Off-highway’s electrification push needs more than a total cost of ownership argument to win over customers, says Alan Berger, industry veteran and CEO of the on- and off-highway vehicle consultancy, abcg AB
Walking the halls at this year’s ConExpo, one thing was hard to ignore. While electrified machines were still present — it was clear they were no longer where the momentum was. As I moved from stand to stand the biggest crowds were clustered around something far more familiar — new and improved diesel machines. Updated platforms, smarter efficiency gains and incremental improvements to technologies customers already understand and trust. Same old story.
What happened in Vegas
This story at the show is playing out across the industry. Until now, OEMs have tried to sell electrified machines primarily on the argument of lower total cost of ownership. On paper, the logic is compelling: much higher up-front purchase prices are justified by lower energy costs, reduced maintenance and improved uptime over the life of the machine. OEMs didn’t choose this sales pitch from deep strategic insight — with battery packs still super expensive they have little else to work with.
Now the initial excitement of the new technology has dimmed, the industry has moved into a more pragmatic phase. Electrification is being judged against a simple standard: does it solve real problems without creating new ones and does it fit the way off-highway customers buy, operate and resell machines? That’s why the real path forward is not to keep hammering the lower TCO argument, it’s to design electric machines from the ground up so that the product reduces uncertainty in performance, cost, infrastructure and resale value.
The problem is not that TCO is wrong, it’s just that a really big purchase cost combined with the potential of long-term savings requires a leap of faith by customers. Those savings depend on utilisation, duty cycle, energy prices, charging access and operational discipline — variables that are often uncertain and sometimes outside the customer’s control. At the same time, resale values for electric off-highway machines remain largely unproven.
Low power mode
Charging infrastructure — or the lack of it — only raises the stakes. Most machines operate exactly where grid access is weakest: construction sites, quarries, remote projects and temporary works. Yes, there are solutions to bring power to the jobsite, but these are often expensive, additional pieces of equipment that add cost and complexity. What starts as a machine decision quickly turns into a systems problem. While the scale of the challenge is large, none of the hurdles electric machines face are insuperable. Several of them will be lessened when machines are electric by design, not diesel platforms with batteries bolted on. When OEMs start with a purpose-built electric architecture, they can optimise packaging, thermal management, controls and manufacturability – which is the surest route to lower system cost and higher reliability. This will, in turn, improve customer confidence and more assured residual value.
Not a like-for-like replacement
Electrified machines are often operated differently than their diesel equivalents. That opens the door to simplification: fewer components, simpler hydraulics, software replacing hardware, and overall designs better matched to real-world duty cycles.
When the industry addresses these underlying issues, electrification won’t need to be sold primarily on TCO. Lifetime cost will still matter, but it won’t carry the full burden of the argument. Electric machines will ultimately justify themselves through how well they perform, how easily they fit into jobsites — and how confident customers feel owning and eventually reselling them.
This column first appeared in the May/June issue of iVT
