The electric construction machine market is in its nascent stages. However, it will benefit from other sectors having already gone through electrification and will be able to accelerate quickly with existing supply chains for batteries, motors, and other electric vehicle components that it will need to make this transition. OEMs are moving quickly to electrify their product ranges. This has started with mini-electric excavators but is now progressing to larger machines. This report considers OEM activities, policy drivers, and potential total cost of ownership savings to predict a 10-year CAGR of 38%, and growth to an electric construction machine market value of ~$150 billion in 2043. This will put the construction industry on target to hit international carbon neutrality goals by 2050.
Electric mini-excavators are taking-off
Mini-excavators are the third largest segment by volume in the world, and the largest segment in Europe. With its smaller size necessitating reasonably sized batteries, it has been a low hanging fruit for the construction industry to begin their electrification journey. In 2023 six out of the top ten largest construction OEMs, including Caterpillar, Komatsu, Kubota, and Hitachi either had a production electric mini-excavator, or had a concept or prototype. JCB and Volvo are companies with examples of series production electric mini-excavators and have helped to kick-start the electric mini-excavator market. Both of these have their own targets to reduce emissions but will also be responding to market demand.
Electric mini excavators offer all the performance of diesel variants but with some significant advantages. Firstly, it improves local air quality and more importantly the air quality for the operator who will be exposed to high concentrations of exhaust gases. The operator will also benefit from reduced noise, reduced vibration, and improved safety through better communication with other site workers thanks to the machines lower noise. The electric motors will also give more precise control over the machine, and in the long term, aid the integration of autonomous features, such as automated digging.
More electric machines are coming, and they are getting larger
With the electric mini-excavator market becoming established, OEMs are already moving onto larger machines. Large excavators with operating weights of more than 6-tonne, and similarly sized loaders, are the two areas where OEMs like Caterpillar, John Deere, XCMG, Komatsu, Volvo, and LiuGong are looking to electrify next. Loaders and excavators make up nearly 55% of construction vehicle sales by volume. Excavators are the largest by volume, and with their increased size comes higher prices, meaning they also dominate revenue.
Chinese OEMs in particular have shown interest in electrifying larger excavators and installing large batteries. One example covered in this report uses a 525kWh battery and double gun-DC charging to replenish this enormous battery in just 2 hours. However, the biggest battery IDTechEx has scene in an excavator is 700kWh from a Japanese OEM also covered in this report.
Within China, LFP appears to be the cell of choice for these larger systems, which makes sense given its lower cost and the vehicles not being sensitive to the extra weight. Meanwhile, Europe has tended to go with NMC as its cell of choice for batteries in electric construction machines. NMC offers better performance, but at additional cost. This report goes into detail on the trade-offs between NMC and LFP relating to construction, while also explaining how lithium-ion battery price reductions can sway the balance between choosing an electric construction machine, or a diesel.
Adoption will likely be driven by reduced TCO rather than policy
On an international scale, construction emissions are not at the forefront of governments concerns in their goals to address global warming and GHG emissions. The construction machine industry is only responsible for 1.1% of GHG emissions and will likely be one of the last vehicle types to get targeted by internal combustion ban policies. On a local scale, countries like Norway, and the Netherlands have shown some activity in tackling emissions from construction vehicles. These are mostly focused on local issues, like local air quality, and reducing noise from building sites.
A better incentive for the adoption, and the mechanism needed to establish growth in the electric construction machine market will be total cost of ownership savings. Construction machinery can burn through a lot of fuel. For example, IDTechEx’s analysis shows that over its lifetime a 20-tonne excavator will cost around $120,000 just to fuel. On top of that is maintenance of a large diesel engine, which can also amount to tens of thousands of dollars over the vehicle’s lifetime. This creates a large potential window for generating savings through the use of electric vehicles. However, this US$120k can quickly be consumed by the cost of batteries required to give these machines their 8 hours of operation. Local incentives can help tip the TCO balance in favor of electric while battery prices are coming down, but in the long term, the combination of fuel savings, reduced emissions and increased performance and precision, will lead to electric machines winning out.