“With altering demographics, the new car market is expected to continue to underperform compared to other regions, which already happened the last 10 years or so I would say,” Kline & Co. Senior Consultant Gabriel Tarle said at the UNITI Mineral Oil Technology Congress last week.

New car sales in Europe made up only 4% of the vehicle parc in 2021, lagging behind the three other regions the consultancy researched: Asia-Pacific, the United States and Latin America, all of which had new car sales make up between 6% to 8% of their car parc that year.

“As the population shrinks in Europe, there’s less need for new cars,” said Tarle. “Also, 43% of the parc is still diesel engines, which last longer than gasoline engines, up to three times more life.”

And despite the fact Europe is implementing much more aggressive targets for EV sales through legislation compared to the other regions, it is only scrapping 3% of its car parc every year, compared to 5% in the U.S.

Still, Kline & Co. projects BEVs will constitute almost 90% of all new car sales in Europe by 2040, with hybrid electric vehicles a little over 10% and vehicles with internal combustion engines only a tiny portion of the market. Of note, HEV sales will outperform BEV sales until around 2029. “Currently, there’s charging anxiety by consumers, and governments don’t seem to be able to develop those charging stations,” said Tarle. “So it really depends partly on how much money is popped into the charging stations.”

The U.S., for comparison, will still have ICE vehicles making up over 20% of its new car sales by 2040, while BEVs will lead at around 65% of the market and HEVs lagging behind both at just above 10%.

Those sales mean European PCMO demand in 2040 will only be just over 60% of the region’s current demand, Kline projects. Only the U.S. will have a bigger drop, where 2040 demand will be a little over half of the country’s current demand since EVs will be entering the market faster than any other region.

Meanwhile, metalworking fluid demand in Europe will peak around 2026 before slowly declining – though not nearly at the same rate as PCMO – as original equipment manufacturers pump up BEV production to meet EV manufacturing targets. Tarle noted the demand for aftermarket ICE parts could cushion the drop in the short-term.

Removal fluids made up 60% of the metalworking fluids used to make passenger cars in 2021. There’s a significant drop in the use of these fluids for BEV production since they’re the most widely used metalworking fluid to make a combustion engine. These vehicles also have simpler drivetrain systems with fewer parts, Kline found, meaning less removal fluids required for manufacturing.

Even the engines housed in HEVs are smaller than cars powered solely by an internal combustion engine, meaning a slight decrease in the use of removal fluids to make those vehicles.

Forming fluids, which made up about 30% of metalworking fluids used in vehicle production in 2021, have a slight increase in use for HEVs because they have more wiring and die casting fluids are used for the e-motor and battery housing. There’s no change in the consumption of forming fluids in the production of BEVs.

The fluids which made up the final 10% of metalworking fluids used in car production in 2021, protecting fluids and treating fluids, are used slightly less in HEVs but have a moderately reduced use in BEVs because of a lack of engine and simpler drivetrains. Altogether, the production of HEVs consumed 3% less metalworking fluids than ICE vehicles, and the production of BEVs consumed 33% less, leading to overall less demand.