Electric construction equipment in Australia: what's holding the industry back?

With diesel prices surpassing $3 per litre amid the escalating conflict in the Middle East, the question of electrification in construction has never felt more urgent.

Interest in electric machinery was already building but now, with energy costs volatile and the ceiling on diesel prices uncertain, it carries real financial weight.

Yet despite the momentum, adoption in Australia remains well behind Europe and parts of Asia. The reasons point to specific conditions the industry needs to address before a genuine pivot becomes possible.

Ask anyone in the construction equipment space and they'll tell you the curiosity is there. Contractors are asking questions, attending demonstrations, running the numbers. But curiosity isn't converting into orders.

The reason, according to Volvo Construction Equipment national product manager, Hayden Grant, is simple: "Someone's got to jump first."

It's a classic first-mover problem. Companies most likely to benefit from electrification are also the most exposed to getting it wrong, investing in machines and infrastructure before the ecosystem fully supports them.

Add to that an economic climate where capital is expensive and uncertainty is high, and the hesitation becomes understandable.

When the industry talks about infrastructure as a barrier, it's actually referring to two distinct problems.

The first is electrical grid capacity. Running an electric excavator or wheel loader, especially larger units, requires high-voltage supply that many Australian worksites — particularly in regional and remote areas — simply don't have.

Getting it there means engaging network providers, upgrading transformers, running new cabling, and navigating lengthy approvals. As Grant puts it, hooking up a charger without proper planning could "take out a street."

The second is charging infrastructure itself. Even where grid power exists, a high-capacity charger is largely a fixed asset.

Unlike a diesel bowser that can be trucked anywhere, it can't easily follow a machine between jobs.

"A digger or a loader can work anywhere. A lot of customers — unless they've got a specific site that the machine stays on — need the ease of diesel where they just put it in the tank and away they go."

Grant also notes the industry has much to learn from the transport sector, where electric uptake and available options are considerably more advanced.

Related: What electric zero-emission trucks are available in Australia in 2026?

In Europe, government subsidies and regulatory pressure drove early adoption rapidly. Australia hasn't replicated that model. Companies are left to absorb the full upfront premium without the policy cushion that made early adoption viable elsewhere.

Grant is direct about what would push things forward: "Government incentives would make a big difference. If they actually encouraged and rewarded companies a bit more, I think that would help. From there, once it's established, it would be self-sustainable."

The reality is that for many operators, fully electric isn't yet an option. In that context, hybrid offers a practical middle ground.

Several manufacturers are already there, including Komatsu, JCB, and Volvo Construction Equipment.

"I think hybrid is a step that's been overlooked. We do have hybrid options on our excavators today which offers some decent savings in fuel,” Grant said.

Volvo's hybrid excavators use a mechanical accumulator to recover and reuse energy during operation, with the company claiming a 17 per cent improvement in fuel efficiency over a conventional excavator at equivalent performance and power.

Taken together, these barriers point to a problem no single party can solve on its own.

Operators aren't taking the plunge largely because their options are limited. The range of electric construction machinery available in Australia remains narrow compared to other parts of the world and without a compelling lineup to choose from, fleet managers have little reason to make the switch. Why invest in charging infrastructure for a product category that may or may not expand?

On the other side of the equation, OEMs are watching the same lack of demand and drawing their own conclusions. Without strong signals from the market, bringing additional electric models into Australia is a difficult business case to make. Localising a machine, building out dealer support, and managing parts and servicing takes significant investment that's hard to justify when operators aren't buying.

The result is a standoff. Operators are waiting for more choice while manufacturers are waiting for more demand.

Until something breaks the cycle — whether that's a large fleet making a high-profile switch, a government incentive that shifts the equation, or an OEM willing to bet on the market — both sides will keep waiting.

Despite the slow start, the direction is clear. Fuel costs aren't coming down anytime soon, emissions pressure is growing, and the technology improves with each product generation.

Grant sees it as inevitable: "It has to improve. It's where the country wants to focus — companies want to reduce their carbon footprint and they want to do better.

“I do think the change will happen one day. It's just when."

Related: Total cost of ownership: electric vs diesel construction machinery