CHINA REPORT
The electrification of the construction machinery industry in China continues to accelerate. For example, CATAL and Longgong have signed a strategic cooperation agreement in Ningde, Fujian, a move that follows the January cooperation agreement between CATAL and Lingong Heavy Machinery. According to the agreement, both parties will expand cooperation in the development and production of construction machinery, the development of power batteries for construction machinery, and jointly research and develop adaptive products and market promotion to jointly explore the new energy construction machinery market.
More and more construction machinery companies are turning their attention to the electrification market. Domestic and foreign engineering machinery companies such as XCMG, Sany, Zoomlion, and Carter have developed and launched electric products such as loaders, excavators, and mixer trucks.
In 2023, the total sales of electric loaders increased by 2,435 units compared to the same period in 2022, a year-on-year increase of 209.9%. However, the overall electrification of the construction machinery industry is still in its early stages and the penetration rate is not high. In 2022, only 0.04% of off-road equipment globally was electrified, and the electrification penetration rate in large construction machinery such as excavators, bulldozers, and large loaders was less than 1%.
Although new energy engineering machinery has significantly improved in terms of endurance and power performance, there is still a technological gap compared to traditional fuel powered machinery, and there is a need to improve technical factors such as battery energy density, cycle life, and low-temperature performance.
In terms of cost, the manufacturing cost of new energy engineering machinery is relatively high. At the same time, the construction speed of charging facilities and maintenance networks remains a limitation, since it does not match the growth of market demand for new energy engineering machinery.
However, in the long run, industry insiders indicate that with the development of battery technology and cost reductions, the electrification of the construction machinery industry is expected to accelerate in 2024. The energy consumption cost of new energy engineering machinery is being reduced, construction efficiency is improving, and the economic cost of companies is significantly reduced, achieving a win-win situation of economic and ecological benefits.
Source: EEO Read The Article
PSR Analysis: With the decline of China’s domestic economy, sluggish demand for construction machinery, and increasingly fierce market competition, some foreign-funded companies have begun to consider reducing the scale of Chinese engineering or departing the Chinese market altogether. Companies are putting more resources into the development of new models, expansion in the new energy sector, and growth of overseas markets.
Presently, the main product inventory of domestic construction machinery exceeds 9 million units, and it is growing at a rate of about 300,000 units per year. The penetration rate of new energy construction machinery is less than 1%. Against the backdrop of policy promotion and environmental pressure, the penetration rate of electrification of construction machinery will rapidly increase in the coming years, with an expected penetration rate of over 30% by 2025.
Compared with traditional fuel engineering machinery, electric engineering machinery has a long service cycle, high utilization rate, low operating costs, and the dual advantages of environmental protection and performance, making it more economically efficient overall.
Batteries account for 40% to 50% of the total cost of electric construction machinery. The main purpose of engineering machinery companies entering the battery field is to promote the development of their products. But currently, the main battlefield for batteries is still passenger cars. PSR
Jack Hao is Senior Research Manager – China for Power Systems Research
As a hidden incremental market, electrified construction machinery needs to continuously expand its application areas. Manufacturers and battery production enterprises need to continue to innovate and collaborate in technology, further reduce battery costs, and improve battery life in order to accelerate the electrification process of construction machinery. PSR
