The electric construction equipment market is estimated to be valued at USD 12.75 Bn in 2024 and is expected to reach USD 56.04 Bn by 2031, growing at a compound annual growth rate (CAGR) of 23.55% from 2024 to 2031. The electric construction equipment market is expected to witness significant growth with growing awareness about the environmental benefits of electric equipment compared to traditional diesel-powered variants.

Market Driver - Government Incentives Encourage Adoption

The transition to more eco-friendly electric construction equipment has been gaining momentum in recent years. Many governments around the world have started introducing subsidies and incentive programs to promote the adoption of electric machinery in the construction industry. Authorities realize that construction activity has significant impact on the environment and climate change. Thus, supporting manufacturers and customers to shift to electric powered options can meaningfully contribute to emission reduction targets.

Several attractive subsidy schemes have made electric equipment more affordable for contractors and builders. Most of the incentives cover not just purchase price but also installation of charging infrastructure which is critical for electric construction equipment market growth.

Original equipment manufacturers now have greater confidence to extensively test new electric models and mass produce them. Subsidies help mitigate risks and reassure manufacturers about return on investments in electric technology. Over time, with more robust support schemes and increasingly competitive total cost of ownership, adoption rates are expected to pick up at a stronger pace.

Market Driver - Cost Savings Drive Adoption over Long Run

While upfront costs of electric construction equipment are higher currently, operating expenses are significantly lower compared to diesel- or gas-powered equivalents over the lifecycle of machinery. Electric motors are vastly more efficient than internal combustion engines as more than 90% of electrical energy gets converted to motive power versus only about 30% for fuel engines.

Maintenance needs are also far lesser for electric powertrains that have far fewer moving parts than engines. Electric vehicles have fewer unscheduled downtimes which enhance productivity and reduce costs associated with equipment failure or breakdowns. Fewer fluid changes further minimize workshop expenditures.

Upfront premiums are shrinking due to technology advancements and scale of production. So, total expenditures will become comparable or even lower than diesel equivalents within ownership cycles spanning 15-20 years typically. The total cost of ownership therefore strongly favors electrification gradually as electric solutions gain maturity and electric construction equipment market size allows costs to fall further.

Market Challenge - Concerns about the Durability and Longevity of Electric Equipment Compared to Traditional Machinery

One of the key challenges faced by the electric construction equipment market is addressing concerns around the durability and longevity of electric machinery. While electric construction equipment reduces fuel costs and emissions, contractors and construction firms are still wary about the lifespan of critical components like batteries in electric vehicles.

With the current battery technology, there are doubts regarding how long the batteries in electric equipment would last under such intensive usage conditions. Additionally, the high upfront costs of electric vehicles also contribute to perceptions about whether they are robust enough to deliver a long duty cycle comparable to conventional equipment.

Equipment downtime due to battery replacements or repairs could significantly impact project timelines and budgets. To overcome this challenge, OEMs will need to focus on improving battery life, reliability, and charge/discharge cycles through ongoing research and development.

Market Opportunity - Growth in Rental and Leasing Services for Electric Machinery

The electric construction equipment market is poised to benefit significantly from the rising popularity of rental and leasing models available for machinery. Given the high upfront procurement costs of electric vehicles, renting, or leasing provides businesses the flexibility to try out new electric alternatives. This lowers the entry barrier for contractors and construction companies to experiment with green technologies and incorporate electric construction equipment into their fleets.

Many companies in the electric construction equipment market are adding electric vehicles and mobile charging stations to their inventory to tap into this opportunity. The pay-per-use business model also shifts the responsibilities of maintenance and equipment upkeep to the rental firms. This attracts more small- and medium-sized enterprises to electric options by reducing their financial and operational risks.

As rental players expand electric construction equipment offerings across different vehicle categories, it will help boost overall market exposure and acceptance of these technologies.

One of the primary strategies adopted by major players is developing technologically advanced electric equipment to gain an edge over competitors. For instance, Caterpillar launched its electric compact excavator in 2021 equipped with the latest lithium-ion battery technology offering longer runtime. This has helped the company capture a major share of the growing electric construction equipment market.

Another strategy is forming strategic partnerships for technology and component development. In 2020, Komatsu partnered with Blue Planet to develop fully electric construction equipment. This allowed Komatsu to leverage Blue Planet's expertise in electrification solutions and fast track its entry into electric construction equipment market.

Establishing dedicated brands for electric models has also proven successful. For example, Volvo CE created its Volvo CE Green Line in 2021 solely focused on electric equipment.

Entering partnerships with rental companies is helping gain rapid adoption. In 2022, Doosan Infracore teamed with United Rentals to roll out its electric wheel loaders across rental fleets in North America. This partnership approach enables wider testing and feedback while increasing electric equipment availability.

Insights, By Equipment: Dominance of Electric Excavators

In terms of equipment, electric excavators contribute 36.7% share of the electric construction equipment market in 2024, owning to their versatility and suitability for a wide range of projects. Their versatile design with an adjustable arm and bucket at the end enables them to perform digging, lifting, and material handling functions.

Electric excavators offer clear environmental benefits over diesel alternatives. Their zero-emissions capabilities allow construction sites to work within noise and emission norms. The lower operating costs of electric excavators also appeal to contractors and developers.

Mini electric excavators have gained rapid adoption for residential and lightweight commercial tasks that don't require heavy-duty capabilities. Their compact size allows maneuvering in tight spaces like between buildings. Large electric excavators deliver power and capacity on par with large diesel excavators. Their ability to efficiently handle bulk earthworks and heavy lifting duties makes them ideal for large commercial and infrastructure projects.

Insights, By Application: Dominance of Residential Construction

In terms of application, residential construction contributes 40.5% share of the electric construction equipment market in 2024, owing to the ongoing housing boom across major global economies. Rising incomes and urbanization are driving massive demand for new residential units in countries like China, India, Indonesia, and several others.

Residential construction sites tend to be located within or adjacent to cities/towns. Additionally, residential projects have a relatively smaller scale compared to commercial or infrastructure works. This plays to the strengths of compact electric equipment models that are well-suited for space-constrained city/town construction sites.

Electric equipment helps lower operating expenses significantly relative to diesel alternatives through benefits like lower fuel and maintenance costs. This cost advantage, coupled with growing customer demand for green housing, is driving greater electric equipment adoption in the residential segment of the electric construction equipment market.

Insights, By Source: Dominance of Lithium-Ion Batteries

In terms of source, lithium-ion batteries contribute the highest share of the electric construction equipment market owing to their higher density and longer life over lead-acid models. Lithium-ion batteries offer roughly double the energy density of lead-acid varieties allowing electric construction equipment to operate longer on a single charge. This is a crucial advantage as it eliminates unnecessary stoppages for charging and improves productivity on busy construction sites.

The lithium-ion chemistry also delivers superior cycle life with battery charge retaining over 80% capacity even after 1000s of charge-discharge cycles. This translates to much lower replacement needs versus short-lived lead-acid batteries and reduces the total cost of ownership. Electric construction equipment with lithium-ion batteries can work longer before batteries need swapping, again enhancing uptime.

Technological advances are continuously extending the run-time of lithium-ion batteries in electric equipment models. As battery technologies progress further, run-times will increase further cementing lithium-ion's popularity over lead-acid in electric construction equipment that demands maximum uptime.

• Asia-Pacific Market Share (2023): 34%, driven by urbanization and environmental regulations in countries like China and India.
• Lithium-Ion Battery Segment: Held 44% share in electric construction equipment market in 2023, preferred for its energy density and longer lifespan compared to lead-acid batteries.
• Europe's Climate Goals: The EU targets a reduction of greenhouse gas emissions by at least 55% by 2030 and aims for net zero by 2050, bolstering electric construction equipment demand.
• India’s Sustainability Goals: India aims for net zero by 2070, with ambitious reductions in carbon emissions by 2030, fostering a push for growth of electric construction equipment market.

The major players operating in the electric construction equipment market include Caterpillar Inc., Volvo Construction Equipment, Komatsu Ltd., Hitachi Construction Machinery Co., Ltd., J.C. Bamford Excavators Limited (JCB), Liebherr Group, Doosan Infracore, Hyundai Construction Equipment, Takeuchi Manufacturing, Zoomlion Heavy Industry Science & Technology Co., Ltd., John Deere, Honda Motor Co., Ltd., Cummins Inc., Wacker Neuson, Xuzhou Construction Machinery Group Co., Ltd., Doosan Infracore, Kobelco Construction Machinery, and Sany Group.

• In November 2023, Caterpillar announced a three-year program to develop and demonstrate an advanced hydrogen-hybrid power solution tailored for off-highway applications. This initiative leverages the new Cat® C13D engine platform and aims to create a system capable of matching or surpassing the power density and transient performance of traditional diesel engines.
• In June 2023, Volvo Construction Equipment (Volvo CE) introduced the EC230 Electric excavator to the European market. This 23-ton, mid-size electric excavator offers the same performance as its diesel counterpart but with the added benefits of zero emissions, low noise, reduced vibrations, improved controllability, and a lower total cost of ownership.

• By Equipment
  • Electric Excavators
    • Mini Electric Excavators
    • Large Electric Excavators
  • Electric Loaders
    • Skid Steer Loaders
    • Wheel Loaders
  • Electric Dump Trucks
  • Electric Dozers
  • Others
    • Electric Cranes
    • Electric Forklifts
• By Application
  • Residential Construction
  • Commercial Construction
  • Industrial Construction
  • Infrastructure Development
• By Source
  • Lithium-Ion
  • Lead Acid
  • Others