Fuchs found e-mobility – electric vehicles and plug-in hybrids – and digitization could cut lubricant demand by 8 to 10 percent in Europe and 20 percent in the United States over the next decade. Fuchs projects that lube demand in China could actually increase 15 to 20 percent due to increased car sales.

Citing data from Clean Technica, the European Automobile Manufacturers Association and Inside EV, Lindemann said that Europes electric vehicle sales reached 206,000 units in 2016, accounting for 1.4 percent of the market and representing a 10 percent increase over 2015. Chinas electric vehicle sales rose 53 percent last year to 507,000 units and now account for 1.8 percent of that market. In the U.S., electric vehicle sales jumped 38 percent to 157,000 but still represent less than 1 percent market share.

Lindemann explained that breakthroughs in electric vehicle technology depend on several factors. The e-car industry needs to fulfill three main tasks – competitive prices, increased driving range and accessible recharge infrastructure. We estimate that if battery capacity can be increased by 250 percent, driving range will be 500 kilometers for compact e-cars. At the same time, cost can be reduced to 100 per kilowatt hour. And this could be achievable by 2020, he observed, citing Daimler AG data.

Lindemann added electric and hybrid vehicle battery system costs are falling and could become equivalent to conventional power train costs by 2025, citing Daimler data. By 2028, Fuchs predicted, electric cars would have a 30 percent market penetration in the EU, while cars with combustion engines will hold a 28 percent market share and hybrids will account for 40 percent. Similarly, the U.S., Canada and China could see electric cars outnumber internal combustion cars by 2027.

Electric vehicles have different lubrication needs, so factory fill engine and gear oil demand will shrink significantly. Aftermarket demand for automotive lubricants will shrink slightly as internal combustion cars are replaced, according to Fuchs. First fill grease demand needs to be evaluated too, as some applications will grow in volume and new applications could come up. Also, the demand for forming lubricants and corrosion preventives could drop as aluminum and thermoplastics replace steel.

Finally, Fuchs considers digitization as another development lubricant manufacturers need to consider. Digitization broadly refers to employing information technology to make business practices more effective. Fuchs warned that start-up companies could use this practice to nudge their way into the lubricants industry.

These companies help manufacturers analyze operations and provide advice on various aspects of the business. The potential threat to lubricant marketers is that they may also determine the lubricant characteristics needed and then identify the best source for such performance, rendering lube suppliers little more than toll manufacturers.