Market Trends of Electric Off Highway Equipment Machinery Industry
Hybrid Segment of the Market to Gain Traction during the Forecast Period
Increasing government spending on mining and infrastructure activities, rising foreign direct investments in the construction sector, and developments in road transportation infrastructure owing to the surge in population and urbanization serve as major determinants for the surging demand for new-energy off-highway equipment around the world. These equipment require higher energy to operate, and therefore, operating all-electric off-highway equipment becomes an arduous task for commercial fleet operators, which, in turn, positively impacts the demand for the hybrid segment of the market.
In July 2023, the Brazilian government announced a series of road auctions worth USD 13 billion for the year 2023 for better maintenance and development of the transportation network to facilitate cross-border trading activity and increase consumers’ convenience for mobility.
The Grand Paris Project initiative, the largest transportation project in Paris, which is being carried out in phases till 2030, has attracted billions of investments in the construction sector. The project envisages the expansion of Line 14 and the construction of four new automatic Lines. Further, the project outlines a new metro development with an estimated investment of Euro 36.1 billion (USD 47.7 billion), 30% of which is being financed by the French Government through Societe du Grand Paris (SGP) and the remaining 70% by the local authorities through earmarked taxes, subsidies, and loans.
With the rising investment in the construction and commercial sector around the world, there will exist a massive demand for deploying hybrid off-highway equipment in project sites. These diesel-electric hybrid drive systems allow the machinery to run with a slightly smaller engine at a lower rpm. This translates into fuel savings, fewer part movements, and longer engine life, coupled with a lower total cost of ownership in the long run. The other advantage of using a hybrid engine, apart from sustainability, is the reduction in vehicle noise. Various private companies operating across the world are investing hefty sums to launch advanced hybrid off-highway equipment to cater to the rising demand.
In November 2023, Caterpillar announced the launch of a three-year program to demonstrate an advanced hydrogen-hybrid power solution built on its new Cat C13D engine platform to develop a transient-capable system for off-highway applications. The project will demonstrate how state-of-the-art control systems and electric-hybrid components can help hydrogen-fueled engines meet or exceed the power density and transient performance of traditional diesel engines.
In September 2022, Volvo Construction Equipment introduced a 38-tonne class EC380E hybrid excavator model, which is one of the largest among the company's offerings. The new launch assists the company in expanding its hybrid range of products and simultaneously helps increase fuel efficiency by 17%.
With advancements in powertrain technology and increasing investment in construction activities across the globe, the hybrid segment of the market is expected to witness surging growth during the forecast period.
Asia-Pacific is the Fastest Growing Market during the Forecast Period
The extensive focus of the governments across the Asia-Pacific region to achieve a carbon-neutral economy is aiding the rapid transformation in various sectors in adopting a new energy ecosystem. With the aggressive strategy adopted by the governments of India and China, among other countries, to achieve a reduction in carbon emissions, there will exist a greater demand for advanced products used in various sectors, which helps in the reduction of carbon content in the environment. For instance,
The government of India announced its goal to achieve the target of net zero emissions by 2070 while aiming for a one billion metric ton reduction in projected carbon emissions until 2030. Similarly, the government of China announced its aim to have CO2 emissions peak before 2030 and achieve carbon neutrality before 2060.
With the shifting focus towards adopting a new energy ecosystem, various companies operating in different industries are actively promoting the use of products and equipment to help in air pollution reduction. Off-highway equipment companies operating in space are investing hefty sums in developing new products that are operated via an electric drive type, which is expected to positively impact the demand for electric off-highway equipment across the Asia-Pacific region.
In June 2023, XCMG, a heavy machinery manufacturing company based out of China, announced the launch of XES35. This next-generation super 35m³ electric shovel excavator is capable of loading about 65 tons of ore each time, and it's designed to deploy with mining dump trucks in the 220 to 330 tonnage range.
Moreover, the rising urban population in countries such as India and China is aiding the surging investment in the transportation and construction sector to provide its citizens accessibility to top-notch infrastructure, which, in turn, contributes to the growing demand for off-highway equipment across the Asia-Pacific region. For instance,
In September 2023, the National Highways Authority of India (NHAI) announced its plan to build 27 new roads in the state of Kerala, with a total project cost of INR 70,114 Crore (USD 8.4 million). These road projects will encompass a distance of 960.27 km, including the development of greenfield highways, in addition to the ongoing construction of National Highway 66.
With rising investment to develop advanced electric off-highway equipment products, especially by Chinese manufacturers such as XCMG Group, coupled with the increasing investment to improve infrastructural network across the Asia-Pacific region, there will exist a massive demand for electric off-highway products during the forecast period.
