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Energy Transition And Chip Shortages To Accumulate Longer Delays For New Construction Equipment

Courtesy Of Caterpillar

United States Of America – ”Energy Transition” has become a requirement and goal worldwide in a social force evolved during the pandemic.

An enhanced commitment to ecologically sustainable growth is at the heart of many of these discussions among investors, governments, regulators, corporations, and society at large. Construction, infrastructure, agriculture, manufacturing, mining, and oil and gas are among the end markets garnering a lot of attention, with their environmental footprints attracting investors’ attention. Corporate responsibility and “cancel culture” demand it in these new times.

New environmental efforts, such as the European Green Deal, which was adopted by the European Parliament in 2020 and will be expanded in February 2021, have substantial compliance consequences for industrial sectors. By 2050, the European Green Deal aspires to make Europe’s economy environmentally sustainable. The following goals are included in the interim 2030 targets at a minimum.

As factories increasingly continue to shutter due to lack of chip supply across the country construction equipment and machinery is not immune. The problems are nothing new and we can expect them to become a priority as the country and manufactures race to manufacture more chips on U.S. Soil. Companies like Apple and Tesla have been seeking to develop their own chips recently.

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CHIP SHORTAGES TO AFFECT CONSTRUCTION

Production conversion for roll out of construction equipment has been gradually moving forward but equipment manufactures are still being spread thin maintaining and supporting two markets while not only focused on extreme needed cuts to help fight climate change but also by implementing the other needs for our infrastructure such as integrated robotics and autonomous operations in connected construction.

The climate initiatives and political force in the United States in progressively moving at an extremely fast rate. Manufacturing backlogs and bottlenecks are not a possibility but a fact. The infrastructure bill and massive other issues we have seen are only adding to the recipe.

Machinery is a hugely diverse industry—construction machinery alone generates over $200 billion in annual revenue worldwide. Assuming aftermarket contributions of 25% to 35% of total revenue with application ranges comparable to those above, transitioning from internal combustion engines to electric drives might result in a $30 billion to $60 billion yearly revenue loss for construction machinery OEMs alone.

Each OEM must evaluate its development route against two criteria: stakeholder expectations and technical maturity.
When both are high, OEMs may respond by incorporating electric motors into equipment like as skid steers and compact excavators, which are pioneers in the adoption of electric vehicles (EVs). Caterpillar and BHP are currently developing zero-emission mining trucks as the moves are happening rapidly across all sectors. The transitions are heavily reliant on chips in production of on-board computers and other features.

Source Caterpillar European Commission

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