Chinese EV trucks will build the cities of the future

Business Times

26-05-2025

IF YOU think the world is starting to get used to surging sales of Chinese-made electric cars, the next wave of exports is going to be bigger and more powerful.
That's because the construction machinery giants that grew fat off the country's property bubble are looking for new markets to offset the downturn at home. Combined with looming electrification, the effects could be quite as dramatic as the other made-in-China export booms which have so troubled trading partners.
Consider Sany Heavy Industry. In 2020, 83 per cent of its business was selling excavators, cranes, concrete mixers and the like to domestic developers. In the space of just four years, China's property crash has caused its turnover in that market to shrink by two-thirds.
Overseas markets now account for more than 60 per cent of its US revenue. It's hoping to raise US$1.5 billion via a Hong Kong initial public offering to help it double international sales to 100 billion yuan (S$17.8 billion), the South China Morning Post reported this month.
Sany isn't alone. Its local rivals XCMG Construction Machinery, Zoomlion Heavy Industry Science & Technology, and Guangxi LiuGong Machinery are all facing the same collapse of activity on the home front, where housing starts in the first four months of 2025 fell to their lowest level since 2003. That's left dismal returns on all the assets they built to service a market that's since disappeared – below 5 per cent, less than half what Caterpillar Inc manages and well below the 7.7 per cent at Komatsu.
The best way out of this problem is to find export markets to get the production lines for all those diggers, dozers, lifters and trucks humming again. Zoomlion's international sales have followed Sany's in becoming the largest element of its revenue, and XCMG and LiuGong aren't far behind.
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There's plenty of work to go around. In the Persian Gulf, governments are using the windfall from the oil boom of the early 2020s to build a swathe of major infrastructure projects, from the Middle East's first Disney theme park in Abu Dhabi to a new international airport in Riyadh and a US$22 billion, five-year infrastructure plan for Qatar. Construction markets are also booming across South and South-east Asia and in parts of Africa. China's export market share in major categories of work vehicles has soared in recent years.
As with passenger cars, electrification offers a potent route for further disruption. Batteries are often considered an ill fit for construction machinery, which has extreme power needs that diesel is particularly well-placed to deliver. But that's changing as lithium-ion cell-makers build cheaper and longer-lasting power packs that can often keep running as long as an eight-hour work day, according to IDTechX, a consultancy. Electric construction equipment sales will grow at 21 per cent annually up to 2044, when they'll hit US$126 billion, IDTechX predicted last year.
Chinese manufacturers have an advantage here. Local battery-makers Contemporary Amperex Technology and BYD are market leaders in lithium iron phosphate, the cathode chemistry that's likely to be best-suited to site vehicles, thanks to its stability and low costs. Already, local construction machinery manufacturers produce about two-thirds of the electric bucket loader models on the market.
Circumspect governments should be looking at ways to outcompete this shift. Instead, they're raising the drawbridge.
The European Union last month set tariffs as high as 67 per cent on Chinese construction machinery, while the UK has more recently imposed duties of more than 30 per cent on excavators made by Sany, Liugong and XCMG. The Indian joint venture between Tata Motors and Hitachi Construction Machinery last year called on New Delhi to raise levies against imported Chinese products, saying they had already grabbed 22 per cent of the market.
Things are even worse in the US, where the Trump administration is busy unpicking the heavy-duty vehicle emission standards introduced by former President Joe Biden. That removes much of the incentive for US-exposed manufacturers such as Caterpillar, Komatsu, Volvo and Deere & Co to innovate and compete with the coming onslaught.
Work vehicles have tended to fly below the radar in discussions of urban emissions, but their vast size and power requirements give them a disproportionate share of engine pollution. China's 10 million construction machines emit more particulates than its 417 million road vehicles, according to the International Council on Clean Transportation.
With low-emission zones spreading across cities worldwide and older diesel vehicles increasingly restricted on the roads of major cities such as London, Paris and Madrid, construction machinery is increasingly going to find itself in the crosshairs as one of the biggest contributors to urban pollution. When that happens, Chinese manufacturers will have a solution ready to be driven from their parking lots. Will their incumbent overseas competitors be ready, too? BLOOMBERG