Policies promote the electrification of construction machinery. From a policy perspective, in recent years, relevant policies in the construction machinery industry have mainly focused on clearing out old and highly polluting construction machinery products, guiding the clean and high-tech development of the construction machinery industry. The central government has pointed out the direction for the development of electric construction machinery from aspects such as emission reduction targets, prevention and control technologies, and support policies. Relevant policies and plans for the construction machinery industry in various provinces and cities have been introduced in succession. According to the policies and plans for the construction machinery industry in various provinces and cities, most provinces and cities have proposed to replace high emission construction machinery, support energy-saving and environmental protection related products, and improve the green manufacturing capacity of construction machinery products.
The construction machinery market is still on the rise. China has a huge space for economic development, a huge scale of infrastructure construction, and the construction machinery market is still in an upward period. Both stock updating and new demand are emphasized. During the "14th Five Year Plan" period, construction machinery still has great potential. In recent years, the sales volume of major construction machinery products in China has increased significantly, and the market is operating well. In 2021, the total sales volume of major construction machinery products in China exceeded 1.67 million units, with a year-on-year increase of 8.8%. There are nearly ten million construction machinery in China, and the future demand will enter a new era. In 2021, the operating revenue of China's construction machinery industry reached 800 billion yuan for the first time, with a year-on-year growth of 3.21%. "The 14th Five Year Plan" for construction machinery proposes that the overall operating revenue of the construction machinery industry will reach 900 billion yuan in 2025, with an average annual growth of 3-5%.
The incremental and alternative space for new energy construction machinery is enormous. At present, the main products of domestic construction machinery have a population of over 9 million units, with an annual growth rate of over 400000 units. The penetration rate of new energy construction machinery is less than 1%. Referring to the rapid increase in the penetration rate of domestic new energy vehicles, we believe that under the background of policy promotion and environmental pressure, the penetration rate of electric construction machinery will also increase rapidly in the next few years, and it is expected that the penetration rate will exceed 30% in 2025. We believe that as the lithium battery industry chain continues to mature, battery costs will further decrease, and the penetration rate of electric construction machinery can increase to 35% by 2025.
The economic benefits of new energy construction machinery are obvious. At the cost side, batteries account for 40% to 50% of the total cost of electric construction machinery. With the gradual improvement of the lithium battery industry chain, the price of lithium ion battery packs has rapidly decreased. The market for electric construction machinery has exploded under the driving of policies. Compared to traditional fuel engineering machinery, the economy of electric construction machinery is reflected through the use process, and the overall cost during the use period of electric construction machinery is more advantageous. We believe that operational cost savings are the main economic factor for electric construction machinery to truly replace traditional fuel engineering machinery. By calculating the current cost of electric construction machinery compared to fuel engineering machinery, there is a significant advantage, and the cost savings can fully cover the acquisition cost. Taking loaders as an example, we estimate that within a 5-year period, the operating expenses of pure electric loaders will be more than 1.089 million yuan, and the operating expenses of fuel loaders will be more than 2.762 million yuan, which can fully cover the purchase price difference of 450000 Yuan.
Traditional construction machinery manufacturers have obvious advantages in electrification. The market concentration of the construction machinery industry is relatively high, and the market concentration of China's construction machinery industry has shown an upward trend year by year. In 2021, the total global market share of the top ten enterprises in the construction machinery industry was 65.3%, of which Caterpillar ranked first with 13% market share, followed by Komatsu and XCMG, with market share of 10.4% and 7.9% respectively. The market for new energy construction machinery has already shown a competitive situation, with traditional construction machinery main engine factories deploying in the field of new energy construction machinery. Global construction machinery leaders such as Caterpillar, Volvo Construction Equipment, Sany Heavy Industry, and XCMG have launched several electric construction machinery products.
With the guidance of national policies, the process of electrification of construction machinery will continue to accelerate. Currently, the penetration rate of electric construction machinery in China is relatively low. Referring to the explosive growth of new energy passenger vehicles, we believe that as the lithium battery industry chain continues to mature and battery costs further decrease, the penetration rate of electric construction machinery will rapidly increase in the next three years, and it is expected to increase to 35% by 2025. Global head construction machinery companies have deeply deployed electric equipment, and global construction machinery leaders such as Caterpillar, Sany Heavy Industry, XCMG Machinery, Zoomlion Heavy Industries, etc. have continuously launched multiple types of electric construction machinery products. Therefore, it is believed that in the future, the construction machinery industry will develop in the direction of electrification and intelligence, and the main line of market driving is stock substitution and penetration improvement and the construction machinery market has entered a new development cycle.
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