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Frost & Sullivan’s research reveals that approximately 2.1 million electric vehicles (EVs) were sold globally in 2018, of which 56% were sold in China alone. In 2018, total global EV parc was estimated at nearly 4.3 million, which is just 0.33% of the total global passenger vehicle parc of 1.29 billion. The rest of Asia Pacific (excluding China) accounted for only a 5% share of global EV sales, led by Japan and Korea. In contrast, India’s EV market remains at a very nascent stage of development.

EV penetration is forecast to increase dramatically by 2030. The World Economic Forum (WEF) predicts that the global car parc could double by 2045, boosted by strong EV sales push initiatives such as Government subsidies of up to 20-25% of the vehicle’s cost in Europe, Japan’s drive to reduce greenhouse gas emissions by 80% by 2050, and improved charging infrastructure. Collectively, these trends could potentially lead to EVs constituting 1 of every 2 cars sold globally by 2030. In fact, China alone plans to sell almost1 2 million EVs by 2020, according to an article published by the World Economic Forum, which is close to 2018 global EV sales.

Why the Transition towards EVs will reduce lubricant demand

  • Battery electric vehicles (BEVs) will not require traditional lubricants, only greases
  • Plug-in hybrid vehicles (PHEVs) will not require traditional lubricants, only more customized lubricants with specialized additives and formulations like plug-in hybrid engine/transmission oils

To mitigate the challenge of reduced demand for traditional lubricants and to capitalize on the opportunity that EVs offer, lubricant companies are diversifying towards e-fluid solutions, i.e., fluid solutions for EVs.

The e-fluid portfolio primarily includes e-thermal fluids, e-transmission fluids and e-greases. All OEMs are developing active thermal management systems with e-thermal or cooling fluids for next generation EVs. For example, Nissan Leaf, the highest selling EV model in Europe, will feature an active liquid cooling system post 2020, future BEV models from Audi will have an active liquid thermal management system, and Toyota will adopt the active cooling strategy for their high capacity hybrid segment post 2022. Lubricant companies are therefore looking to collaborate with OEMs to develop e-thermal or cooling fluids for high performance EVs. For instance, 3M Novec Engineered Fluids and Taiwan-based XING Mobility have entered into a partnership to develop an immersion cooling system for EV batteries, while Shell has created customized fluids like the Shell Helix Hybrid for hybrids.

As far as greases are concerned, there are more than 100 greased parts within the car that require up to 900 grams of grease in a C-segment car—for example, the VW Golf and BMW 1 series in Europe—with bigger cars requiring up to 1 kg of grease. The transition towards EVs will contribute towards a minor reduction in grease application, which spells good news for lubricant companies offering greases. The decline in greased engine parts in EVs will be compensated by more actuation greasing around the energy powertrain. Also, there will be enhanced grease usage to improve in-car noise cancelling. In a nutshell, there will be a potential reduction of only 100 grams of grease per vehicle in an EV, compared to an internal combustion engine vehicle.

Lubricant companies clearly anticipate strong growth potential for e-fluids as EV parc grows in the future and are therefore keen to offer a range of e-fluids within their lubricant portfolio. It is a testament to how lucrative this market will be that Shell launched a new range of e-fluids, including e-thermal fluids, e-transmission fluids and e-greases, in June 2019 in the Indian market which currently accounts for only a minuscule portion of the global EV market.
This is a strong indication that lubricant companies foresee strong growth prospects in the e-fluid space and are, therefore, shifting their R&D focus towards e-fluids.

For more information, please contact: Avijit Ghosh, Director – Consulting, Mobility at avijit.ghosh@frost.com

[1] WEF Article dated Feb 4, 2019 by Alex Thorton, Senior Write, Formative Content Titled “China is winning the electric vehicle race” (https://www.weforum.org/agenda/2019/02/china-is-winning-the-electric-vehicle-race/)

 

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