Electric drive equipment is rapidly gaining traction across all industries, including construction. On jobsites around the world, the rumble of diesel engines is giving way to the quiet hum of electric equipment. The shift signals a transformation in the construction industry driven by environmental concerns, regulatory pressures and strong economic advantages.
Driving Factors for Electrification
The construction market is one of the largest emerging markets in electrification on a global scale. International Construction Magazine recently ranked the Top 50 global construction original equipment manufacturers (OEMs) for 2024, according to construction equipment revenue, and found Asia leading by region, followed by North America and Europe. Asia has traditionally been a leader in driving electrification, particularly automotive electric vehicles (EVs). Now, Japan, Korea and China are paving the way for electric construction equipment ahead of Europe and the U.S. These figures are impressive, given China’s current difficult market conditions.
Closer to home, experts expect the North American construction equipment market to experience explosive growth, jumping from $27 billion in 2022 to a staggering $46 billion by 2028. Stakeholders will likely invest some of this capital in electric equipment.
Countries worldwide are implementing regulations to phase out diesel-powered equipment. For example, in the U.S., the California Air Resources Board has been directed to develop strategies to “achieve 100% zero-emission from off-road vehicles and equipment by 2035 where feasible.” California has a history of leading the way in sustainability governance, and other states will likely follow suit.
California’s stricter regulations could cause a nationwide ripple effect. American construction companies that want to operate in California must adapt to these policies. Investing in separate fleets for different states is a logistical and financial nightmare. As stricter regulations to phase out traditional equipment are likely to be implemented in other states, electric construction equipment is not just a way to comply with California’s push for sustainability; it’s a wise business decision for long-term success in a rapidly evolving market.
Europe is implementing similar regulations. For example, Norway, which also leads the way in EV adoption, has mandated that public construction work in the capital city of Oslo must be emission-free by 2025, while general construction projects have until 2030.
While the environmental benefits of going electric are clear, including reduced carbon emissions and a cleaner environment, there are additional reasons for companies to make the switch.
Consumer preferences are also indirectly pushing the switch to electric construction equipment. Noise pollution is a prime example. Local noise mandates, often influenced by the public’s concerns, may limit the operating hours of traditional, noisy equipment on jobsites. Electric equipment, with its significantly quieter operation, offers a solution. It enables construction businesses to operate much more efficiently while complying with local mandates. In some cases, switching to electric may even allow construction companies to operate around the clock. The lack of noise and emissions also makes electric construction equipment ideal for indoor work.
Business Benefits of Electrification
Making the switch to electric equipment can be a wise financial decision for construction companies. The operating costs of electric construction equipment are significantly lower than those of traditional construction equipment. There are no fuel bills, and maintenance and servicing costs are reduced.
In the U.S. and Europe, several incentive programs exist, enabling businesses to switch to electric equipment. These programs can offset the higher initial cost, making adopting electric equipment cost-neutral or even cost-beneficial. A recent example is the Clean Off-Road Equipment Voucher Incentive Project (CORE) offered in California.
CORE is a multimillion-dollar incentive initiative intended to motivate users of off-road equipment in California to buy or lease zero-emission off-road machinery. The aim is to counterbalance the higher cost of zero-emission technology by offering an immediate purchase discount. This incentive includes a large variety of qualifying equipment, from professional landscaping equipment to construction equipment and more.
Another incentive (which went into effect January 2023) was included in the Inflation Reduction Act by the Environmental Protection Agency (EPA), stipulating that purchasers of qualifying electric equipment will receive a tax credit. It covers 15% of the vehicle purchase price for plug-in hybrid electric vehicles and 30% of the vehicle purchase price for EVs, including heavy equipment.
Like electric vehicles, electric construction equipment offers operators a more comfortable and enjoyable experience. There is less vibration, and overall performance is improved. This means switching to electric equipment will likely be an easy and well-received transition for employees of companies that adopt electric equipment.
Challenges & Obstacles
Transitioning to electric construction equipment presents a unique set of challenges, especially for companies that have a large inventory of equipment. Deciding when to make the switch and how to manage costs are key considerations.
However, a smooth transition is possible with careful planning. Companies should first understand their operating landscape, including factors like the regulatory environment in each region they operate in, as well as any available incentives.
To ensure a smooth transition to electric construction equipment, having a good understanding of the available infrastructure is also crucial. The progress of charging infrastructure development is mainly steered by automotive EVs — with the increasing number of electric vehicles entering the market; there will be a greater availability of improved charging infrastructure in the long run for owners of electric construction equipment. Companies can gain valuable insights from pioneers in the automotive EV sector.
They made substantial investments in infrastructure even before introducing their vehicles, setting the stage for their success. It is anticipated that charging infrastructure will continue to be a key focus for the automotive EV industry, construction sector and beyond.
The Future of Construction Electrification
Electric equipment will become the new standard in the construction industry, it is just a matter of time. Technology is rapidly advancing, making electric construction equipment more powerful and accessible. As the production of electric equipment scales up, the initial purchase price is likely to decrease, making it an even more affordable and attractive option. It will significantly improve efficiency for companies, allowing them to function more effectively and leverage capital better than ever before.
Smaller machines, typically under two tons, are leading the way in electrification. This is partly because technical solutions are simpler for smaller equipment but also because there are simply more small machines in use. Starting with smaller equipment and gradually transitioning the entire fleet to electric power makes the process smoother and more manageable.
Building a Sustainable Future
Electric construction equipment is no longer a trend but a powerful movement transforming the industry. Environmental concerns, evolving regulations and economic advantages are fueling its rise. By embracing electric equipment, companies can not only contribute to a cleaner and quieter environment but realize significant cost savings and efficiency gains, positioning themselves for success in a rapidly evolving landscape. The path forward is clear — the construction industry is going electric
