Q&A: Electromobility, sustainability and the future of construction with Volvo CE

Meeting at Volvo Group Australia’s headquarters in Wacol, Brisbane, Constructionsales was given the rare opportunity to spend time with the global head of an equipment manufacturer as well as the man behind its local distribution.

Volvo CE’s global president, Melker Jernberg, was nearing the end of his time touring the country visiting customers and dealers. He was joined in his travels by WA-based CJD Equipment director, Alan Barnett, who is a driving force behind the brand’s Australian success.

Despite this visit to Australia being his first, Melker wore an Akubra hat and RM Williams belt upon welcoming us which was clear evidence he had both embraced and enjoyed our unique outback culture.

The future-focused duo shared details of Volvo CE’s zero-emission journey, the upcoming machines we can expect to see here, and their thoughts on where they think the industry is headed.

Q: Last year was an incredibly successful year for Volvo CE, with US$10 billion in reported sales. Do you expect a similar result this year, or do you think the machinery market is due to cool off?

Melker Jernberg: I think it's a good question and I wish I knew the real answer. I think the last few years have been very special - since 2020 - but 2023 was a fantastic year for the whole Group, and not least for Volvo Construction Equipment.

We do believe it will soften in 2024. Europe is showing clear signs of slowing down, so our best guess right now is minus 15 per cent. It will still be a decent year, but I don’t think it will be like 2023.

Q: In terms of the Australian market, what do you expect our machinery sales will look like across 2024 after such a huge few years?

Alan Barnett: I think from an Australian perspective, there's also a softening of the marketplace. But as Melker said, the last few years have been special right across the globe and we're no different here in Australia. The demands, the infrastructure projects, mining, agriculture, cattle, civil, forestry, everything was booming all at once - there was a huge push into the marketplace.

I think what we’re seeing is a softer market, but I think we are seeing more normality too. I think we’re going to come back to what we think is a good market, it’s just making sure we manage those expectations and understand what that looks like.

For us in Australia, we’ve had some fantastic years for the last few, but we’ve been a Volvo partner for 32 years now. You can have good years, but it's about looking forward to what opportunities are still available for us to take out there. Sustainability is a big piece of that, that new vision and that new world.

Q: Speaking of sustainability, you unveiled your first electric earthmoving models in 2019 and have just brought them to Australia. What did the validation process involve and have any of your customers hit go on an electric machine yet?

Alan: We got our first machines in Australia in the middle of last year, but they were the first two machines for us to do all of our testing and compliance on. We did all of our ADR compliance and commercialised them to go to market at the start of this year.

Melker was here yesterday and we took him to see one of our long term Volvo customers who purchased the very first L25 fully-electric compact wheel loader…literally yesterday!

Q: What great timing and congratulations on delivering the first electric loader! Now that you’re officially delivering electric models to customers in Australia, do you have plans to expand the range beyond compact options?

Alan: We’ve already ordered the available models for every branch in Australia, so every major facility will have a 2.5-tonne and 1.8-tonne compact excavator and compact wheel loader.

But we also have prototypes coming to do our own trials with - an L120 wheel loader and EC230 excavator. So a 20-tonne digger and loader will be coming this year. They’ll be here in August or September and we’ll finish off getting everything right across charging solutions, training and development. They’ll then be going to market by the end of this year, or the beginning of next year.

Melker: It's important for us when we launch something that it should be for sale, not a prototype. Right now we have nine models for sale and we will launch some more this year and continue to launch every year.

It is important to move into the bigger machines as they are the ones that will start to make a big difference when it comes to CO2 emissions. It’s also the demand from our customers, and customers of our customers. So we’re moving into the bigger machines.

Q: It’s fair to say the Australian market is apprehensive about electric equipment, slower to adopt zero-emission machines than countries like Sweden, but is that attitude changing in Australia now that people are trying them out?

Melker: I think it's fair to say that it always starts with scepticism and not only in Australia. But that is just how it is - because it's new. They ask, 'how do I charge it’ and when the answer is that it doesn’t take long, suddenly it's interesting. Once you try it, you’re really into it.

The feedback from both the owner side and the driver side is just fantastic. Of course it’s about the sustainability mission, but when you’re in the machine it’s the other stuff that matters, right? You actually become a better operator because they are much better to use from many different perspectives. The biggest surprise is the sound, because there is no noise!

Q: So it sounds like the usability benefits are converting people, but what are the key benefits of the electric options over a diesel machine?

Alan: They’re quiet, there’s no vibration, everything changes really. You’ve actually got to think about, ‘is it on’ because you’re so used to what you hear. We also have a lot of idle time with diesel, because it’ll sit there running while people get a coffee, but that isn’t the case here so the usage hours are also different.

Melker: Our machines are very well suited to electrification, because we have a lot of movements that are ‘free’. For example, if you have a loader and you go up with a bucket, and then you go down, going down is easier of course. In a diesel machine, it still uses diesel, but in an electric machine, worst case is it is free, best case is the energy is recuperated. That means we can use less battery or we can have higher autonomy, but all the tests so far are better than our theory.

Q: The entire Volvo Group has set the target of net-zero value chain emissions by 2040, but what does that journey look like for Volvo CE?

Melker: So we now said that if we are going to reach 100 per cent zero-emission vehicles by 2040, we have to be at a certain point by 2030. We cannot do that with one technology and we don’t even believe that one technology will be the solution, so the pathway for us is one where we don’t put all our eggs in one basket.

I mean, we started with the compact machines back in 2019 and the reason at that time was we wanted to learn. But then we learned a lot about batteries, electric motors, components and customer behaviours. We learnt we can go much higher up and we are now launching 20-tonne machines.

We have a battery-electric platform now and we also have a joint venture with Daimler called Cellcentric to develop (hydrogen) fuel cells. Then the third solution we are working on is a combustion engine - but not diesel. Biofuels, biodiesel and we are investing heavily to be able to run the combustion engine on hydrogen too. So that is the pathway.

Q: It’s clear that across the next 10 years, a lot will change within the construction equipment space. How do you think the transition to a zero-emission future will affect the Australian construction equipment industry in particular?

Melker: This 10-year period, maybe some of us will retire but the young guys will probably look back and say ‘these were the most fantastic 10 years in my business life’. A lot of the young people coming in and older people too can have the opportunity to change or develop or add a lot of competencies.

Alan: I think Melker is right. I look at the next 10 years and it’s not just about electromobility and sustainability, but it’s everything together and the new generation of people coming in. I think the next 10 years in particular are going to be one of the biggest changes in how we work with our customers. We’re going to be solution providers with technology, data, and information to help them operate their machines better and get their information with the technology we see with sustainability.

Q: Do you think the rapid pace of change and ‘greater good’ sustainability focus will attract young people to the industry?

Alan: In short, yes. The challenge for all of us is how we attract young people into our industry. Attracting young people into our industry when they’re drawn to so many other fields is a challenge. People today want to be part of something bigger, they want a purpose in life. I think that’s the beautiful thing about Volvo - they have a very clear purpose that a lot of people want to be a part of and share that ambition.

Melker: Both with our current employees and new employees, when we say our higher purpose is ‘building a world we want to live in’, it’s really about building that world both in the workspace and in the broader perspective. That is bringing people to something bigger because, I mean, that was not how we grew up. You did something, you went to work and then you went home. Now they really want to be part of something.

Q: How have you enjoyed your time in Australia, Melker, seeing CJD Equipment and Volvo CE customers and how they operate?

Melker: This is my first time here and we've spent our time both on the West Coast and East Coast, but I must say we have met fantastic customers and people this week. I think that the dedication that we see from our customers here in the end will be a driving force for electrification.