Four Trends to Watch in 2026

This article was developed in collaboration with our partners at Applied Fluid Power®, combining field experience, engineering insight, and direct feedback from OEMs and industry experts to identify the key electrification trends shaping 2026.

While full electric remains the long-term goal for many OEMs, the path to get there is being built step by step. Hybrid systems are emerging as the most viable path forward today, offering a balanced solution where full electric remains complex to implement at scale. At the same time, stricter emissions regulations are pushing OEMs to downsize engines, often below 75 HP, and pair them with electric assistance. Electric-over-hydraulic setups are gaining traction as a simpler, lower-risk entry point, while the focus is shifting from upfront cost to total cost of ownership.

Technologies like the GSM motor are helping OEMs meet these challenges with smarter, more efficient solutions, enabling hybrid and electric systems that are both technically and commercially viable. In the sections that follow, we’ll explore each of these four trends in depth: what they mean, why they matter, and how they’re shaping the decisions OEMs will make in 2026 and beyond.

Trend #1: Hybridization, The Most Viable Path Forward

As the off-highway industry moves toward electrification, hybridization is emerging as a key transitional strategy: not as the final destination, but as a practical and scalable step toward full electric systems. While the long-term goal for many OEMs remains full electrification, hybrid solutions are helping bridge the gap by offering immediate performance and regulatory benefits without the full complexity of battery-electric architectures.

“We’re seeing more OEMs use hybrid systems not just to meet regulations, but to unlock better control and energy efficiency in real-world applications.”
— Applied Fluid Power®

Among all the electrification strategies discussed in recent months, hybridization stands out as the most widely understood, most requested, and most feasible option for many off-highway applications heading into 2026. Yet, despite its growing popularity, there’s still confusion in the market about what “hybrid” actually means.

In this context, hybridization refers specifically to the combination of a diesel engine with an electric motor, not electric-over-hydraulic systems, which are often mistakenly grouped under the same label. This distinction is important, especially as OEMs evaluate electrification strategies that balance performance, cost, and integration complexity.

What makes hybrid systems so attractive right now is their practicality. They allow manufacturers to retain familiar diesel architecture while adding electric assist where it makes the most impact, whether that’s for torque boost, energy recovery, or emissions reduction. This approach avoids the full system overhaul required by battery-electric solutions, which remain challenging due to factors like battery cost, infrastructure limitations, and supply chain volatility.

Battery-related concerns were a recurring theme in recent discussions. Many OEMs are hesitant to commit to full electric systems today due to geopolitical instability, rapid shifts in battery technology, and uncertainty around long-term support. These challenges don’t diminish the importance of full electrification, they simply highlight the need for a phased, application-specific approach.

In contrast, hybrid systems offer a lower-risk, faster-to-market alternative. They’re easier to integrate, more flexible in terms of power management, and often more cost-effective when designed correctly. This is where technologies like the GSM electric motor come into play. Used both as a motor and generator, GSM enables OEMs to build hybrid systems that are compact, efficient, and scalable. It’s already being deployed in applications where downsizing the engine and adding electric assist helps meet regulatory thresholds while improving overall machine performance.

Hybridization also opens the door to smarter energy use. In certain field applications, GSM-powered systems have enabled machines to operate for a full 12-hour workday by offsetting diesel load with battery support without compromising torque or control. These kinds of solutions are not just technically viable; they’re better performing and more efficient than traditional setups, helping manufacturers meet both performance goals and regulatory demands without overextending budgets or timelines.

As we move into 2026, hybridization will continue to play a central role in the electrification journey as a "strategic enabler" that brings the industry closer to fully electric solutions, but one step at a time.

Trend #2: Engine Downsizing and Regulatory Drivers

One of the most impactful forces shaping electrification strategies in 2026 is regulation, particularly around engine emissions and horsepower thresholds. OEMs are increasingly looking for ways to downsize engines to stay below critical limits, especially the 75-horsepower mark, which in many regions triggers additional compliance costs, taxes, and maintenance requirements. California continues to lead the way with strong emissions policies, enforcing rules that penalize machines exceeding certain horsepower levels. And it’s not just California anymore: states like Colorado, DC, Illinois, and Michigan are actively exploring similar frameworks, signaling a broader shift in how emissions will be managed across the U.S.

This regulatory pressure is pushing OEMs to rethink their powertrain strategies. Instead of relying solely on diesel engines, many are now exploring hybrid configurations that pair a smaller combustion engine with electric assist. This allows them to stay under regulatory thresholds while still delivering the torque and performance needed for demanding applications.

“Downsizing paired with electric assist is helping customers avoid costly DEF systems and taxes, while improving machine responsiveness.”
— Inmotion Technologies

The GSM electric motor plays a key role here. By acting as both a motor and generator, it enables OEMs to offset engine load, improve fuel efficiency, and extend operating hours, all while keeping the engine size below critical limits. As we move into 2026, we are sure we'll keep seeing engine downsizing being a strategic lever for OEMs. 

Trend #3: Electric Over Hydraulic as a Stepping Stone

While hybridization is emerging as the most practical and widely adopted electrification strategy, it’s important to recognize that OEMs operate in a wide range of applications, with equally diverse goals. In many cases, especially where precision, torque control, and responsiveness are critical, electrification offers unique advantages that go beyond what hybrid systems alone can deliver. This is where electric over hydraulic solutions come into play: rather than replacing the entire system, OEMs are increasingly choosing to retain their hydraulic architecture and simply swap the diesel engine for an electric prime mover. It’s a targeted, efficient way to modernize without overhauling everything.

“Electric prime movers are becoming the go-to solution for precision-driven applications. It’s all about enhancing hydraulics.”
— Applied Fluid Power®

But this approach isn’t in conflict with hybridization, it’s instead a different response to different needs. For example, in applications like road striping or material placement, electric systems enable precise position control and instant torque, capabilities that are difficult to achieve with traditional hydraulics. These performance gains translate directly into productivity and accuracy, which are critical in time-sensitive or high-precision environments.

Design efficiency is also becoming a priority. As electrification introduces new cost variables, such as battery systems, control electronics, and tariffs on imported components, OEMs are paying closer attention to how systems are engineered. Electric over hydraulic solutions offer a way to optimize performance without overcomplicating the design, making them especially attractive for mid-sized and niche applications. The GSM motor is a key enabler in this space. Its compact form factor and dual functionality as motor and generator make it ideal for integrating into existing hydraulic systems. Whether it’s powering a harvesting implement or assisting in traction control, GSM helps OEMs achieve better results with a simpler setup.

Trend #4: Total Cost of Ownership Over Invoice Price

One of the most important shifts happening in the off-highway industry is mental. As electrification becomes more mainstream, the way customers evaluate cost is changing. Instead of focusing solely on the upfront price tag, more OEMs and end-users are looking at total cost of ownership (If you are interested, you can check out our article on TCO), a broader view that includes fuel savings, maintenance reduction, uptime, and long-term ROI.

“We’ve seen hybrid and electric systems deliver ROI in months. That’s what’s changing the mindset across the industry.”
— Inmotion Technologies

This shift was clearly reflected in conversations at recent trade shows. Many visitors weren’t just asking “How much does it cost?” but “How long until it pays for itself?” And in many cases, the answer was surprisingly short. Electrified systems, especially hybrid and electric-over-hydraulic setups, are showing returns in months, not years, thanks to improved efficiency and reduced operating costs.

Real-world examples are driving this change. In road construction, for instance, electrified striping machines have demonstrated faster operation and higher placement accuracy, reducing the time crews spend on the road and increasing productivity. In agriculture, hybrid harvesting implements have shown better traction and torque control, helping machines work more efficiently even in tough conditions, all while cutting fuel use and simplifying maintenance.

Of course, not every application will see immediate savings. Some electrified systems do carry a higher upfront cost, especially when battery packs or advanced control systems are involved. But the key is helping customers understand the full picture, and that’s where education and transparency come in. OEMs, suppliers, and sales teams all play a role in shifting the conversation from sticker price to long-term value.

This is why we foresee TCO will become a central metric in electrification decisions. It’s about being smarter with resources, time, and investment, and the companies that embrace this mindset will be better positioned to lead in a market that’s increasingly focused on performance, efficiency, and sustainability.

Key Takeaways

• Hybridization is leading the way, on the path to full electrification: OEMs are increasingly adopting hybrid systems that combine diesel engines with electric motors. This approach offers a practical balance between performance, cost, and integration complexity, especially in today’s market. While full electric remains the long-term goal for many, hybridization is proving to be a scalable and effective step forward, helping OEMs meet performance and regulatory demands while building toward fully electric solutions.
• Engine downsizing is accelerating: Driven by emissions regulations, manufacturers are strategically reducing engine sizes to stay below critical thresholds like 75 HP. Hybrid systems and electric assist technologies are enabling this shift without compromising machine capability.
• Electric over hydraulic is gaining traction: As a low-risk entry point into electrification, replacing diesel prime movers with electric ones while retaining hydraulic systems is proving effective. This strategy simplifies integration and improves performance in applications where precision and torque control are essential.
• Total cost of ownership (TCO) is becoming the new metric: The industry is shifting away from focusing solely on upfront costs. Customers are increasingly evaluating electrified solutions based on long-term savings, efficiency, and ROI, often seeing returns in months rather than years.
• GSM motor technology is enabling smarter solutions: While not the focus of the article, the GSM motor, used as both motor and generator, is playing a key role in helping OEMs implement hybrid and electric systems that are compact, efficient, and cost-effective.

Conclusion: A Smarter Path Forward

What we’ve shared in this article comes directly from being immersed in the industry, listening to engineers, OEMs, and thought leaders, and engaging in real conversations at tradeshows and technical meetings. These are patterns we’ve seen emerge across projects, discussions, and product development cycles.

Electrification in off-highway is evolving into a set of smarter, more strategic choices. Hybrid systems are proving to be the most viable option for many, offering flexibility without the complexity of full electrification. Engine downsizing is becoming a necessity, driven by regulations that are already shaping design decisions. Electric-over-hydraulic solutions are helping OEMs meet performance demands with simpler integration. And the shift toward total cost of ownership is changing how value is measured, putting long-term efficiency and ROI at the center of the conversation.

Technologies like the GSM motor are enabling these transitions, not by pushing electrification for its own sake, but by solving real problems in real applications. As we head into 2026, the industry is adapting, learning, and choosing what works best. That’s how we keep progress running.

Visit Applied Fluid Power® website to learn more about their insights, products, and upcoming innovations.

Author: Francesco Patroncini