By Aaron Stone
We’ve all heard the hype — alternative drive trains are the future. The days of the once-loved internal combustion engine (ICE) are almost numbered. Businesses relying on automobile lubrication must adapt or die. You could be forgiven for thinking traditional power trains are on their last legs.
But should you believe all this hysteria? After all, the age of the electric vehicle (EV) is still a long way off, isn’t it? According to CleanTechnica, electric vehicle sales in Europe were a paltry 206,000 in 2016, accounting for only 1.4% market share. The United States, on the face of it, is lagging further behind, despite ongoing fanfare surrounding Palo Alto, Calif.-based automaker Tesla Inc. EVs in the U.S. only comprise 1% market share and totalled 157,000 units in 2016.
Even China, with a total population of almost 1.4 billion, generated just 507,000 EV sales last year (1.8% share), 336,000 of which were passenger cars. No doubt however, demand for EVs is increasing, with the Asian powerhouse reporting year-on-year growth of 53%. But let’s be honest, we’re still talking about reasonably insignificant volumes on the global stage, aren’t we?
Total production of the world’s top 20 OEMs (passenger cars, pickups and light trucks) in 2017 was 86.741 million. A Price Waterhouse Coopers 2016 report predicts this figure will rise to 98.914 million over the next four years – led by Volkswagen (12.175 million by 2021), Toyota (11.631 million) and General Motors (11.203million).
That’s settled then, e-mobility dominance remains years away. Regardless, the internal combustion engine will always be there, so EVs won’t impact the lubricant business much anyway. These vehicles are simply “toys for boys” right? Even if we do see a sharp increase in alternative powertrains, there’s plenty of time to play catch up. Let’s just see how it plays out.
Believe it or not, this is still the view held by many in the automotive industry. The reality: we are entering an era of disruptive change. A time where society and technology are evolving more quickly than many businesses can adapt. Forward-looking companies are clambering over one another to gain ascendancy, and multi-billion dollar investment announcements by leading automakers will play out over the next few years. The burning question is how quickly will e-mobility cannibalise existing technologies, and what impact this period of unsettling change will have on the lubricant industry.
Speaking at the UNITI Mineral Oil Technology Congress on “Economical, Ecological & Technical Challenges for the Lubricant Industry” in Stuttgart, Germany, Lutz Lindemann, a member of the Fuchs Group’s Executive Board, invited the audience to consider an e-mobility “ramp up” scenario. The scenario paints a very different picture, and one which could surpass the expectations of many.
Highlighting the Paris Climate agreement, signed by representatives of 195 countries, Lindemann said that by 2050 CO2 emissions shall not exceed CO2 absorption. Yes, we are still over three decades from this reality. About 33 years ago the Ferrari Testarossa F110, Ford Falcon XF, Bentley Eight and Holden Commodore VK were new to the market, and we’ve come a long way since then!
But let’s consider thetime it will take to rejuvenate the existing world car fleet of 900 million passenger cars. In his presentation, Lindeman confirmed that the “time to replace conventional cars with clean cars” is 14 years, or 20 allowing for “expected fleet growth.” Therefore, he says, OEMs must be prepared to provide the majority of their car fleet based on new or clean technology from 2030 onwards. Bearing in mind the average car model lifecycle is six years, this means that the second-generation models from now should be “clean cars.” Suddenly, the issue of electric vehicles seems much more pressing.
As a consequence of achieving these stringent emissions targets, by 2028 electric vehicles will need to have 30% market share in the European Union. In Lindemann’s scenario, combustion engines would account for 28% share and hybrids 40%. In China, e-cars will outstrip combustion cars by 2027. At this rapid, and not entirely implausible, rate of change – before we think about it, the landscape could have transformed forever.
Still, it is certainly not a given. Achieving the “ramp up” scenario relies on several technical breakthroughs becoming reality. Success in three key areas will allow EVsto thrive and promote exponential growth: increasing driving ranges, extensive public load station infrastructure and the arrival of competitive car pricing for EVs.
Leading battery cell producers in Japan, South Korea and China will perhaps play the most significant role, by fast tracking developments in battery performance. Lindemann claims “if capacity can be increased by 250%, driving range will be at 500 km for compact e-cars.” An outcome that “should be achievable by 2020,” according to the battery industry.
Lindemann predicts a significant hit to lubricant demand. Most notably, substantial declines in first fill engine oil and gear oil usage, as well as considerable reductions in metalworking fluid. A trend from steel to lighter weight aluminium, thermoplastics and CFK car bodies will also lower demand for forming lubricants and corrosion preventives. Aftermarket demand for engine and gear oils will shrink slightly year-on-year as combustion car stock gradually becomes replaced technology.
It may not be total doom and gloom on the lubricant front. Lindemann advises that new requirements for lubricants will need to be met or evaluated, such as first fill grease demand, electric conductivity, the effect of electric fields, low friction/high speed requirements and reduced noise. New applications may also arise such as battery cooling or copper wire drawing.
He predicts automotive lubricant demand in Europe to drop 8-10% over the next decade through a combination of improved efficiency and e-mobility. The United States could experience a more substantial decline of up to 20%, whereby China is forecast to increase demand by 15-20% through growth in emerging markets. This translates to an overall reduction of 450-800 kilotonnes worldwide.