The Total Addressable Market (TAM) for Off-Highway Electric Vehicles was valued at USD 4.34 billion in 2021. It is expected to reach USD 47.38 billion by 2030, growing at a CAGR of 30.42% during the forecast period (2022–2030). Electric vehicles intended for off-road use are known as off-highway electric vehicles (OHEVS). They use one or more electric motors for propulsion. Additionally, these electric cars store energy using a range of batteries, including lead acid, nickel metal hybrid, and lithium-ion. Electric off-road vehicles are frequently used in the mining and construction industries where the roads are not perfectly straight and convenient to drive.
Off-highway electric vehicles are an excellent choice because they do not emit harmful gases, making them appropriate for mining and construction sites because it lessens pollution and harm to the environment. An off-highway electric vehicle is used for numerous applications and occasionally charges for its operation. They are anticipated to be used more frequently in off-highway applications shortly due to their suitability for heavy loads and capacity to complete tasks without emitting harmful gases.
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Advantageous Government Policies and Regulations
Electric vehicles are well-known air pollution-reduction technologies. Thus, governments worldwide offer subsidies and tax rebates for off-highway electric vehicles. All governments support electric vehicle policies for environmental and sustainability reasons. Various nations are in the process of formulating policies that will stimulate the market for electric vehicles. The volatile price of crude oil also encourages consumers to buy electric cars due to their high ROI. Chinese and Indian mining and construction are increasing demand for efficient electric vehicles. This reduces carbon emissions and opens new energy sources. For instance, India's INR 50 trillion infrastructure development investment will require construction equipment. The "Bharatmala Yojana" to improve India's roads is one of many infrastructures plans the government has announced.
Growing Market for Renting Construction Equipment
Excavators and loaders are among the construction equipment in high demand. The market for renting construction equipment is predicted to reach USD 337.30 billion by 2027, growing at a promising CAGR of 8.1%. Nowadays, customers would instead rent construction equipment than spend a significant amount of money purchasing, acquiring, and maintaining this equipment. Many construction equipment manufacturers, including Mitsubishi Corporation and Hyundai Construction Co., Ltd., have begun working with rental businesses to increase their market share. The rental sector can use off-highway electric vehicles to increase ROI.
High Electrical Component Cost
Electric vehicles have a higher initial purchase price than conventional vehicles, despite having a lower overall cost of ownership overall. An article written by the Natural Resources Defense Council claims that the average cost of an electric vehicle is almost USD 19,000 higher than that of a gasoline vehicle. Customers concerned about price may find the wide range of initial purchase prices difficult and decide against changing. Additionally, since electric powertrains cost USD 5,000 to 13,000 more than ICE powertrains, OEMs may find it difficult to replace them with an electric powertrain. This situation is anticipated to change over the next few years as people become more aware of and comprehend the overall advantages and low ownership costs of an EV. Moreover, it is anticipated that the price gap will narrow significantly over the next few years as battery technology develops and production volume rises.
Growing Intention for Electrification of Construction Equipment
Excavators, graders, backhoes, and loaders are among the machinery that will likely switch from diesel to electric power. Transportation accounted for 29% of global Green House Gas (GHG) emissions in 2019, while agriculture produced almost 10% of global GHG emissions, according to the U.S. Environment Protection Agency (EPA). In addition, according to a 2017 report from the U.S. EPA, off-road vehicles were responsible for 64.4 MMT of the country's CO2 emissions.
Additionally, if construction equipment's diesel engines were idled less frequently, 1.8 billion pounds of CO2 emissions each year could be decreased. This has been recognized by top government regulatory agencies, who have begun to impose strict emission standards for diesel engines used in the construction industry. As a result, electric vehicle manufacturers can gain a competitive edge by developing all-electric construction equipment. For instance, Volvo CE announced in 2019 that it intended to halt the development of equipment powered by diesel engines for small excavators and loaders. The development of all-electric construction equipment is another area of focus for organizations like J C Bamford Excavators Ltd., Caterpillar Inc., and Hyundai Construction Equipment Co., Ltd.
The global off-highway electric vehicles market is segmented by application and electric vehicle type.
Based on application, the global off-highway electric vehicles market is bifurcated into construction, agriculture, and mining.
The construction segment is the highest contributor to the market and is expected to grow at a CAGR of 30.12% during the forecast period. The segment features electric loaders and excavators, among other construction machinery. One of the key elements fueling the market demand for this equipment has been the rising investments made by governments worldwide in developing public infrastructure. OEMs are introducing electric off-highway equipment to comply with the stricter emission standards. Future regulations may require zero emissions from heavy-duty construction equipment, allowing OEMs to stop making diesel-powered engines and switch to all-electric models.
Due to the decreased exhaust emissions and increased worker safety, underground mining is the primary focus of my electrification. The issue of electrification and diesel displacement at their mines has already been started to be addressed by several significant mining companies. Using diesel-powered off-highway vehicles raises operational costs because a more significant amount of exhaust ventilation infrastructure is required to maintain a safe working environment. According to Atlas Copco, the total operating costs of an underground mine can be as much as 30% of the energy used to power large-scale ventilation systems. Utilizing fully electric machines with no diesel emissions can reduce ventilation system prices by 30 to 50%.
Based on electric vehicle type, the global off-highway electric vehicles market is bifurcated into battery electric vehicles (BEV) and hybrid electric vehicles (HEV).
The battery electric vehicles (BEV) segment owns the highest market share and is expected to grow at a CAGR of 29.10% during the forecast period. The CO2 emission limits and the slowdown in the uptake of ICE (internal combustion engine) vehicles are to blame for the segment's growth. However, because most off-highway vehicles need much power to run, their use of BEV is still somewhat constrained. Over the forecast period, it is anticipated that improvements in battery technology and falling lithium-ion battery prices will fuel demand for BEVs.
Hybrid electric vehicles (HEV) are made to improve the performance of internal combustion engines when used in conjunction with electric powertrains. Due to the strict emission regulations set by regulatory bodies like the U.S. EPA and the European Commission, there is an increasing demand for off-highway equipment with hybrid propulsion, pushing manufacturers to create more environmentally friendly off-highway vehicles. Since 2017, manufacturers of off-highway vehicles have essentially been using hybrid engines with diesel-electric propulsion systems. These hybrid diesel-electric drive systems enable users to operate a slightly smaller engine at a lower rpm, resulting in less part movement and high fuel efficiency.
By region, the global off-highway electric vehicles market is segmented into North America, Europe, Asia-Pacific, and the Rest of the world.
North America Dominates the Global Market
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North America is the most significant shareholder in the global off-highway electric vehicles market and is expected to grow at a CAGR of 29.8% during the forecast period. The North American region dominates the off-highway electric vehicle market, with the United States playing a significant role. The U.S. Department of Transportation (DoT) announced in June 2020 that the government intends to use the INFRA discretionary grant program to invest USD 906 million in the nation's infrastructure. The national infrastructure is a priority for the government. As a result, over the forecast period, opportunities for market participants in off-road electric vehicles are anticipated to arise from the growth in road construction and highway infrastructure projects.
Europe is expected to grow at a CAGR of 25.50%, generating USD 14,010.53 billion during the forecast period. Due to growing infrastructure investments and regulations governing diesel emissions from heavy equipment, the market for off-highway electric vehicles in Europe is predicted to expand over the forecast period. The German government has consistently invested in high-quality infrastructure over the past few years. Other concrete and road machinery markets in Germany may grow significantly due to the country's rapidly expanding infrastructure market, which is particularly strong in the area of roads, highways, and transportation infrastructure.
Asia-Pacific is anticipated to grow significantly over the forecast period. The significant increase in infrastructure development in the Asia-Pacific is expected to lead to growth in the off-highway vehicle market. Countries like China and India are investing heavily in infrastructure projects. China is building its infrastructure quickly to gain a competitive edge and develop into an economic superpower. Over the next ten years, the government intends to relocate about 250 million people into the nation's rapidly expanding megacities. In addition, the country has spent billions of dollars on massive infrastructure projects to accommodate migration. Under the direction of President Xi Jinping, the government launched China's Belt and Road Initiative (BRI), one of its most ambitious infrastructure initiatives, in 2013. The BRI is thought to have generated USD 117 billion in trade in 2019. The total cost of the project is estimated to be USD 1.3 trillion.
In Latin America, Africa, and the Middle East, the off-highway vehicle market is still in its infancy. Compared to other areas, the penetration of electric off-road vehicles is low. However, it is anticipated that the market demand for off-highway electric vehicles will increase due to the demand for mining, construction, and agricultural activities and the use of electric equipment in these applications. Mining-related excavation work is taking place in nations like Brazil and Mexico. Additionally, these nations are witnessing an increase in building projects for the construction of public infrastructure. The use of electric machinery is expanding, as are the region's growing African mining operations. The health-harming diesel exhaust emissions are not released by electric mining equipment. The region's demand for off-highway electric vehicles is anticipated to increase with the growing use of electric equipment in mining applications.
The global off-highway electric vehicles market’s major key players are Caterpillar, Ab Volvo, Deere & Company, Komatsu Ltd, Sandvik Ab, Hitachi Construction Machinery Co., Ltd, Epiroc Ab, Doosan Corporation, J C Bamford Excavators Ltd, and CNH Industrial N.V.