A New Year brings out everything from resolutions to crystal balls. I usually steer clear of both but thought I’d go out on a limb this year and decipher the facts around Electric earth moving equipment to predict where the market is heading. As this is still a fairly new concept in earth moving, but spurred on and lagging trends from motor vehicles, we can learn from others experiences. Hope to get replies with your opinions!
Let’s start with the Pros of Electric Earth Moving Equipment:
- Quieter operation, with benefits to the operator and surrounds, meaning that works may be able to be completed within sound limits for more hours per week.
- Reduced Maintenance – no need for regular oil and filter changes.
- Instant torque, thereby improving lifting capacity, and electric controls improving responsiveness and more precise movements.
- No tailpipe emissions – no nitrogen oxide or particle matter, making them suitable for instance in underground or enclosed areas. Note though that the power is produced elsewhere, and with 30% energy losses in transmitting the power, the overall CO2 and other emissions are higher (just not in the immediate vicinity of the machine).
- Access to Government and financial incentives such as tax credits and grants (although great investment advice was to never make a purchase based on Government subsidies, as one day they might change, exhibit 1 being that EV’s are likely to get a road user charge shortly to make up for lost fuel excise).
The Cons of Electric Earth Moving Equipment:
- Limited access to power and long charging hours. Electric units have shorter run times of typically 4-8 hours before requiring 10 hours to fully charge. Access to grid power can be an issue (albeit can be overcome by using diesel generators – kind of defeats the purpose though?).
- Expensive site set up. Access to high-capacity chargers and infrastructure is a requirement. If your job can’t run around the above battery discharge rates, a second battery pack may be an option, but still needs substantial power supply infrastructure to charge.
- Limited availability of parts and repair services, with few trained technicians, leading to long repair times. This is also increasing insurance costs and downtime.
- Expensive to buy compared to Internal Combustion Engine (ICE) options (see below)
Areas where the jury is out:
- Fuel versus power costs. Advocates highlight fluctuations in diesel costs; detractors highlight that power costs have increased 43% in the past 3 years and are still rising exponentially (whilst diesel has remained around an average of $2/litre).
- Product life and disposal – best estimate data is that batteries last 5-10 years and a certain number of charge cycles (but capacity depletes over time). However, battery life depends on avoiding deep discharges, high temperatures and usage intensity (i.e. if the machine works hard, the life shortens). Australian Earth moving is expected to push all 3 parameters towards a shorter life. As the batteries used are lithium-ion, they are toxic, can cause extreme fire risks, and are likely to lead to significant disposal costs. By comparison, diesel machines are largely recycled.
Interact Analysis has done a cost comparison of electric versus diesel machine costs. “A large internal combustion engine excavator with no automation features has a component bill of materials (BoM) of about $75,000. A large battery electric excavator with safety and automation features has a BoM of about $300,000 (2024 values).” They go on to say that for prices to come down would require high volumes, but that the off-highway market is low volume and high mix – there are huge numbers of machine types for lots of different applications and sometimes only a handful are sold in a particular year.
A further contentious point is the repair costs. Electric machines have longer service intervals, but the battery replacement cost is typically 10-15% of the cost of the machine. Using the above figures, 10% of $300,000 is $30,000, which is 40% of the cost of the brand new diesel machine. The batteries alone will require replacement at least twice (often 3-4 times) to get to the average life of an ICE. So much like for cars, will it be worth replacing the battery at all? And as proven with cars, this means the resale value of an electric machine is not much, meaning the purchase price depreciates very significantly. A higher purchase price also means a significantly higher interest cost. (not all machines have a cost multiple of 4, but in those cases the battery replacement cost is proportionately higher, so the calculation and other factors still give a similar overall viability calculation). Advocates state that Electric machines should have a longer life, but experience with for instance cars is that it’s the electronics (rather than mechanical issues) which die first.
So here is my prediction: Much like Battery Electric cars that seem stuck on about 8% market share, for the very same reasons, Electric Earthmoving machinery is unlikely to fully replace diesel units. Other countries are removing subsidies for EV’s and the demand is collapsing. Electric Earth Moving equipment is predicted to triple by 2032, and I don’t doubt that figure – but from a low base. Add in that this charge (pun intended) will be led by a barrage of Chinese brands (components, batteries and machine manufacturing – just like the car industry), not all will survive which affects product support and resale further. There will however be an increase in demand for automation and other efficiency improvement features (irrespective of power source).
Extrapolating the car industry story: in 2021 Australia had 39 brands. In 2026 we’ll have 67 (already today selling over 100 models of EV’s – so all are low volume by car standards) with a projection to have an additional 28 brands by 2031. Clearly going from 39 to 95 brands in a decade (in a market that has increased about 20%), not all will get sufficient scale to survive, so don’t trust that generous sounding warranty too much. If you read only the headlines, you’ll believe that EV’s are taking over because “sales doubled”, but the reality is that the increase in number of units is less than the increase in ICE units (that only increased 5.5%), so still falling further behind in reality. Pure battery car sales haven’t increased in the past 2 years, in fact, the only reason they can report “sales increases” at all is because they changed the definition to include Hybrids as EV’s. We are already seeing car brands that rushed full steam to EV’s now writing off investments and reverting to keeping ICE’s alive (Ford F-series, Volvo and others).
Disclosure: I bought some great battery tools on the weekend, one being a battery chain saw. It will complement my petrol chain saw (for trees) by being a better tool for small scale small pruning. And in essence, that is where Electric everything is headed – it’s a fast growing but niche product. Much like this type of product, I can see a niche for especially small sized low usage machines to operate in urban areas where “ticking many boxes” is a key to winning the contract (a friend used a much less friendly term and has his parked in the corner most of the time).
Words from the wise
“Progress means getting nearer the place you want to be, but make sure you are on the right road first.” – me, combining two sayings.
“A person who makes few mistakes makes little progress” – Bryant McGill (but only if you learn from your mistakes).
Beware Plato’s Meno Paradox: how can you search for something if you don’t know what it is, or if you know it, why search? – in other words, perhaps we are already using the best solution?
As always, Onwards and Upwards!
Fred Carlsson
General Manager
