ID: PMRREP35489
Format: PPT*, PDF, EXCEL
Last Updated: 15 July 2025
Industry: Automotive & Transportation
Number of Pages: 199
The global off-highway powertrain market size is likely to be valued at US$10.7 Bn in 2025 and reach US$ 16.9 Bn by 2032 at a CAGR of 6.8% by 2032.
The off-highway powertrain market is experiencing significant transformation driven by automation, electrification, and connectivity. The rise of autonomous solutions such as Monarch electric tractors reflects a broader shift away from traditional diesel engines toward cleaner, and more intelligent powertrains. As machines become more connected with a heightened capability of sharing real-time data, improving fleet management, predictive maintenance, and operational efficiency. These advancements not only enhance performance but also justify higher equipment pricing or drive cost savings through improved productivity and reduced fuel consumption.
Electrification is gaining momentum, supported by stringent emission regulations and a growing preference for sustainable operations. Efficient hydraulic systems are also playing a critical role, enabling engine downsizing and facilitating smoother integration of electric systems. As manufacturers invest in digital technologies and modular platforms, the market is expected to grow steadily, especially in regions such as Asia-Pacific and North America. Overall, the market is evolving from mechanically driven systems to intelligent, software-defined, and sustainable powertrain architectures, opening new avenues for innovation and value creation.
Key Industry Highlights:
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Global Market Attribute |
Key Insights |
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Off-Highway Powertrain Market Size (2025E) |
US$ 10.7 Bn |
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Market Value Forecast (2032F) |
US$ 16.9 Bn |
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Projected Growth (CAGR 2025 to 2032) |
6.8% |
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Historical Market Growth (CAGR 2019 to 2024) |
8.5% |
A key driver of the off-highway powertrain market is the shift toward low-emission and sustainable propulsion technologies, including ultra-low NOx diesel engines, hydrogen combustion, and hybrid solutions. Regulatory bodies in regions such as Europe and North America are enforcing stringent emission standards, pushing manufacturers to innovate beyond conventional diesel. Ultra-low NOx engines reduce nitrogen oxide emissions significantly while maintaining high power output, making them suitable for heavy-duty applications.
Manufacturers such as Cummins Inc. are leading in this space, offering Tier 4 Final-compliant diesel engines and developing hydrogen internal combustion engines for construction and mining equipment. Similarly, Deutz AG has introduced hybrid and alternative fuel engines, including hydrogen-powered prototypes, to meet clean energy goals. These technologies provide a balance between performance, fuel flexibility, and environmental compliance, especially in sectors like agriculture and mining. The transition also opens up retrofit and aftermarket opportunities, as older fleets seek compliance with emerging emission norms.
In the off-highway powertrain market, challenges vary significantly by machine type and application, even within the same sector. For example, construction equipment such as mini excavators are often used in urban areas or indoor environments, where noise and air pollution are major concerns. This creates strong demand for electric or hybrid powertrains that offer low emissions and quiet operation. In contrast, the mining sector faces stricter scrutiny regarding greenhouse gas emissions and climate impact, especially in underground operations, leading to a growing shift toward battery-electric or hydrogen-powered equipment to improve air quality and worker safety.
On the other hand, the agricultural sector, while increasingly focused on sustainability, is often more concerned with cost-effectiveness and operational efficiency than strict emissions compliance. As a result, solutions vary from diesel-electric hybrids to advanced low-NOx engines. These differences highlight the need for customized powertrain strategies tailored to specific operational environments and regulatory pressures.
A major opportunity in the off-highway powertrain market lies in the adoption of proven on-highway technologies such as aftertreatment systems, hybrid modules, and electrified accessories to meet increasingly stringent NOx and CO? emission regulations. As global regulatory frameworks tighten, particularly in Europe and North America, there is a clear incentive for manufacturers to adapt these technologies to off-road use. Electrification of auxiliary systems (e.g., fans, compressors, hydraulic pumps) is gaining momentum, as it enhances efficiency, reduces fuel consumption, and supports powertrain downsizing.
Tailoring these solutions to rugged, duty-variable off-highway environments enables OEMs to stay compliant while improving machine reliability and total cost of ownership. This creates a competitive edge and unlocks new revenue streams in retrofit and upgrade markets. Cummins Inc. is a key manufacturer, testing hydrogen internal combustion and hybrid off-highway engines based on on-road platforms.
The Internal Combustion Engine (ICE) segment is expected to dominate the off-highway powertrain market throughout the forecast period due to its established reliability, high torque output, and fuel efficiency essential for heavy-duty applications in construction, mining, and agriculture. In 2021, ICE accounted for about 95% of the total off-highway equipment sales value worldwide, underscoring its market dominance.
Leading manufacturers are investing in advanced ICE technologies to improve fuel efficiency and reduce emissions while maintaining performance. For example, Caterpillar’s $90 million investment in 2024 to upgrade its Texas facilities for producing the new Cat C13D engine highlights ongoing innovation in ICE platforms. Caterpillar is also developing hydrogen-hybrid powertrains based on the Cat C13D, signaling a gradual transition while retaining ICE dominance.
The construction equipment segment is a key driver of growth in the off-highway powertrain market due to its intensive use in infrastructure projects worldwide This growth is fuelled by rapid urbanization and increasing investments in roads, bridges, and commercial building projects, which demand efficient, low-emission machinery. Stricter environmental regulations are pushing construction firms to adopt hybrid and electric powertrains to reduce emissions and comply with sustainability goals.
Leading manufacturers are actively innovating to meet this demand. For example, Wacker Neuson launched the electric mini excavator EZ17E in 2024, while Volvo Construction Equipment introduced the EC230 electric excavator and L120 electric wheel loader in North America the same year. These advancements enhance operational efficiency and reduce carbon footprints.
Asia Pacific is the fast-growing market for off-highway powertrains, accounting for over 30% of the global market share in 2025. This rapid growth is driven by accelerated urbanization, expanding construction and mining activities, and increasing mechanized agriculture across countries such as China, India, Japan, and South Korea. Large-scale infrastructure projects and government investments in transportation and industrial development fuel demand for high-performance, fuel-efficient off-highway engines.
Technological advancements such as turbocharging, electronic fuel injection, hybrid powertrains, and intelligent diagnostics improve engine efficiency and durability, aligning with stringent emission regulations in the region. For example, India and South Korea’s 2025 cooperation agreement focuses on infrastructure and logistics enhancement, further boosting equipment demand.
North America’s Off?Highway Powertrain market continues transitioning from diesel dominance toward electrification, particularly in construction equipment like mini?excavators and loaders. Despite historical cost advantages tied to regional oil and favorable taxes, shifts under the Infrastructure Investment & Jobs Act and Canada’s carbon tax are accelerating EV uptake. Battery costs have plummeted from over $1,000/kWh in 2010 to around $130/kWh in 2021 supporting viable electrification paths for smaller machines.
Forecasts expect electric equipment units to grow from ~0.9?M in 2020 to 3.6?M by 2029 (16.6%?CAGR). Currently, the off?highway powertrain market exceeds $9.5?billion (component sales) in 2024, with increasing electrified modules, especially batteries, generating major revenue. Looking ahead, forklifts and aerial work platforms are leading electrification, but OEMs like Caterpillar, Volvo CE, and John Deere are advancing full-electric loaders and excavators paving the way for broader adoption in heavy-duty construction and mining sectors.
In 2025, the Europe Off?Highway Powertrain market lagged behind global peers, grappling with high interest rates, softening construction demand, and an estimated 14% decline in equipment sales. Despite this, the region remains a hub for innovation in low?emission engines and electrified powertrains, driven by strict EU Stage?V regulations and carbon neutrality targets. The small-to-mid power segment (100–200?HP) continues to dominate, while interest grows in electrified mini excavators and loaders for urban and indoor use.
Yanmar launched a new Electrification Unit in March 2025, enabling compact excavators and wheel loaders to go electric starting April 2025. Cummins introduced its Next?Gen X15 diesel engine at Intermat 2024 in Paris, delivering improved reliability, lower emissions, and cost efficiency.
The competitive landscape of the global off-highway powertrain market is characterized by a mix of global OEMs, specialized powertrain manufacturers, and emerging technology providers vying for market share through strategic differentiation. Major players are focusing on product diversification by offering both conventional ICE-based and hybrid/electric powertrain solutions to cater to varying customer needs across construction, agriculture, mining, and industrial sectors.
Investment in R&D remains a core strategy to enhance engine efficiency, reduce emissions, and integrate smart control systems. Companies are also leveraging digital innovation, such as integrated telematics, predictive diagnostics, and software-defined powertrain control, to add value and improve customer retention.
The Off-Highway Powertrain market is estimated to be valued at US$ 10.7 Bn in 2025.
Rising Infrastructure and Construction Activities and Mining and Energy Sector Growth are the major growth drivers.
The industry is estimated to rise at a CAGR of 6.8% through 2032.
Electrification of Agriculture, Construction & Mining Equipment, and Smart Powertrain Integration are the key market opportunities.
The global Off-Highway Powertrain market is dominated by major players such as Cummins Inc., Caterpillar Inc., John Deere, Volvo Penta and ZF Friedrichshafen AG.
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Report Attribute |
Details |
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Historical Data/Actuals |
2019 - 2024 |
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Forecast Period |
2025 - 2032 |
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Market Analysis |
Value: US$ Bn, Volume: Units |
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Geographical Coverage |
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Segmental Coverage |
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Competitive Analysis |
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Report Highlights |
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Customization and Pricing |
Available upon request |
By Power Output
By Powertrain Type
By Application
By Region
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