Summary

Like any development impacting the global automobile population, EVs stand to also significantly alter the automotive lubricant market. EV technology is still in its commercial infancy, and forecasts about how much and when EVs will replace ICE vehicles vary widely.

Still, most models would result in a significant reduction in future passenger car motor oil volumes. The disruptiveness of that loss will be moderated by the fact that baseline demand volumes would still be rising over that time-frame.

EVs will also create new product categories for lubricants and fluids due to their design differences from ICE vehicles. The formation of those categories is also in its early stages, as EV designs evolve and demand volumes are still low. A number of companies have launched lubricants and fluids designed specifically for EVs, though, and that cohort should continue to grow as vehicle sales grow. However, they will never rival current demand for PCMO.

The auto and lubricant industries have a clear need to develop performance specifications and standardized tests to measure the performance of these lubes and fluids. Efforts to develop them have begun and also are in early stages.

Underlying all of these conclusions is one observation that stands out: Forecasts about the impact EVs will have on the lubricants industry are based on a large number of assumptions that may or may not be borne out. The most important takeaway is that there are a number of trends and potential developments that deserve to be monitored.

How long can governments continue to subsidize purchases of EVs? The answer depends on the region in question. In January 2021, China announced it would roll back subsidies on EVs from the standard $2,800 to $2,200. It had extended them during the depths of the pandemic, when EV sales fell by 54%.

Several subsidies packages in Europe are due to expire at the end of 2021. Some analysts predict they may be extended to cushion the blow for the continent’s carmakers, as seen in China in 2020. Europe overtook China as the biggest EV market, but analysts warn that too is a bubble.

Will EVs continue on their track toward price parity with ICE-only vehicles? It would appear that is happening apace. According to Castrol, parity could be reached in some territories by the middle of the decade. In December 2020, the cost of lithium-ion batteries dipped below BNEF’s “magic number” threshold of $100/kWh.

Will battery recharging technology continue to advance? If Moore’s law of technological progress can be applied here, then it would seem likely.

Will sufficient charging networks be developed? In Europe at least, the European Court of Auditors thinks that deployment of charging infrastructure is too slow  to meet the European Union’s targets, as of 2021.

“Last year [2020], one in every 10 cars sold in the EU was electrically chargeable, but charging infrastructure is unevenly accessible across the EU,” said Ladislav Balko of the ECA. Automaker lobby group ACEA thinks the pace of network expansion is even slower e-trucks.

Will EV manufacturers transition to batteries that require little or no cooling? There are already models on the market that have coolant-free batteries, but this limits range and power. There are also a handful of alternatives to lithium-ion batteries , such as hydrogen fuel cells, redox flow, aluminum-graphite, bio-electro-chemical and thin-film batteries.

How will EV design changes affect lubricant performance demands? Without a crystal ball, that would be a difficult question to answer.

There is wide consensus that EVs will have large impacts on the lubricants industry, but these and many other developments will determine what those impacts are, the size of them and their timing.

Key Points

  • Many analysts forecast that by the middle of this century, the global light-duty automobile market will make a big shift away from vehicles powered only by ICEs to BEVs and PHEVs.
  • Such a development would significantly reduce PCMO demand from the levels it would reach were it not for EVs.
  • The lubricant industry could begin to feel that impact within a decade, but disruption will be reduced because of continued growth in the population of ICE-only vehicles.
  • These forecasts are based on assumptions that the main factors behind increasing EV uptake would shift from government subsidies and other financial incentives to mandates and punitive regulations, such as vehicular emissions standards and then to EV cost advantages for consumers.
  • These forecasts are based on assumptions that the main factors behind increasing EV uptake would shift from government subsidies and other financial incentives to mandates and punitive regulations, such as vehicular emissions standards and then to EV cost advantages for consumers.
  • These forecasts depend on numerous developments that have yet to occur.