Implications

Analysts characterize the impact of EVs on global PCMO demand as significant but less than devastating. It is important to remember, though, that those numbers are global averages. The pace of EV uptake varies widely from country to country, and in some countries the impact on PCMO demand could be much larger and be felt much sooner.

In 2019, Kline discussed results of a study on EV impacts in 15 countries, most of which were among the world’s largest automobile markets. Some, like China, the U.S., France, the U.K. and Japan, are also among the largest EV markets, while others have very few electrics. The firm concluded that EVs will start to reach critical mass in some of those countries after 2030.

Under what it described as the most likely scenario, it estimated that by 2040 most of the EVs in China, France and the U.K. will be BEVs and that they will account for more than a third of the car population in China and at least 40% in both France and the U.K. Kline also estimated that EVs will cause PCMO demand in the latter two nations to decrease by more than 50% by 2040. It added that EVs will significantly suppress PCMO demand in China, and based on its prediction of BEV penetration, one could expect a loss of more than 33% in potential demand volume.

By comparison, the firm forecasts that markets such as the U.S., Japan, Canada and South Korea will experience more moderate shifts to EVs over the study period and closer-to-equal mixes between BEVs and PHEVs. That would make the PCMO volume impact on those countries smaller though still significant. In countries such as Russia, Brazil and Saudi Arabia, the firm predicts that EV sales will remain insignificant until after 2030, and that even by 2040 their impacts on PCMO volumes will be relatively small.

For all 15 countries – including Germany, India, Mexico, Australia and South Africa, in addition to those mentioned above – Kline forecasts that EVs will cause PCMO demand to be approximately one-fifth lower in 2040 than it would have been without EVs.

“EV adoption and penetration is expected to aggravate the stagnant PCMO demand in mature markets,” Morvey said during his 2019 presentation at the ICIS World Base Oils & Lubricants Conference. “Conversely, PCMO demand in China will most likely continue to grow, even at projected high EV penetration levels.”