Rotary Encoder Market Trends

Growth Drivers

• Rising adoption of robotics, smart manufacturing, and IIoT: Industries including automotive, aerospace, and consumer electronics are increasingly adopting robotics, smart manufacturing, and IIoT to operate as sustainably as possible. The expansion of the industries with the integration of robotics technologies is likely to boost the adoption of rotary encoders. The sensors play a crucial role in encoding rotation angle and linear displacement in robotics applications. As reported by the International Energy Agency in November 2024, the average robot density in factories globally reached 162 units per 10,000 employees in 2023, doubling in the last seven years.
• The expansion of the EV sector: The rapid expansion of the automotive sector and adoption of advanced vehicles is expected to fuel global market growth. Therefore, rising EV adoption expands the need for rotary encoders. As reported by the International Energy Agency, EV sales in the first quarter of 2025 reached 4 million, an increase of 35% in relation to the first quarter of the previous business year. Developing economies are not behind in EV adoption. In January 2025, EV sales in India reached 1,69,931 units, a MoM increase of 19.4%, and an observed 17.1% YoY growth.
• Push for sustainability: Several regulatory bodies are introducing stringent regulations to achieve the sustainable development goals, which is expected to fuel the rotary encoders market growth in the coming years. For example, as revealed by the Association for Advancing Automation in March 2025, the update of ISO 10218-1 and ISO 10218-2 in 2025 obligates manufacturers and integrators of robotics technologies to meet functional safety requirements more explicitly. Thus, the demand for the sensors can increase with the rising adoption of robots.  

Challenges

• Rising competition from alternative sensors: Competition in the global market is high, due to the widespread presence of a vast number of key players offering diverse products, and the availability of substitute product suppliers for consumers. Products, such as small, brushed DC motors or small, brushless motors, are easily accessible in the market. Competition in the industry is likely to influence deterioration in the sales performance of the businesses and obstruct the entry of new enterprises.
• Technological barriers: The inherent limitations of sensing technologies, such as optical and magnetic, used in rotary encoders, can hamper the market growth to a certain extent. These technologies are vulnerable to malfunctions that are often caused by fingerprints, scratches, and other environmental issues. Malfunctioning of such technologies can deteriorate the performance of the rotary encoder technologies and hinder the market growth.