Off-highway Electric Vehicle Market Size, Share & Trends Analysis Report By Application (Construction, Agriculture, Mining), By Electric Vehicle (BEV, HEV), By Region, And Segment Forecasts, 2020 - 2027

Report Overview

The global off-highway electric vehicle market size was estimated at USD 5.48 billion in 2019 and is expected to expand at a compound annual growth rate (CAGR) of 21.2% from 2020 to 2027. Increasing stringency in the emission standards for off-highway vehicles has been implemented by the government authorities, such as emission standards for greenhouse gas (GHG) emissions by the U.S. Environmental Protection Agency (EPA), BS-VI in India and China VI. The growing stringency of emission norms has shifted the focus of the OEMs towards alternative powertrain sources such a hybrid electric and full electric off-highway vehicles leveraging the demand globally.

Electrification of off-highway heavy-duty vehicles is on the rise, and companies are showing keen interest in exploring how this new trend can supplement their existing business models. The electric system in heavy-duty vehicles provides multiple benefits. Still, factors such as battery technology, infrastructure, and overall development cost play a vital role in conducting research and adopting the electric solution. Pursuing electrification of off-highway vehicles promises less fuel consumption and long-term cost savings because of less maintenance. As the OEMs, designers, and engineers make advancements in battery technology, the off-highway electric vehicle is poised for growth in the coming years.

The EPA (Environmental Protection Agency) has been assertive on the stringent emissions standards for off-highway diesel vehicles mainly for heavy-duty vehicles for construction and mining applications. With the stringent regulations, some requirements limit the use of nitrogen oxides and particulate matter. To reduce these components, off-highway vehicle OEMs have been developing innovative ways to achieve zero emissions. As per Construct Connect, construction companies are responsible for at least 11 percent of CO₂ emissions. The European Union established a stage 5 emissions standard, which took effect in 2019. Since European emission regulations keep on changing, diesel-powered machines could be discontinued altogether in the future. They would be replaced with electric alternatives leveraging the market for off-highway electric equipment.

The world economy has been taken aback by the rate at which the coronavirus pandemic has escalated. The off-highway electric vehicle market is most vulnerable to the COVID-19 crisis owing to its dependency on the global sourcing for its core technology, the batteries. Europe is one of the most prominent regions in the adoption of off-highway electric vehicles and has also observed a sharp decline in the sales of equipment. Europe Forestry and Agricultural Machinery Production through April 2020 were down by around 10%. Additional fall is anticipated due to labor disruptions, changing consumer demand, and COVID-19 shutdowns negatively impacting the industry and plummeting new machinery demand. Moreover, new orders for construction machinery in the U.S. were down by around 12% in April 2020 compared to the previous year.

Application Insights

The construction off-highway electric vehicle segment accounted for the largest revenue share of around 38.2% in 2019. The segment includes electric construction equipment such as electric loaders, electric excavators, and among others. Increasing investments by governments worldwide for developing public infrastructure has been one of the prime factors driving the market demand for this equipment. The OEMs are launching electric off-highway equipment to abide by the stricter emission norms. Regulations in the future could require zero-emissions on heavy-duty construction equipment which would pave the way for OEMs to drop production of diesel-powered engines and go all-electric.

The mines' electrification is focused mainly on underground mining owing to the reduced exhaust emission and improved worker safety. The search for mineral resources is driving the mining companies to delve deeper to extract materials. The use of diesel equipment leads to an increased operational cost owing to a large amount of spending in exhaust ventilation infrastructure necessary to keep the working environment safe. According to Atlas Copco, up to 30% of an underground mine's total running costs go towards powering large-scale ventilation systems. With the use of electric mining equipment, the operational cost could be reduced.

The agriculture segment is projected to grow at the compound annual growth rate of 22.3% from 2020 to 2027. The segment includes electric agricultural equipment such as electric tractors, electric harvesters, among others. In regions such as North America and Europe, consumers have started adopting modern farm equipment and advanced agriculture processes to gain higher yields. Thus, the demand for electric and hybrid tractors and other farm equipment is expected to rise in the forecasted timeline.

Electric Vehicle Insights

The HEV segment accounted for the largest revenue share of 66.1% in 2019 and is anticipated to sustain its dominance over the forecast period. These types of vehicles are designed to enhance the use of the internal combustion engine in interaction with the electric powertrain. The stringent emission regulations by the government agencies such as the European Commission and the U.S. EPA, the demand for hybrid propulsion off-highway equipment is growing and driving the manufacturers to develop more environmentally friendly off-highway vehicles. Since 2017, off-highway vehicle manufacturers have been adopting a hybrid engine, a combination of the diesel-electric propulsion system. These diesel-electric hybrid drive systems allow the user to run with a slightly smaller engine at a lower rpm, providing fewer parts movement and high fuel efficiency.

The BEV segment is projected to expand at the highest CAGR of 30.5% over the forecast period. The growth can be attributed to the slowdown in the adoption of internal combustion engine vehicles and restrictions on CO2 targets. However, the power required for the majority of off-highway vehicles to function is too high; therefore, the use of fully electric BEV is still limited. The reduction in lithium-ion battery prices and advancements in battery technology would leverage the demand for BEVs in the forecast period.

Regional Insights

The North America region accounted for the largest revenue share of 42.7% for the market in 2019 and is anticipated to continue its dominance over the forecast period. The region holds a dominant share throughout the forecast period owing to the presence of key companies such as Caterpillar, Deere & Company, and CNH Industrial N.V. The construction industry is growing in the North American region, impacting the demand for off-highway electric equipment in the region. The U.S. has implemented stringent emission norms, according to the United States Environment Protection Agency (EPA), in 2018; the off-highway equipment contributed nearly 30% of the total greenhouse gas emission. The increased greenhouse gas emission has forced the companies to launch new electric models for off-highway vehicles.

The off-highway EV market in the Asia Pacific region is projected to expand at the highest CAGR of 34.4% from 2020 to 2027. The countries in the Asia Pacific region, such as China and India, recorded a strong performance in 2019 owing to the boost in the infrastructure investment. China region is one of the significant contributors to the manufacturing of construction equipment owing to the presence of numerous OEMs, low production cost, low labor cost, and availability of excellent manufacturing facilities in the country. The Chinese Government is encouraging the adoption of electric equipment in the country. For instance, in June 2020, the National Institute of Agro-machinery and Innovation and Creation (CHIAIC) in Luoyang, China announced the launch of its first hydrogen fuel-cell electric tractor named ET504H tractor.

Key Companies & Market Share Insights

The key players offer a wide range of electrically-propelled off-highway vehicles for construction, agriculture, and mining applications. The companies are stressing on providing technologically driven and advanced equipment to reduce the carbon footprint and adhere to the emissions norms and regulations in regions such as North America and Europe.

New product launches and upgrades of the existing product portfolio have remained the key strategy of these players. For instance, in August 2020, Doosan Bobcat announced a strategic partnership with Green Machine Equipment Inc. to produce electric compact excavators for the markets in North America. Green Machine Equipment Inc. would help Doosan Bobcat custom retrofit its excavators with their proprietary battery technology to replace the standard diesel power source. In July 2020, Chinese OEM Sany Heavy Industry Co., Ltd. gained success in electric mining automation with the help of two unmanned electric SKT90E wide-body mining trucks. The wide-body mining trucks were successfully connected to a 5G remote-controlled excavator. Some prominent players in the global off-highway electric vehicle market include:

• Caterpillar

• Volvo Construction Equipment AB

• Komatsu Ltd.

• Deere & Company

• Sandvik AB

• Hitachi Construction Machinery Co., Ltd.

• Epiroc AB

• Doosan Corporation

• J C Bamford Excavators Ltd.

• CNH Industrial N.V.

Off-highway Electric Vehicle Market Report Scope

Segments Covered in the Report

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2016 to 2027. For this study, Grand View Research has segmented the global off-highway electric vehicle market report by application, electric vehicle, and region:

• Application Outlook (Revenue, USD Billion, 2016 - 2027)

  • Construction

  • Agriculture

  • Mining

• Electric Vehicle Outlook (Revenue, USD Billion, 2016 - 2027)

  • Battery Electric Vehicle (BEV)

  • Hybrid Electric Vehicle (HEV)

• Regional Outlook (Revenue, USD Billion, 2016 - 2027)

  • North America

    • The U.S.

    • Canada

  • Europe

    • Germany

    • The U.K.

    • France

    • Norway

  • Asia Pacific

    • China

    • Japan

    • India

  • Rest of the World (RoW)