Decarbonising off-road heavy vehicles in New Zealand

In New Zealand almost all off-road machines, such as excavators, loaders and graders, are fuelled by diesel. This amounts to around a billion litres of diesel each year – almost 30% of all diesel use nationwide.^*

But with recent advances in electric off-road technology, electric machines are likely to become a common feature of job sites.

Here, we dig into the benefits and challenges of electric off-road vehicles, and what the market looks like for New Zealand businesses.

Digging in to the future with electric machines

With the promise of lower running costs, zero emissions, and quiet operation, it’s clear to see why demand exists for electrified heavy machinery.

Many sites around the country have started to trial and embed the use of electric equipment, overcoming perceived challenges around charging and duty cycles.

High capital costs remain a barrier, but battery prices are expected to come down in the years ahead, making electric machines a sound investment for more New Zealand businesses.

On this page:

Market research

EECA and MartinJenkins undertook research to understand the opportunities and challenges for electric construction equipment.

The research scope included:

a review of international technology scans
interviews with New Zealand market participants
an assessment of total ownership costs of electric off-road machines compared to diesel equivalents.

This webpage highlights key insights from the report.

Download report [PDF 1.1 MB]

Benefits and challenges to electric off-road equipment

Benefits

Decreased operating costs – Due to the significantly higher efficiency of electric motors over diesel, electric machines use much less energy, and are therefore cheaper to run. In addition, electric motors require less maintenance, so over the life of the machine it is expected to be notably cheaper than a diesel equivalent. Businesses with electric machines are reporting operating cost reductions of around 70-80% compared to diesel.
Better operating performance – The high torque and fast response of electric motors allows for greater performance than diesel, improving both speed and precision. For many machines the extra weight of batteries can act as counterweights for stability when lifting heaving loads, rather than using cast iron or concrete.
Clean and quiet – With lower noise and no exhaust emissions, electric machines provide a safer and more pleasant environment for workers. Internationally, some inner-city areas require contractors to use electric equipment to reduce the negative sound and air pollution that construction has on residents.
Zero emissions – For companies operating heavy equipment, the diesel burned by their machines is often their largest source of emissions. As customers begin to consider emissions when contracting suppliers, electric machines give businesses a competitive edge.

Challenges

High capital costs – Due to low production volumes, the capital cost of electric equipment can be 2-3 times more than a diesel equivalent. While operating costs are significantly lower, they may not entirely offset the higher upfront cost, depending on the vehicle and its expected lifetime. Some manufacturers are offering warranties twice the length of diesel equivalents to help offset this.
Low duty cycles – Most machines are expected to be able to complete an 8-hour shift. While some do, many electric machines don’t yet have the battery capacity to reach this, instead sitting around the 5-hour mark. This may work for some lower utilisation sites, and charging in breaks can help, but for widespread adoption the 8-hour mark is needed.
Access to charging in remote locations – Machinery can be needed in remote sites with poor grid connections, or be spread across multiple sites to be used when needed. This can make installing fixed chargers an expensive undertaking, or requiring emerging alternatives like battery trailers. Fast chargers are a mature technology due to the electric car market, but mobile options are limited. Battery swapping may be an option but will often require onsite infrastructure of its own to lift the heavy batteries.
Small-market limitations – Because New Zealand is such a small market, it can be difficult to secure supply from international manufacturers. Other countries are able to place larger orders which gives them preference with manufacturers – leaving us with longer wait times.

Jump to our forecast for the future

The 3 most common off-road machines

Globally, the 3 most popular machines are loaders, excavators and mini excavators. According to industry experts IDTechEx these machines make up more than 75% of all construction vehicle sales. Unsurprisingly, these have been the highest priority for manufacturers looking to offer electrified options.

- Mini excavators are generally defined as excavators under six tonnes and are commonly used in areas such as construction and landscaping.
- Many major manufacturers operating in New Zealand, such as XCMG, Volvo and JCB, offer a mini excavator option.
- Due to their relatively low energy demands, manufacturers have produced mini excavators that are capable of an 8-hour day, either working in one shift or charging on the operator’s lunch break.
- Mini excavators are often used indoors or in highly populated areas. The lack of emissions and significantly lower noise levels of electric machines allows for safer and less disruptive worksites.
- As a smaller and cheaper machine, mini excavators provide lower financial risk and can be a good option for businesses looking to trial electrification.
- Excavators are over six tonnes and are common in many industries, such as construction, mining and landfill.
- Compared to mini excavators, the full-sized machines require large amounts of energy. They spend their days lifting heavy loads, and can work long shifts.
- This has made achieving an 8-hour duty cycle more challenging, but progress is being made. In 2023 Komatsu announced a fully electric 24 tonne excavator capable of a full day’s work on one charge. Other manufacturers such as XCMG and Volvo are also bringing options to market, providing competition in an important sector.
Tethered electric excavators
- Many excavators move very little during their usual duties, which lends well to tethering.
- Tethering involves directly connecting the machine to an electricity source, rather than using a battery. This reduces the CapEx (as there’s no expensive battery) and removes concerns around duty cycle capability.
- Challenges can arise around cable management to prevent damage to either the cable or machine, but with appropriate planning and training this can be managed.
- While not all uses will fit tethering, due to the significant cost and efficiency benefits it is worth investigating as an option when replacing existing equipment.
- Loaders are usually wheeled vehicles, which are used to quickly move material from one place to another, or to load into trucks. They are very common across industries such as earthmoving, construction and forestry.
- Due to their work pattern of frequently accelerating and decelerating, electric loaders can recover a significant amount of energy through regenerative braking. This makes 8-hour duty cycles achievable with current technology.
- Electric options in use today can be over 20 tonnes, and are significantly cheaper to run than their diesel equivalents that burn through a lot of fuel. These savings combined with the ability to do a like-for-like replacement on duty cycle has made loaders a popular starting point for electrification. Both XCMG and Volvo have electric loaders in daily operation here in New Zealand.
- Operators have reported the higher torque and faster response of the electric motors makes the machines popular amongst operators compared to their diesel machines.

Total cost of ownership comparison

MartinJenkins undertook a total cost of ownership (TCO) analysis of an XCMG 20-tonne diesel loader and its battery electric equivalent based on an 8-hour duty cycle.

Despite the electric option coming with a $200,000 purchase premium, the significant energy savings achieved working eight hours a day resulted in a lower total cost of ownership over an 8-year lifespan.

These results show that businesses can maximise the financial benefit of electrification by targeting high-use machines first.

Bar graph comparing cost of purchase, charger, diesel/electricity, maintenance and insurance for electric and diesel loaders.

Case studies: Electric machines are proving popular in trials

4 minutes

Machine operators and business leaders at New Zealand companies Fulton Hogan, Reliance Transport and Leach & Co. talk about their experience using electric off-road vehicles.

Forecast for the future

IDTechEx estimates that current global sales of electric construction equipment sit at around 0.5% of the global market, and forecasts that this will increase to 43.5% by 2042. The market increase is expected to be driven primarily by excavators, mini-excavators and loaders.

Several of the current barriers to the uptake of electric off-road equipment in New Zealand will reduce or become easier to manage as time goes on.

As production of batteries for off-road use increases, and operators become more familiar with the technology, prices will decrease, while technology enhancements, such as battery capacity and charging options, will improve.

Battery prices are the major influence over electric equipment prices and are expected to rapidly decline.

As manufacturers are still producing in very small quantities, battery prices for off-road equipment are much higher than seen in other areas of the market. Batteries used in off-road equipment currently cost around US$600-700/kWh, compared to light vehicle battery prices of closer to US$100/kWh. IDTechEx modelling shows that if construction vehicles were to reach these prices, most applications would pay back after less than 3 years, strongly pushing the economics in favour of electrification.

Time in years until total cost of ownership breaks even for electric wheel loaders of various sizes compared to diesel, at a range of battery prices. This is the time taken for fuel and maintenance savings compared to diesel to equal the additional cost of the battery.

Battery capacity is increasing quickly, leading to longer duty cycles.

Due to the cross-sector demand for high density lithium-ion batteries, improvements are being seen in more than just cost. The tough requirements for light vehicle batteries to have high capacity with a low weight and size will have flow on effects for the off-road equipment industry. With a greater amount of energy storage available in battery of the same footprint, duty cycles will naturally increase as a result.

Portable batteries will make electrification possible on temporary and remote job sites.

Manufacturers are also building portable batteries, which can be towed between jobsites. These can be slowly charged through the day in grid constrained areas, to then provide fast charging for vehicles in break times, or to allow multiple machines to charge simultaneously overnight. Currently sites are often serviced by trucks carrying a diesel tank, in future we may see them carrying batteries instead.

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