EV Impact Forecasted to Accelerate to 2040


Electric vehicles will have only limited impact on passenger car motor oil demand through 2025 but will cost a group of 15 leading markets more than a million tons per year in combined demand volumes by 2040, according to a forecast by Kline & Co.

The outlook is the first edition of a study covering 15 passenger car motor oil markets that collectively represent more than 75 percent of the global PCMO market. The 15 countries covered include: Australia, Brazil, Canada, China, France, Germany, India, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, United Kingdom and the United States.

According to Kline’s projections, the combined PCMO demand across the 15 countries – if electric vehicle representation remained constant at 2017 levels through 2040 – would be expected to reach 6.5 million metric tons by 2040, up from 5.3 million tons in 2017, for a 0.9 percent compound annual growth rate.

However, Kline projects that under the most likely scenario, the number of electric vehicles in those countries would rise dramatically from around 16 million units in 2017 to 460 million units by 2040. In that case, Kline estimated, PCMO demand for those countries is forecasted to decline at a compound annual rate of 0.1 percent out to 2040 – or a cumulative demand loss of about 1.2 million tons through the forecast period.

In a May 14 webinar, Sharbel Luzuriaga, a project manager in Klines energy practice, said the decline in demand due to EV penetration wouldn’t be uniform over time. This has a multi-stage nature, he said. In the near term, EVs penetration will not play a major role in the PCMO volumetrics. In the longer term, the role of EV penetration may be more pronounced. In terms of the other factors, we still can corroborate that oil drain intervals remain the main PCMO market driver.

The highest negative impact of EV penetration will be observed in mature markets in Western Europe and North America, while the impact of EV penetration and other mobility forces will be less pronounced in emerging countries, Luzuriaga continued. Those other mobility forces include new business models such as on-demand ride services, car sharing and ride sharing and new technologies such as autonomous vehicles.

France and the United Kingdom will be among the countries where electric vehicles will be most accepted by the market out to 2040, because of their governments efforts to encourage such vehicles, according to Kline’s study.

Kline concluded that EV penetration will vary at a regional and country level, depending on socio-economic factors, existing infrastructure and governmental intervention.

Among the countries covered, France and the United Kingdom will have the highest degree of electric vehicle penetration by 2040 – more than 40 percent each – due to ambitious EV targets by their governments and being countries where building the necessary infrastructure will be a relatively easier task.

Kline predicted that Germany will be among the countries with medium EV diffusion rates to 2040, in the 20 percent to 40 percent range. Diffusion is the process by which a new idea or new product is accepted by a market. The study notes that most of the countries in this medium range have not announced an internal combustion engine ban at the national level.

Russia and South Africa are among the countries with low EV diffusion rates of less than 20 percent. Kline noted that in most of these emerging economies, purchases of EVs are not subsidized, although some incentives are offered at the state or local level. With some exceptions, this group of countries can be characterized by large territories and low population densities, presenting a challenge when it comes to building the necessary power infrastructure for EVs.

Luzuriaga noted that EVs still present opportunities for finished lubricants such as transmission fluids and specialty greases, and also for coolants. Growth in hybrid electric vehicles and plug-in electric vehicles are also expected to provide momentum to a rise in demand for low-viscosity synthetic PCMO. Meanwhile, 0W oils will be selected as factory-fill and service-fill PCMO, endorsed by hybrids and plugins.

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