Leaping forward

The construction equipment industry is set to grow in the years to come. While this is great for the global economy, it could be devastating for our planet… Electrification may help to curb the consequences.

The construction equipment industry is projected to achieve a global market size of US$174 billion by the end of 2032, finds Fact.MR*. Increasing commercial and residential infrastructure projects, especially in Asia, are expected to positively drive market growth.

“In 2020, construction activity was negatively impacted by the Covid-19 outbreak. As a result of the rapid spread of Covid-19 infections, construction activity worldwide was suspended indefinitely,” Fact.MR notes in its report. “Supply chain disruptions and temporary closings of dealer stores caused new purchases to be halted for OEMs. The resumption of construction activity for halted and new projects, however, caused a spike in the demand for construction equipment in 2021.”

Over 40% of revenue in 2022 is projected to come from the Asia Pacific region, and the compound annual growth rate is forecast at over 4% from 2022 to 2032. “In emerging economies such as India, China, and Southeast Asia, the market growth is mainly the result of government policies that boost infrastructure projects.

“Furthermore, the recent Regional Comprehensive Economic Partnership of China with Asia Pacific countries, such as Japan, South Korea, Australia, and other smaller Southeast Asian countries, is expected to increase the development of transport infrastructure in the region, thus driving demand,” the report continues. “The deal was strategically designed for China to strengthen its regional economic ties and divert attention from the aftereffects of the US-China trade war.”

But increased activity means increases in pollution. “Construction machines are responsible for around 400 megatonnes of CO₂ emission annually, which is around 1,1% of global CO₂ emission,” writes Dr David Wyatt, technology analyst at independent market research firm IDTechEx**.

“Decarbonisation of the construction industry will be a key element of countries meeting their Paris agreement commitments, and electric construction vehicles will play an important role in this. While the off-road electric construction vehicle market is at a much earlier stage of development than the on-road electric vehicle markets, there is increasing effort within the space to deliver zero emission solutions, with a growing number of prototypes.”

Electrification led by compact machines; larger machines to follow

Wyatt says the electrification of construction vehicles is being led by the electrification of small compact machines including mini-excavators, small wheel loaders, and dump trucks, primarily because these machines are deployed in urban environments, and cities are increasingly looking to lower exhaust emissions and noise: “Their use in smaller projects means their daily duty cycle is lighter than larger machines, meaning the power demand can be met with a practical size of li-ion battery and electric motor.” 

He adds that Volvo Construction Equipment has already committed to moving its entire range of compact wheel loaders and compact excavators to electric powertrains, completely stopping the development of new diesel models. “We expect other OEMs will follow suit. Development work is also being conducted by many OEMs for the electrification of larger construction machines, although most are still in a prototyping or piloting phase, with the high upfront capital expenditures cost meaning they are not yet a viable commercial product.”

Air quality regulations are a primary driver

“Many cities are looking to either ban or charge for operation of heavily polluting vehicles in urban environments, through the introduction of low emission zones,” says Wyatt. “This could be a mechanism to incentivise zero-emission machines by adding substantial cost to construction projects that continue to rely on only diesel equipment.

“For example, Oslo, Norway, will require all municipal construction sites to operate emission-free vehicles by 2025, moving to all construction projects by 2030. This has spurred the development of many of the heavy-duty electric construction vehicle prototypes in Europe. We expect other cities to follow suit in future, though likely with less aggressive timelines.”

A multitude of performance benefits for electrification

Electrification has the potential to greatly improve the working environment for machine operators, with lower noise and vibration and reduced exposure to pollutants. “The elimination of exhaust pollutants enables electric vehicles to operate in indoor environments – particularly useful for demolition projects – whilst noise reduction offers the possibility to improve on-site communication, improving site safety as well as potentially enabling site operations to continue outside of normal daytime working hours,” Wyatt points out.

“Generally, electric powertrains provide superior vehicles, with lower maintenance and servicing costs, that are more straightforward to operate, and which facilitate precise autonomous controls, with the battery efficiently powering computers and sensors.”

Construction vehicle electrification is definitely a leap in the right direction. Couple this with the forecasted growth, and the global economy – and our planet – should benefit post-pandemic.

* Fact.MR is a global market research and consulting firm with clients in over 100 countries. The demand for construction equipment is highlighted in its piece “Construction Equipment Market Analysis by Product Type (Earth Moving Machinery, Material Handling Machinery, Concrete and Road Construction Machinery), By Region – 2022 to 2032”.

** IDTechEx’s report “Electric Vehicles in Construction 2022-2042” is a deep dive into the world of zero emission off-road construction machinery. The report explores the electrification efforts of key players operating in the construction machinery market, highlighting technical and economic considerations of powertrain electrification over the diverse range of mobile construction machines, including excavators, loaders, cranes, and telehandlers. It details a long-term 20-year outlook for the sector, with IDTechEx’s independent sales, battery demand, and market revenue forecasts for electric construction vehicles up to 2042 broken down by region.