There are many facets of an electric construction machine that make them an attractive option for the wider industry. Machines can operate with zero local emissions and can go a long way to assisting a company’s decarbonization goals and creating a safer environment for workers.
They run with very little noise, which reduces noise complaints and eases communication. In spite of 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 that drives the electrification of the industry. (Total cost of ownership comparison between diesel and electric 20-tonne excavators. Calculations assume 12,000 hours lifetime operation using European energy price estimates (US$2/L diesel and US$0.30/kWh electricity). No emissions charges considered, Source: IDTechEx)
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 biggest components of TCO – fuel and maintenance.
The use of electricity for charging 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 worth 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 huge savings potential for machine operators, as much as US$75,000 over a full machine service life.
As machines grow in both size and uptime, so do their fuel bills, creating the opportunity for even greater savings through electrification. The regionality of energy prices will make a difference as well. IDTechEx’s estimates for prices in Europe are as much as US$2/L diesel and US$0.30/kWh electricity. At these price points, the electric 20-tonne machine will save US$12,620 a year over the diesel one. Such considerable benefits should push construction operators in the direction of 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 does away with 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.
Compared to the energy savings from the same machine, maintenance costs will not be the critical factor in the financials of a 20-tonne excavator. 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 it does in fuel compared to an equivalent diesel model.
In areas with emissions charges, often found in city centers, 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 come at a very high capital cost. This can be quite 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 relatively early stage of development of the overall industry means production volumes are quite 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 40-100% added on to the cost of a typical diesel machine, depending on size and machine type. Despite this, the savings generated through operation are great 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 5 years, many machines have been built as retrofits of existing diesel machines. This incurs an additional high cost for retrofitting labor, which shifts the balance of TCO back in favor of diesel machines. IDTechEx estimates roughly US$60,000 retrofitting cost for a 20-tonne excavator and even more for larger machines. However, the retrofit business model is used far less frequently as OEMs move production in-house, and customers will be able to 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 will be able to achieve more significant economies of scale, both in the cost 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 still working on bringing their own costs down too, which means the price decline of batteries for construction could continue even beyond this.
In the long run, price premiums of electric machines are expected to drop to only incorporate the cost of its battery pack. This will be achieved when the volumes of production are sufficiently high, and OEMs are no longer investing as much into R&D. The additional cost of an electric machine should only constitute the relevant electric components – and while motors and power electronics have some associated cost – these 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 even more favorable TCO and should convince more customers to make the switch to electric. Many of these potential customers are still more concerned about upfront costs than the overall TCO, so this change may be the one that has the greatest impact on the success of electric construction machines.
The “Electric Vehicles in Construction 2024-2044: Technologies, Players, Forecasts” report from IDTechEx presents detailed TCO analysis for a wide range of construction machine types with in-depth scenario analysis. For more information and downloadable sample pages, visit www.IDTechEx.com/EVConstruction.
The lithium-ion (Li-ion) battery industry is undergoing significant shifts in material usage, driven by the growing demand for electric vehicles (EVs) and stationary battery storage applications.
Despite some short-term concerns over EV adoption, the long-term outlook for Li-ion battery demand remains positive due to improving battery technology and prices, increasing renewable penetration, and broadly supportive policies. IDTechEx forecasts the global Li-ion market to reach over US$400 billion by 2035.
Shift Toward LFP Batteries
As the EV industry moves beyond early adopters and into the mass market, the focus needs to shift toward affordability. In this context, lithium iron phosphate (LFP) has emerged as a compelling option for EV batteries due to its lower cost compared to alternatives like nickel- manganese-cobalt (NMC) and nickel-cobalt-aluminium (NCA) chemistries. LFP is a highly attractive choice as automakers seek to produce more affordable electric models, with multiple manufacturers outside of China planning to adopt more LFP, including Hyundai, Volkswagen, Renault, Stellantis, and Ford, amongst others.
LFP’s share in the global battery market has been steadily rising, largely driven by China’s re-adoption of LFP cathodes for EVs. The influence of LFP is now spreading beyond China, with early adoption in Europe and the U.S., as well as a growing preference in the stationary energy storage sector, where price and levelized cost are crucial. However, while there are efforts to start producing LFP outside of China, almost all LFP cathode active material and battery cells are currently manufactured in China, raising concerns about supply chain security and geopolitical risks for manufacturers relying on LFP, especially in the US.
LMFP as a Response to LFP’s Energy Density Limitations
While LFP offers significant cost benefits, as well as advantages related to cycle life and thermal stability, it does have a notable disadvantage – it has lower energy density compared to NMC or NCA chemistries. Despite improvements to battery pack designs, this limits the range of EVs powered by LFP batteries, which is a key consideration for automakers and consumers alike. Lithium manganese iron phosphate (LMFP) has emerged as a potential solution to this challenge. LMFP retains the cost advantages of LFP while improving energy density through the inclusion of manganese in the cathode composition. This development could help bridge the performance gap between LFP and NMC-based batteries while maintaining the low-cost structure of LFP. Plans are now emerging for the development and expansion of LMFP production capacity from key cathode manufacturers such as Dynanonic and Ronbay, through to newer entrants such as Lithium Australia/VSPC or Mitra Chem. IDTechEx’s report “Li-ion Battery Market 2025-2035: Technologies, Players, Applications, Outlooks and Forecasts” provides production outlooks for cathode active material and forecasts GWh battery demand by cathode through to 2035.
Another notable shift in battery material trends is occurring in the anode market, where artificial graphite is gaining ground over natural graphite. IDTechEx estimates that artificial graphite made up approximately 73% of the Li-ion battery graphite anode market in 2023, from approximately 60% in 2020. The primary driver behind this shift is cost. Historically, artificial graphite has been more expensive than natural due to the energy requirements of graphitization, but it offered greater reliability in material production as well as some performance benefits related to rate capability and cycle life. However, low energy prices in China and extensive competition have driven artificial graphite prices down, with prices as low as US$6/kg being reported for high-quality anodes. This has made artificial graphite a more attractive option for battery manufacturers aiming to optimize both cost and performance, leading to greater usage. Importantly, this also creates a barrier to the adoption of alternative anode materials for cost-sensitive applications, such as silicon-based materials, the prices of which can be an order of magnitude higher on a US$/kg basis.
Battery Market Being Driven By Cost
The commonality between current anode and cathode material choice trends is cost. The use of LFP and the development of other low-cost cathodes, such as LMFP, are a primary example of the increased focus on cost and price from the Li-ion industry. The recent shift toward artificial graphite over natural graphite has also been due to falling prices. Substantial competition and overcapacity throughout the battery value chain further drive prices down. This will be highly beneficial for battery purchasers and consumers but creates considerable hurdles to players aiming to enter the market, in particular, Europe and North America, where less developed supply chains and industries create an additional barrier to competing with established Asian players and manufacturers.
A diverse range of materials and technologies are emerging to meet the demands of a rapidly growing Li-ion battery industry, but key to the successful adoption of any material and technology will be cost, with the recent shifts toward LFP and artificial graphite testament to this. Innovations and developments that can drive forward performance, safety, and environmental benefits while retaining low and competitive prices will be key to the continued growth of the battery industry and the decarbonization projects relying on it.
