The outlook in the United States for electric vehicles – and the implications for automotive lubricant suppliers – has changed significantly with the election of a president more motivated to help combat climate change.
President Joe Biden signed an executive order last week setting a goal for plug-in hybrids and vehicles running solely on battery power to constitute half of new U.S. auto sales by 2030. The initiative, to be pursued partly through more ambitious fuel economy mandates, represents one of Biden’s starkest differences from his predecessor, Donald Trump, who tried instead to retreat from existing fuel economy targets and to gut laws that states employ to push their own EV agendas.
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If successful, Biden’s initiative could accelerate the erosion of demand for engine oils that lubricate internal combustion engines and the growth of new lubes and fluids required by EVs. Analysts said, however, that the new plan faces significant hurdles, including requirements for massive spending on auto assembly plants, battery manufacturing and charging networks.
The plans that Biden laid out Aug. 5 were no surprise, as he had signaled previously that he intended to return to the climate policy course set by Trump’s predecessor, Barack Obama. Biden served as vice president during Obama’s eight years in office. Whereas Trump withdrew the U.S. from the Paris Agreement, Biden has recommitted the country to the nearly global effort to reduce greenhouse gas emissions and to halt rising temperatures.
Biden’s administration noted that his goal for EVs to constitute half of U.S. auto sales is non-binding, but his executive order was accompanied by announcements from General Motors, Ford and Stellantis that 40%-50% of their sales will be zero emission vehicles by the end of this decade.
That would require a huge ramp-up in sales of BEVs and PHEVs. U.S. sales of light- and heavy-duty vehicles totaled between 14 million and 15 million in 2020 and are forecast to reach 16 million this year. U.S. EV sales are currently around 250,000 per year.
Biden said he will facilitate EV sales partly by raising fuel economy mandates, starting with a target of 38.2 miles per gallon for cars and trucks by 2026 – a level that would be 20% higher than scheduled for that year under Trump.
Trump expressed skepticism about the scientific arguments that humans are causing temperatures to increase globally and maintained that he was more committed to protecting U.S. companies and the nation’s economy. Besides reducing fuel economy targets that had been set by Obama, he sued to revoke California’s long-standing permission to set its own air pollution standards and for other states to follow them. More than a dozen states follow California policies that require increasing portions of new vehicles to have zero emissions of greenhouse gases.
A shift to EVs would have big impacts on the lubricants industry since the electric motors in EVs do not use engine oil, the single largest product category in the lubes industry. EVs do require some new types of fluids, such as lubricants with high protection against corrosion and coolants to handle high temperatures generated by EV batteries. The volumes of those new types of fluids are expected to pale in comparison to current engine oil sales.
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