Abstract: A two-stage electric water heater adapted to store water at a comparatively low temperature and to heat the outflowing stored water to a desired higher temperature includes a storage vessel provided with an elongated thermostatically controlled electric resistance heating element positioned in the vessel and surrounded in space-apart relationship by an elongated imperforate metal tube having a closed outer end attached to a wall of the vessel and an open inner end at a higher level in the vessel and terminating short of the top of the vessel. A heated water outlet extends from the outer end of the tube to the outside of the vessel. An elongated tubular thermally insulating body concentrically surrounds a major part of the length of the tube and is spaced therefrom to form a convective water flow passage communicating with the interior of the vessel proximate the inner and outer ends of the tube.