The electric construction equipment sector is poised for significant expansion despite tariff and infrastructure hurdles

May 8, 2025: The US electric construction equipment market is experiencing robust growth despite significant challenges, with projections indicating a remarkable 28.06% compound annual growth rate through 2030. According to a comprehensive strategic assessment and forecast report, starting from a modest 441 units in 2024, the market is expected to expand nearly fivefold to 1,945 units by the end of the decade.

This growth trajectory reflects the construction industry's accelerating shift toward sustainability, driven by environmental concerns and increasingly stringent government regulations. However, the path forward is complicated by high equipment costs, substantial tariffs on Chinese imports, and infrastructure limitations that threaten to constrain the sector's full potential.

Compact Equipment Leading the Electrification Charge

The transition to electric power occurs unevenly across equipment categories, with compact machinery leading the way. Electric excavators currently hold the largest market share, prized for their versatility in urban construction and mining applications.

"The compact construction equipment segment is experiencing the highest electrification rate due to its less complex structure and modest power demands," notes the report. This simplicity makes electrification more straightforward compared to larger, more complex machinery.

Smaller equipment's ability to operate indoors, in basements or during demolition projects, provides additional incentive for electrification, as zero-emission operation improves worker health conditions in confined spaces.

By contrast, equipment with more complex structures and specialized applications—particularly backhoe loaders and dump trucks—have seen significantly lower adoption rates. Contractors remain hesitant to invest in electric versions of these machines due to their lower utilization rates and higher costs.

Major Manufacturers Expanding Electric Offerings

Leading construction equipment manufacturers have rapidly expanded their electric product portfolios throughout 2024. Case Construction Equipment made significant moves with two major launches: the compact electric wheel loader 12EV featuring a 23kWh cobalt-free lithium-ion battery with a 1.15-ton payload capacity, and the Case 580EV electric backhoe loader.

Volvo Construction Equipment has similarly expanded its North American electric lineup with a new mid-size electric wheel loader (L 120) and the next-generation EC230 electric excavator. The EC230 has already been deployed in high-profile sustainability projects, including Los Angeles Metro's Purple Line extension.

Meanwhile, Bobcat—which maintains manufacturing facilities in North Dakota and Minnesota—introduced a new electric compact track loader at the 2024 Equip Expo in Louisville, Kentucky. The company has established itself as a leading electric construction equipment manufacturer in the US market with a comprehensive range of compact machinery.

Caterpillar, emphasizing its commitment to electrification, showcased multiple electric machines at the 2024 Consumer Electronics Show in Las Vegas, including a zero-emission underground loader and mini excavator. The company also signed a strategic agreement for electric trucks and charging solutions with CRH, a leading building material solution provider.

Komatsu has pursued a domestic manufacturing strategy by partnering with US battery manufacturer Proterra to develop electric construction equipment and launched lithium battery-powered mini excavators in 2024.

Government Initiatives Drive Market Growth

Government policies promoting sustainability in construction are providing significant momentum for the electric equipment market. Several major US cities—including New York, San Diego, Los Angeles, Philadelphia, and Austin—launched the North America Electric Construction Coalition in 2024, which aims to phase out diesel-powered equipment.

Federal backing includes the Bipartisan Infrastructure Law, which allocated $5 billion for the National Electric Vehicle Infrastructure and $2.5 billion for the Discretionary Grant Program for charging and fueling infrastructure.

The US Department of Energy has announced plans to phase out fossil fuel use in new building construction and renovations. Starting in 2025, fossil fuel usage at construction sites for new federal buildings must be reduced by 90% compared to 2003 levels, with complete elimination mandated for projects beginning in 2030.

The government has also prioritized zero-energy building development, with 22 programs currently in progress—14 residential and 8 commercial. These initiatives, supported by $110 billion in government funding, are expected to complete over 5,000 family homes, nearly 25,000 new apartments, and 222 new commercial buildings by the end of the current year.

Mining Sector Embraces Electrification

The mining industry represents another promising growth area for electric construction equipment. Government regulations promoting sustainable practices, including the Mining Law of 1872 and the Surface Mining Control and Reclamation Act of 1977, encourage the adoption of electric alternatives in surface and underground operations.

Electric equipment is primarily used in drills, conveyor belts, and pulley systems, but the report indicates growing use of electric excavators and loaders. This trend is expected to accelerate as mining companies prioritize emission reduction and compliance with environmental regulations.

Cost and Infrastructure Challenges

Despite promising growth prospects, significant obstacles remain. The high initial cost of electric construction equipment continues to be a major barrier to widespread adoption. According to estimates from Volvo CE cited in the report, an electric mini excavator costs approximately $66,000, compared to just $26,000 for its diesel counterpart—a price differential of over 150%.

Recent trade policies have further exacerbated these economic challenges. In 2024, the US government increased tariff rates to 100% for electric construction equipment imported from China while also imposing a 25% tariff on imported Chinese lithium batteries used in such equipment.

Infrastructure limitations present another significant hurdle. The report highlights that "several infrastructure development projects take place in the outer parts of cities," where establishing charging infrastructure can be prohibitively expensive due to "the need for extensive electrical and network enhancements, limited availability of electricity, and high installation expenses." These infrastructure gaps can delay construction schedules and require greater redundancy in electric equipment fleets to maintain productivity while machines are charging.

Battery Technology Trends

The market has witnessed strong growth in the low battery capacity segment (below 50 kWh), primarily due to cost efficiency and suitability for compact equipment. The report also segments the market by battery chemistry, analyzing the adoption of Nickel Manganese Cobalt (NMC), Lithium Ferro Phosphate (LFP), and other technologies.

Component suppliers, including ABB, Eaton, American Battery Solutions, and Ecovolta, play crucial roles in the ecosystem by providing the battery systems and charging infrastructure necessary to support the growing fleet of electric construction equipment.

Future Outlook

Despite the challenges, the remarkable projected CAGR of 28.06% through 2030 suggests strong underlying demand and favorable long-term prospects for the US electric construction equipment market. As manufacturers continue to innovate, production scales increase, and charging infrastructure expands, many current obstacles may diminish in significance.

The report indicates that the convergence of government mandates, corporate sustainability commitments, and ongoing technological improvements will likely sustain market momentum even as the industry works to overcome cost and infrastructure barriers. For construction firms preparing for a zero-emission future, the question increasingly appears to be not whether to adopt electric equipment, but when and how to manage the transition most effectively.

With major cities planning to completely phase out diesel-powered equipment for construction projects starting in 2025, the market stands at an inflection point. Companies that successfully navigate the current challenges may gain significant competitive advantages as regulatory pressures intensify and the economics of electric equipment continue to improve through technological advancement and economies of scale.