China’s automotive lubricant market is experiencing a sharp contraction as new energy vehicles gain ground, according to a recent report by Sinolub. The publication said the penetration rate of new energy vehicles surpassed 40 percent, reducing demand for traditional gasoline engine oils and putting pressure on lubricant producers that have yet to adapt to evolving vehicle technologies.
The shift reflects a broader transition within China’s automotive sector as electric and hybrid vehicles displace internal combustion engines. This change is accelerating the decline of the mid- to low-tier lubricant segments and challenging domestic blenders to upgrade their technical capabilities, industry insiders have told Lube Report. Many local manufacturers still depend on older additive formulations and imported synthetic base stocks, limiting their ability to serve the growing electric vehicle market.
According to Sinolub, sales of API SJ- and SL-grade gasoline engine oils fell sharply compared with a year earlier, while higher-grade products also recorded a decline. These two performance specifications are both more than 20 years old.
Sinolub cited technology and supply chain constraints as key barriers preventing Chinese lubricant makers from producing fluids compatible with new energy powertrains. It added that companies unable to overcome these technical bottlenecks in high-end synthetic base oils risk being pushed out of the market.
“The traditional automotive lubricant industry is facing a devastating impact,” Sinolub wrote. “More Chinese companies would be eliminated if they cannot overcome technical bottlenecks in high-end synthetic base oils.”
By the end of June 2025, China’s motor vehicle fleet reached 460 million units, including 359 million passenger cars, according to data from the Ministry of Public Security. New energy vehicles totaled 36.89 million units, or about 10.3% of passenger cars. Of that total, 25.54 million were pure electric vehicles, accounting for roughly 69% of the new energy vehicle market.