Manufacturers will showcase a wide range of battery-powered construction machinery at next month’s Bauma exhibition in Germany. However, Roland Berger, a German consulting firm, says that high purchase prices, the lack of charging infrastructure, and technical challenges are becoming barriers to market acceptance. (Excerpt from Rental News)
As construction machinery manufacturers prepare for their impressive booths at next month’s Bauma exhibition in Munich, it’s clear that Original Equipment Manufacturers (OEMs) will focus heavily on zero-emission equipment this year. Volvo Construction Equipment plans to make history by showcasing only electric equipment at its booth. Hitachi Construction Machinery promises to display its largest-ever lineup of electric excavators, including nine zero-emission models—nearly a third of the manufacturer’s total exhibit. Komatsu also stated that it will demonstrate both current production machines and pre-production and concept models to showcase its electric products.
However, despite all the marketing hype, the German consulting firm Roland Berger says the pace of electrification is actually slowing down. “We see that major OEMs have set very ambitious electrification targets for their compact series, and they want to push forward. We’ve seen similar situations in the passenger car and truck industries,” said Martin Weissbart, a partner at Roland Berger and speaker at the European Non-Road Machinery Electrification Landscape Webinar. “[But now] OEMs are stepping back a bit to truly reassess what the right strategy is—what decarbonization and full decarbonization really mean.”
Despite the fact that construction machinery engines are similar in many ways to those in cars and trucks, the configuration of heavy machinery—especially articulated dump trucks, graders, and tracked bulldozers—is far more complex, and the required power systems are much more difficult to adapt. “For an OEM, defining an engine strategy based on their entire product portfolio is becoming increasingly difficult,” he said. “This is why a cautious decarbonization-first strategy is needed—what is required and what can transition from traditional ICE (internal combustion engine) solutions to [alternative] propulsion decarbonization solutions.”
“Larger vehicles with higher horsepower demands—those require different solutions and broader power system solutions that not only assist with operation but also meet their use cases in operations,” he added. According to data from the International Energy Agency (IEA), in the road vehicle market, electric vehicles made up about 18% of all car sales in 2023, up from 14% in 2022, and just 2% five years ago. Roland Berger forecasts that, driven by innovations in the automotive market and other sectors, sales of compact construction machinery like mini-excavators will see significant growth over the next five to ten years.“The entire ecosystem will evolve and learn from other sectors, and there will be strong cross-industry collaboration,” Weissbart said. “The electrification of compact machinery will push forward, especially in the mini-excavator and smaller wheeled loader segments in Europe and the U.S.,” he said. “There will be significant investments in the electrification environment, including investments in battery and energy management technologies.”
The company predicts that the main driver of this growth will be the Total Cost of Ownership (TCO)—the overall cost of purchasing, operating, and maintaining equipment—will be cheaper than the overall equivalent cost of diesel machinery. “We see mini-excavators leading the way in electrification,” Weissbart said. “This is happening both in Europe and the U.S. But the positive impact of TCO will largely emerge in the early 2030s, or even the mid-2030s.”
For rental companies, which typically don’t pay for fuel usage by customers, it may be harder to sell the argument supporting TCO. Instead, Weissbart acknowledges that the high purchase cost remains one of the key barriers preventing the electric construction machinery market from taking off.
What are the barriers to electrification?
He points out that another major challenge is the lack of charging infrastructure in many places. Although many rental companies have installed charging stations at their warehouses, and contractors are increasingly able to use mainstream highway charging points in towns and cities, Weissbart notes that many construction projects are located far from these charging points. “The infrastructure challenge is key in remote areas, which also play a critical role in construction and mining,” he said. “As well as the system integration. These are the key challenges OEMs and end customers currently face, and they’re slightly slowing down the promotion of electrification.”
As a result of all this, Weissbart says he expects OEMs to invest more in developing hybrid machines. He said Roland Berger increasingly believes that hybrid solutions provide the overall most attractive option for end users in construction, agriculture, mining, and forestry. “We did a study on combined electrification,” he said, using agricultural equipment as an example. “Just the batteries require a 4-ton trailer. So, in that case, you need different decarbonization methods.”
“In farm ecosystems, you have telehandlers, you might have a homogeneous driving mode, each machine’s use case is about four hours—things like wheeled loaders, telehandlers, and a variety of others—this can be electrified more quickly, and TCO will pay back earlier,” he said.
The company also studied the number of patents related to hybrid technology filed by major OEMs since 2000, and found that most of the patents come from four manufacturers. “We plotted the number of patents related to [hybrid technology] since 2000, so the last 20 years,” he said. “You’ll see significant pushes from Caterpillar, Komatsu, Hitachi, and Volvo.”
Despite all the announcements at this year’s Bauma exhibition, Roland Berger predicts that the acceptance of battery-driven machines in Europe will remain low this year, mainly due to the weak economic conditions across the market. “Clearly, the current downturn cycle in agriculture and construction machinery is expected to last until 2025, especially in Europe,” Weissbart said. “Agriculture and construction are likely to at least remain flat. We expect the market to grow in 2026.”
Shared from: Machinery Information Station
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