EV fluids market data

EV Fluids Will Spark Battery Electric Vehicle Sales


Sharbel Luzuriaga
Project Manager, Energy
February 2020

EV fluids market dataAdvanced electric vehicle fluids are set to help overcome the key barriers to the wide adoption of full-battery electric vehicles. Sharbel Luzuriaga, Project Manager at Kline, reveals findings of the latest electric vehicle fluids market research and explains how these high-value, specialized fluids could play a crucial role in accelerating BEV adoption.

Tightening CO2 emissions limits and consumer pressure for more sustainable and more fuel-efficient motoring are driving passenger car OEMs to invest in the use of energy from sources other than petroleum.  While the uptake of hybrids in the form of a combination of the internal combustion engine (ICE) and battery technology has been strong, the sales of pure battery electric vehicles (BEV) remain low.  In 2019, our estimates suggest that only a small percentage of new passenger car sales were pure BEV powertrains. China is currently the largest electric vehicle market. In 2018, approximately 1 million electric passenger vehicles (EV) were sold, of which BEVs account for about 75% of the total, while PHEVs account for the balance.

Forecasts on when to expect wider adoption vary widely, but most industry watchers agree that the ICE will dominate the market for the next 30 years and beyond.  Kline analysis, based on the most-likely scenarios, indicates that even in the major markets of Japan, China, and the United States, ICEs are still expected to account for more than 60% of the vehicle population in 2040.  This will be reflected in the lubricants market, where demand for conventional ICE engine oils and transmission fluids will represent most sales by volume.

So what’s preventing the mass-scale consumer acceptance of battery-powered cars? Right now,  there are three key issues: relatively high vehicle cost, long charging time, and limited vehicle range. All of these barriers need to be overcome and, in our view, EV fluids will be a major part of the solution.

Although conventional ICE lubricants are currently used for most electric vehicles, there will soon come a point when they will struggle to meet the performance requirements of EV technologies.  It is unlikely that they will be able to deliver the enhanced cooling and electrical properties that EVs of the future will require in addition to traditional lubrication. Those specialist EV fluid manufacturers, which can help remove the three key barriers currently deterring BEV uptake, will make significant gains in this growing market.

A new dimension of challenging technical requirements for electric vehicles will allow leading lubricant developers to showcase cutting-edge technology.

Removing the barriers to EV

1) Reducing cost

The higher price tag of BEVs is probably still the most significant deterrent, with even the more entry-level Tesla 3 starting at US $50,000. Currently, the higher purchase price is being offset in some regions by government incentives and subsidies.  But where these are minimal—or as existing schemes end—OEMs need to find ways to bring the price tag closer to that of conventional vehicles to attract customers.

EV fluids can help to prolong battery life and contribute to reduced battery thermal degradation, which in turn extends the service life of the vehicle.  The thermal management system in electric vehicles, particularly BEVs, plays a vital role in maintaining a balance between performance and thermal degradation of the batteries in the vehicle and can help extend their lifespan.

Electric vehicles typically use lithium-ion battery packs which have high power-to-weight energy density, long lifespan, and low self-discharge rate. The power output of these batteries is highly dependent on the effectiveness of the cooling system used for these batteries. Batteries generate heat when they discharge and can only maintain optimum performance within a certain temperature range: typically 25°C to 40°C.

While EV fluids cannot directly reduce the cost of the battery by extending its operational life—and hence the life of the vehicle—they can help to reduce total cost of ownership.

2) Faster charging

An electric car can take several hours to charge from empty to full using a home charging point.  This time to charge can be cut to under one hour if rapid chargers are used. However, the availability of rapid charging points is currently limited, which means unplanned holdups can leave BEV owners wondering if they will be able to complete their journey.

Because faster charging results in more heat being generated, it is necessary for the entire system—from the battery pack, power electronics and charging system—to be actively cooled.   Advanced thermal management systems, where EV-customized coolants and even transmission fluids, could be used to help remove heat more efficiently, enabling faster charging systems and reducing charging times significantly.

3) Extended driving range

One of the barriers to electric car adoption is their limited range between charges and the current relatively low availability of rapid and fast-charging stations.  The average range of electric cars is around 180 miles, which is sufficient to account for most peoples’ daily use.  But the fear of running out of power is an issue OEMs want to address—some, such as Tesla, Jaguar and Mercedes, are adding long-range models with claims of up to 375 miles, but they tend to come with a hefty price tag.

Greases, transmission fluids, coolants, and engine oils (in the case of plugins) can help reduce the friction between moving parts, allowing cars to travel further per charge; this makes the lack of infrastructure less of a concern.

Specialized fluids for electric vehicles must deliver excellent wear protection, heat absorption, materials compatibility, and dielectric properties.

The future of the EV market is inexorably linked to the successful development of advanced EV fluids. Kline estimates that by 2040, in the three markets studied (China, Japan and the United States), the BEV population will reach almost 240 million, more than 80% of which will be in China.  This growth will create a very attractive market for factory-fill EV fluids.  While in volumetric terms, China has the potential to be the largest market for EV fluids—particularly coolants—players in this market are currently inclined to use mainstream fluids to service EVs.  However, in other markets, such as Japan, the United States, and Europe, there will be demand for fluids that can deliver technical advantages.  This will result in the growth of higher-value niche markets for customized EV transmission fluids and greases in these regions.

In our view, the real tipping point for electric vehicles could come as early as 2030.

As time progresses and electric vehicles come out of warranty, the service fill markets for e-transmission fluids and coolants will also grow. This could provide significant opportunities for OEM-franchised workshops, as advanced sensor technology will prompt the driver to return to the OEM for fluid replacement. Independent workshops will need to work hard to capture a share of this market.

By addressing the three customer concerns that prevent a mass-scale adoption of battery electric vehicles, advanced lubricants and coolants will play a major role in paving the way to BEV penetration. In the short term, this will be a factory-fill market, dominated by the major oil companies that have sufficient R&D resources to develop the technologically advanced lubricant solutions that are necessary. In the longer term, the service-fill EV fluid market will also expand, providing opportunities that workshops will need to grasp.

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