Total cost of ownership: electric vs diesel construction machinery

Australia's adoption of EVs in the construction industry has been admittedly slow compared to its European counterparts, mainly due to high upfront costs, a lack of government incentives, and limited infrastructure. But with diesel prices surpassing $3 per litre amid the escalating conflict in the Middle East, is it time the industry zoomed in on the electric discussion?

Let's face it — the high sticker price of an electric machine will stop most people in their tracks. In a sector where margins are tight and investment decisions are scrutinised, that number tends to end the conversation before it begins.

But purchase price and total cost of ownership are two very different things, and for fleet managers and operators willing to look beyond the initial outlay, the numbers tell a more interesting story.

We spoke to Hayden Grant, Volvo Construction Equipment's national product manager, to break down the costs of diesel vs electric machinery.

Using the Volvo L120 wheel loader as a reference point, the electric version carries a price premium of roughly 30 to 45 per cent more than its diesel counterpart, depending on configuration and specification.

That's a significant gap, but it's not the full picture of what you'll spend to get up and running. Unlike diesel, which requires nothing more than a fuel source you can truck in, electric machinery demands fixed infrastructure. That means a high-capacity charger and, more importantly, the power supply to run it.

"You have to buy a charger and then you need to get power to that charger — and we're talking decent power, not house power or three phase. So that adds up,” Grant said.

Connecting serious electrical capacity to a worksite is a real cost that needs to be factored into any honest comparison.

So the true upfront cost of going electric is: machine price + charger + power infrastructure. For many operations, that combined figure can be substantial.

Once the machine is running, the equation starts to shift.

At current Australian prices — around $3 per litre for diesel versus $0.33 to $0.40 per kilowatt-hour for electricity — that's an immediate and meaningful cost advantage for electric.

"It's a 3 to 1 ratio. Three litres of diesel to one kilowatt of power. So straight away, you're saving money on fuel and we all know which is better for the environment,” Grant said.

Every hour the machine runs, it's drawing on significantly cheaper energy than its diesel equivalent. The more a machine works, the faster those savings accumulate.

It's also worth noting that electric motors have fewer moving parts, which generally translates to lower servicing costs and reduced mechanical downtime over the life of the machine. While these figures vary by application, they consistently tilt the long-run comparison further in electric's favour.

Furthermore, electric machinery can be operated for longer periods throughout the day due to significantly lower noise levels, helping to increase productivity and putting more money back into operators' pockets.

Based on current energy prices and typical machine utilisation, a payback period of three to five years is a reasonable benchmark for most operations. But that figure is sensitive to one key variable: hours worked.

A machine running hard on a fixed site will close the gap far sooner than one used occasionally.

"It'll all depend on your hours and what you do. If you're burning 1000 litres of diesel a day, that's massive — times $3 a litre. However, electricity is $0.33 to $0.40 a kilowatt, so that's where you'll probably see the savings,” Grant said.

“Three to five years is a reasonable estimate for an operation to make the money back.”

To make this concrete, consider a machine burning significant diesel daily. At $3 per litre, fuel costs add up fast — and that's before servicing, filters, and the mechanical complexity of a diesel drivetrain.

An equivalent electric machine, charged at $0.33–$0.40 per kilowatt-hour, draws on energy that costs a fraction of that.

The upfront premium gets smaller every time the machine starts up.

The TCO case for electric construction machinery is genuine, but it requires a longer view than most purchase decisions allow for.

If you're evaluating on purchase price alone, diesel wins every time. If you're evaluating on total cost across a machine's working life, the picture changes considerably, particularly for operations with high utilisation and access to reliable grid power.

The upfront investment is real. The payback is also real. The question is whether your operation's timeline and usage patterns allow you to reach it.