-Air Breathing Engines Electric Propulsion Engines	Aircraft Spacecraft Missiles Unmanned Aerial Vehicles	North America Europe Asia Pacific South America Middle East & Africa

Report Scope:

In this report, the Global Propulsion Systems Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• Propulsion Systems Market, By Type:

• Air Breathing Engines
• Non-Air Breathing Engines
• Electric Propulsion Engines

• Propulsion Systems Market, By Application:

• Aircraft
• Spacecraft
• Missiles
• Unmanned Aerial Vehicles

• Propulsion Systems Market, By Region:

• North America
• United States
• Canada
• Mexico
• Europe
• France
• United Kingdom
• Italy
• Germany
• Spain
• Asia Pacific
• China
• India
• Japan
• Australia
• South Korea
• South America
• Brazil
• Argentina
• Colombia
• Middle East & Africa
• South Africa
• Saudi Arabia
• UAE