An electric construction machine has many facets, making it an attractive option for the wider industry. Machines can operate with zero local emissions, which can help a company achieve its decarbonization goals and create a safer environment for workers. They also run with very little noise, which reduces noise complaints and eases communication.
Despite these benefits, IDTechEx’s “Electric Vehicles in Construction 2024-2044: Technologies, Players, Forecasts” report finds that financial savings in the total cost of ownership (TCO) of machines will be the primary benefit driving the industry’s electrification.
Electric Machines Run With Lower Operating Costs
Electric construction machines are now sufficiently developed, and achieving performance parity with diesel is no longer a concern. Instead, potential customers are more engaged with the degree of savings that an electric machine could offer them. These machines can save on two of the most significant components of TCO – fuel and maintenance.
Using electricity to charge machines instead of diesel fuel can save thousands of dollars per machine per year in operating costs. IDTechEx has calculated that an average 20-tonne excavator will consume 13,000L of fuel per year—roughly US$13,000 at global average diesel prices.
Charging an electric machine of the same size would cost just over half that at only US$6,690 per year (using a global average electricity price of US$0.15/kWh). This creates enormous savings potential for machine operators, as much as US$75,000 over an entire machine service life.
As machines grow in size and uptime, so do their fuel bills, creating the opportunity for even more significant savings through electrification. The regionality of energy prices will also make a difference.
IDTechEx estimates that European prices can be as much as US$2/L diesel and US$0.30/kWh electricity. The electric 20-tonne machine will save US$12,620 a year over the diesel one at these price points. Such considerable benefits should push construction operators toward electric models.
On the maintenance front, electric machines replace mechanical driveline components with electric ones, which have far fewer moving parts and require less general maintenance. This also eliminates oil and filter changes, which add cost and downtime to a machine’s schedule.
IDTechEx has found that electric machines can cut maintenance costs by up to 50% compared to diesel. For a 20-tonne excavator, this adds up to nearly US$15,000 over its lifetime.
Maintenance costs will not be the critical factor in the financials of a 20-tonne excavator compared to the energy savings from the same machine.
However, smaller machines that use less energy (e.g., mini-excavators and compact loaders) don’t save as much on fuel, and maintenance will be a more influential source of savings. A 3-tonne electric mini-excavator saves nearly as much in maintenance costs as in fuel compared to an equivalent diesel model.
In areas with emissions charges, often found in city centres, electric machines are not charged for their zero-emission operation, which adds another stream of savings for construction companies to benefit from. For example, London’s Ultra Low Emissions Zone charges £12.50 daily for every high-emitting vehicle.
Many of the emissions charge zones currently in place do not include construction machines in their restrictions, but this is starting to change, and zones that include all emitting equipment are set to become more commonplace. In the future, this will be another significant contribution to machine economics.
High Prices Are a Limitation for Electric Machines
With all the savings that they can achieve, why haven’t customers taken up electric machines en masse? In reality, the industry’s relative youth means that electric machines still have a very high capital cost. This can be pretty off-putting for many potential buyers, and it must be balanced out by the savings in operating costs for an EV to be worth the outlay.
The main contributor to high price premiums is the cost of batteries and electric drivetrain components such as motors and power electronics. The industry’s relatively early stage of development means production volumes are pretty low, and OEMs are having to spend more on batteries.
IDTechEx’s conversations with industry players suggest that battery pricing is now around US$300/kWh but was as much as US$500/kWh just a few years ago. OEMs are also looking for a return on their high R&D spending as part of their electric machine development.
As a result, machines come at a high premium, ranging anywhere from 40% to 100% added to the cost of a typical diesel machine, depending on size and machine type. Despite this, the savings generated through operation are significant enough to make electric machines cheaper overall on a TCO basis.
This applies broadly across all machine types that IDTechEx has analyzed, where the electric machine premium can be made up for within its typical lifetime.
Over the last five years, many machines have been built to replace existing diesel machines. This incurs an additional high cost for retrofitting labour, which shifts the balance of TCO back in favour of diesel machines.
IDTechEx estimates roughly US$60,000 in retrofitting costs for a 20-tonne excavator and even more for larger machines. However, the retrofit business model is used less frequently as OEMs move production in-house, and customers will benefit from the improved TCO.
How Will Costs and TCO Evolve?
As the shift from retrofit to in-house production continues, OEMs can consolidate their development efforts, which should help bring down costs. At the same time, growing demand for electric machines means OEMs can achieve more significant economies of scale in the price of batteries and other machine components.
IDTechEx’s conversation suggests that, with the increased scale of production, OEMs could achieve battery pricing of US$200/kWh – still noticeably higher than what is seen in the automotive market but the lowest that construction machines have seen until now. Battery manufacturers are also working on bringing their costs down, which means the price decline of batteries for construction could continue beyond this.
In the long run, price premiums of electric machines are expected to drop only to incorporate the cost of its battery pack. This will be achieved when the volumes of production are sufficiently high. Oems are no longer investing as much in R&D.
The additional cost of an electric machine should only comprise the relevant electric components. While motors and power electronics have some associated costs, they are far less expensive than the battery pack, which will make up the bulk of the long-term premium.
A drop in upfront cost like this creates an even more favourable TCO and should convince more customers to switch to electric construction machines. Many potential customers are still more concerned about upfront costs than the overall TCO so that this change may have the most significant impact on the success of electric construction machines.