Cost to Demand Volumes

Additive company Chevron Oronite calculated that PCMO volumes would continue to rise, though not as much as if ICE vehicles retained their dominance in the car parc. By 2040, the company estimated, global PCMO demand would be approximately 8.1 million metric tons, up from 7.2 million tons in 2020, but still 13% less than demand would be by that date were it not for the impact of EVs.

Of course, the potential demand lost would increase as the car parc continues shifting toward EVs. The Oronite analysis calculated that numbers of both EVs and ICE-only cars would continue rising through 2050, at which point numbers of conventional vehicles would start to decrease. PCMO demand would peak at roughly 8.2 million tons in 2050, Oronite said, then fall to 7.5 million tons by 2060 – at that point 20% less than it would be without EVs

Other analysts have predicted different degrees of impact. IHS Markit said in 2018 that it expected global PCMO demand to be 7% lower in 2040 than it would be if not for EVs, adding that it believes the transition to EVs will be slower than some forecasters predict because the lengthening average life of cars slows the rate of turnover.

U.S.-based consultancy Kline & Co. estimated that by 2040, EVs will cause combined PCMO demand in the 15 countries to be about 20% lower than it would be had it not been for EVs. The demand volume will decrease at a cumulative annual rate of 0.1% over that time period, whereas it would have increased at a rate of 0.9% without EVs.

PCMO demand would peak at roughly 8.2 million tons in 2050, Oronite said, then fall to 7.5 million tons by 2060 – at that point 20% less than it would be without EVs.

Analysts deem such impacts significant but not devastating for lubricant marketers. Oronite officials said they would not expect EVs to have a severe impact on the industry unless the shift away from ICE-only vehicles happens much faster than currently forecast in China, which is by far the world’s largest EV market and one of the two largest lube markets.

“After studying the data, one of the key takeaways from the Oronite assessment is that unless China adopts EVs at a much more aggressive rate, EVs would be a moderating rather than disrupting force on PCMO demand,” the company told Lubes’n’Greases.

An official from IHS Markit was even more sanguine. “Penetration of electric vehicles will reduce lubricant volumes, but the impact on global demand will be limited,” Blake Eskew, vice president of global consulting at IHS Markit, said.

Kline frequently notes that it expects the trend toward longer drain intervals to cut into PCMO demand more than EVs. “The expansion of EVs will clearly dampen PCMO demand, but the most intense negative impact will be felt in the long term – 2030 and beyond,” George Morvey, industry manager for Kline’s energy practice, said during a presentation at the ICIS World Base Oils & Lubricants Conference in London in February 2019. “In the short and medium term, through 2027, oil drain intervals will remain the main factor driving PCMO demand.”