Garrett Motion Enters the HVAC Compressor Market in Early 2026

February 2, 2026, AHR Expo, Las Vegas. Garrett Motion released a full line of oil-free centrifugal HVAC compressors, covering 7 to 500 cooling tons. Same day, Trane Technologies announced an exclusive partnership to bring Garrett's compressors into its commercial HVAC product line.

After the news came out I went through a round of industry media coverage, domestic and international. Basically everyone was just parroting the press release: 70 years of history, automotive technology crossover, 10% efficiency gain, low-GWP refrigerant compatible. Zero nutritional value. What I actually want to figure out is what kind of technology Garrett has in its hands, where it came from, and whether Danfoss should be nervous.

A lot of people see "global turbocharger leader" and think big established enterprise.

When Honeywell spun off the turbocharger business for IPO in 2018, it conveniently stuffed a pile of legacy environmental litigation liabilities into the new company. Around $10 billion. Had absolutely nothing to do with the turbocharger business. Pure baggage dumping by Honeywell. In 2020, Garrett couldn't carry it anymore and filed for bankruptcy. In the middle of all this, some PE firm tried to take it private on the cheap. Didn't work. 2021, debt restructuring done, relisted. Today, debt's been cut from $10 billion to roughly $1.3 billion, five straight years of profitability (Garrett Q3 2025 Earnings).

Garrett's HVAC compressor is formally called the E-Cooling Compressor within its product system. You can look it up on their website. E-Cooling is one of three directions in their zero-emission technology portfolio, the other two being hydrogen fuel cell compressors and the E-Powertrain electric drive system.

E-Cooling is not a standalone project. Its technical foundation comes from a series of products Garrett built over the past six or seven years in automotive electrification. Let me lay it out chronologically.

Have an HVAC company try building an oil-free centrifugal compressor from scratch. The first place they'll get stuck is the high-speed motor and bearings, because HVAC people have never touched those things. Garrett has it exactly backwards. Motors and bearings are the things it has the most of, six or seven years of mature solutions built up generation by generation. What it's missing is HVAC system integration experience, and that's something you can fill by partnering with a Trane. Motors and bearings you can't fill in. Those get ground out product generation after product generation.

Danfoss Turbocor uses active magnetic levitation bearings. The principle is using electromagnets to generate a controllable magnetic field around the rotor, suspending it in midair. Needs high-precision displacement sensors monitoring rotor position in real time, needs a feedback control system adjusting field strength based on sensor data. The upside is extremely high control precision, reliability validated over 30 years. Danfoss has done dedicated studies showing that Turbocor compressors installed for over ten years have no measurable performance degradation. Global installed base above 68,000 units (Danfoss Turbocor Website).

Magnetic levitation bearings are expensive. The electromagnets need a lot of copper windings and specialty steel cores. The displacement sensors are precision components. The feedback control board is custom circuitry. These parts aren't the type that get significantly cheaper with volume, the supply chain itself is narrow. So after 30 years of selling Turbocor, the smallest product is still 40 cooling tons. Go any smaller and the bearing system's cost share gets too high, can't price against scroll compressors.

What bearings does Garrett's HVAC compressor use? This is a question I couldn't find a clear answer to in any public materials. Press release, website, AHR Expo display materials all just say "oil-free," no specific technical approach given.

Their fuel cell compressor though, that one explicitly says oil-free foil bearings. Air foil bearings.

I can't confirm 100% that Garrett's HVAC compressor uses air foil bearings. Looking at the evolution chain from fuel cell compressor to E-Cooling to HVAC compressor, carrying over the same bearing design is the most logical engineering choice. You have no reason to swap out a solution you've already validated.

If it is indeed air foil bearings, things get interesting. Turbocor has stayed in the mid-to-high-end market for 30 years, the root cause being that the cost structure of magnetic levitation bearings simply won't come down. If Garrett uses an air foil approach costing an order of magnitude less, paired with its automotive-grade mass production system of 13 factories and 9,000-plus people, there's a real possibility of bringing oil-free centrifugal compressors to a price range that can compete with scroll. That the product line floor is set at 7 cooling tons is very telling. Danfoss's smallest goes to 40 cooling tons. The 7 to 40 cooling ton range right now is entirely scroll compressor turf.

Quite a few people in the industry found Trane's decision to partner with Garrett surprising. Look at the refrigerant transition pressure Trane is under right now and it's not hard to understand. EU F-Gas regulations, the US AIM Act, the Kigali Amendment, three regulatory tracks simultaneously pushing the phase-out of high-GWP refrigerants. New-generation low-GWP refrigerants are generally poorly compatible with conventional lubricating oils: either switch to specialty oils at added cost, or accept efficiency losses. Oil-free compressors eliminate the oil problem entirely. For Trane, getting a viable oil-free compressor supply source during the critical refrigerant transition window, that's attractive enough.

The "exclusive" in the deal terms needs a closer look at scope. The press release wording says Garrett's technology is "exclusively available through Trane portfolio for commercial applications." Garrett's own press release also says samples are available for customer testing and all types of system integrators are welcome to visit the booth (Garrett AHR Expo Press Release). A non-contradictory read is: traditional commercial HVAC categories are Trane exclusive, data center cooling, energy storage thermal management and other emerging categories probably aren't in scope.

Trane's annual revenue is $19 billion, Garrett's $3.5 billion. With that kind of size gap in an exclusive partnership, Garrett doesn't have much bargaining power. If the end product ships under Trane branding, the compressor's technology premium gets eaten by system-level pricing, and Garrett becomes a fancy contract manufacturer. I don't think Garrett management is blind to this, it's just that with zero channels and zero customer relationships in HVAC, tying up with Trane might be the only way to ramp volume fast.

The partnership framework includes "joint engineering, design, and global field testing," which means deep system-level integration, not just buying a compressor and slotting it in. Once this kind of deep binding is done, Trane would have a hard time switching suppliers, and Garrett wouldn't easily be able to serve a second major customer in the short term. Both sides are basically locked onto each other.

Turbocor was founded in Australia in 1995, later acquired by Danfoss. Over 30 years it invented the world's first commercial oil-free magnetic levitation HVAC compressor, cumulative installed base exceeding 68,000 units. Has a 167,000 square foot new factory in Tallahassee, USA, commissioned in 2024, tripling previous capacity. Haiyan, China factory is expanding. A third production facility in Nordborg, Denmark is planned for completion in 2026 (Danfoss Turbocor 30th Anniversary). Global team of about 350 people.

350 people. Garrett has over 9,000. Even if Garrett dedicates just 5% of its engineering resources to HVAC, the headcount roughly matches Turbocor's entire team.

Before Garrett showed up, Turbocor basically had no peer-level competitor in the oil-free centrifugal HVAC compressor market. Copeland's Aero-lift technology sort of counts, but its market presence and brand recognition lag well behind Turbocor. Garrett changes this picture.

My judgment is that in the short term, three to five years, Garrett is unlikely to pose a real threat to Danfoss's existing customer base. Turbocor's brand recognition, 30 years of accumulated operating data, OEM customer relationship network, these barriers don't fall just because you have a cost advantage. HVAC procurement decisions are insanely conservative, especially on big projects. Nobody wants to put a compressor with no multi-year track record into a newly built commercial building.

Put it bluntly, Garrett is unlikely to go after the large chiller projects Danfoss already has. What it's more likely to do is bring oil-free centrifugal technology into a completely new price tier, taking a chunk of scroll and screw share in the 7 to 40 cooling ton market. How Danfoss responds is up to them. Use the scale economies from Nordborg and Haiyan new capacity coming online to push prices down. Sign long-term lock-in agreements with existing OEMs. Accelerate product development below 40 cooling tons. All doable. At the end of the day, Danfoss has 30 years of field data, tens of thousands of machines running over a decade with proven reliability records. For HVAC customers that matters more than any technical white paper. Garrett catching up on this point will take many years.

Garrett's full-year 2024 revenue was $3.475 billion, down 11% year-over-year. Q3 2025 single quarter came in at $902 million, up 6%, call it stabilized, full-year guidance $3.5 to $3.6 billion. Revenue scale is just this big, mid-tier for auto parts. Profitability is decent though, adjusted EBITDA margin 17.2%, well above most peers. First three quarters adjusted free cash flow totaled roughly $320 million, annualized around $430 million (Garrett 2024 Annual Report).

Where'd the money go? Mostly to shareholders. 2024 saw $296 million in buybacks, shrinking the float by 13% in one go. 2025 kicked off an annual $50 million dividend. 2026 approved another $250 million buyback authorization. Management is either very confident in their own stock or needs buybacks to prop up the share price. Both reads work. R&D spending runs about 4.6% of revenue, with over half going toward zero-emission directions, which works out to roughly $80 million a year. $80 million sounds decent, but split across HVAC compressors, fuel cells, and E-Powertrain, each line gets maybe $20 to $30 million.

Stock is up 91% over the past year, market cap around $3.5 billion, P/E 11.48x. JPMorgan "overweight" rating, Stifel target price $20, BWS Financial at $22, current price around $18. This rally was mainly driven by margin improvement and buybacks, hasn't got much to do with HVAC yet.

The CEO's stated target of $1 billion in non-turbocharger revenue by 2030 covers three lines: HVAC compressors, fuel cell compressors, E-Powertrain. All three currently have combined revenue of approximately zero. HVAC is planned for volume production in H2 2026, the E-Powertrain partnership with Sinotruk on heavy-duty truck electric axles targets 2027 production, fuel cell compressors need the hydrogen vehicle market to take off first. Zero to a billion in four years, the timeline will most likely slip. But whether this target slips or not doesn't really affect the industry landscape that much. What's more worth watching is whether Garrett can make the oil-free centrifugal compressor cheap enough. If in 2027 to 2028 Trane starts shipping products with Garrett compressors, and these products genuinely show significant efficiency advantages and lower lifecycle cost in actual operation, then scroll and screw makers will need to start thinking seriously about their response.

February 19 Garrett reports Q4 and full-year results (Garrett Investor Relations). First investor communication since the HVAC strategy announcement. Questions analysts will most likely press: HVAC capex scale and funding source, whether the Trane partnership has minimum purchase commitments or exclusivity duration, current actual revenue from non-turbocharger businesses.

Garrett has real stuff in its hands. Seven years of technology accumulation chain sitting right there, from E-Turbo to fuel cell compressor to E-Cooling to HVAC, the technical lineage between each step is clear and traceable. That Trane is willing to tie its commercial product line to an HVAC newcomer is itself a kind of technical endorsement. The problems are that the HVAC industry is famously conservative, you can't get into big projects without five-plus years of operating data, and the Trane partnership means Garrett's HVAC revenue is going to depend on someone else's schedule for a good while. These specific obstacles are all real.

The February 19 earnings call is the first window where we might hear something substantive.

Core sources: Garrett Q3 2025 Earnings · Garrett 2024 Annual Report · Garrett AHR Expo 2026 Release · Garrett Website Technical Article · Garrett Shanghai Auto Show Release · Danfoss Turbocor · Danfoss Turbocor 30th Anniversary · Investing.com Garrett Debt Analysis