Last month, we took a deep dive into the market opportunities surrounding heavy equipment based on the emergence of three kinds of technologies for driving new revenue growth. The article focused on automation, digitization (IoT and digital twins), and electrification. We calculated there is at least a total addressable market (TAM) of $56 billion for automating, digitizing, and connecting the operation of heavy equipment. As the leading construction equipment manufacturer, Caterpillar (CAT) seemed like a potentially good play on investing in high-tech heavy equipment. After all, it has already developed about 600 robotic mining trucks.
But as we started to scratch below the surface of Caterpillar’s technological transformation, we were not finding much in SEC filings, transcripts, and news stories to offer much additional color to the story. We’re not saying that Caterpillar is not trending in this direction, but maybe it is moving at the speed of a crane in high winds. Recent acquisitions and investments suggest the company is more focused on the electrification part of the equation – a trend with more ambiguous payoffs at this juncture. For example, Caterpillar participated in a $1 billion Series D last month for Redwood Materials, a battery recycling startup, and a Seed round earlier this year for an electrical engineering firm called Lithos Energy that specializes in lithium ion tech.
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