Electric Vehicle Fluids Market – Global Outlook & Forecast 2022-2027

MARKET INSIGHTS

The electric vehicle (EV) fluids market is expected to grow at a CAGR of 25.09% from 2022 to 2027 and is expected to reach $8.04 billion by 2027 from $2.61 billion in 2022. Electric Vehicle (EV) Fluids are primarily lubricants designed for electric vehicles formulated from high-quality synthetic base oil, i.e., group IV and group V. Engine oil is not a preferred option for Evs for lubricating the components because EVs run on electric motors and EV batteries which have more significant technical requirements than internal combustion engines (ICE) vehicles. Therefore, electric vehicle fluid is specifically formulated to meet EVs' broad range of performance requirements. Electric vehicle fluids perform various functions, including lubricating the transmission system, stabilizing the battery's temperature, providing a cooling effect to the electric motors and gears, and reducing friction. In addition, it also provides insulation to electric current while enhancing the battery life and other components of electric vehicles. However, EVs require lubricants for key electrical components such as gear oils for differentials, coolants for the car battery, chassis, brake fluids, gear reducer, wheels, and grease for other components of the EV.

The major factor driving the demand for electric vehicle fluids is the increasing demand for Evs due to the rising fuel cost, rising pollution levels, and declining battery prices. In addition, governments across the countries are implementing various policies to control the harmful emission from vehicles. Hence, OEM prefers producing electric vehicles over internal combustion vehicles to meet that regulation. For instance, France and the UK announced that they will ban all gasoline and diesel vehicles by 2040, whereas Madrid, Athens, and Mexico City have banned all diesel cars and vans by 2025. Moreover, Original Equipment Manufacturers (OEMs) are divesting from Internal Combustion Engine (ICE) ventures. For instance, in 2019, Volvo phased out its manufacturing of diesel engines to focus on electric and hybridized petrol engines, according to fleet world data.

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RECENT DEVELOPMENTS IN THE GLOBAL EV FLUID MARKET:

• In November 2021, Petronas launched an advanced range of electric vehicle (EV) fluids named second-generation PETRONAS iona. "Second-generation" PETRONAS Iona is designed to meet electric vehicles' several issues, including thermal management, friction control, and enhanced efficiency.
• In June 2021, GS Caltex announced the introduction of the "Kixx EV" lubricant for electric vehicles. It offers a range of products that includes E-Thermal fluid and E-Transmission fluid designed to enhance electric vehicles' efficiency and protect essential components.
• In June 2021, Stellantis and Total Energies entered into a partnership in which Stellantis, the world's leading automaker and mobility provider, will be using a charging station network operated by TotalEnergies in Paris for its car-sharing activity.
• In August 2020, the Fuchs group launched the BluEV product line for electric vehicles. The product categories include FUCHS BluEV MotorGrease-grease products for electric motors, FUCHS BluEV DriveFluid-transmission oils in electric and hybrid drives, and FUCHS BluEV ThermalFluid-dielectric heat transfer media for automotive applications.
• In January 2020, Total Energies announced a collaboration with French automotive manufacturer PSA to create a joint venture, ACC. This joint venture is formed to develop and manufacture high-performance batteries for electric vehicles from 2023.

EV FLUIDS MARKET TRENDS & DRIVERS

Growth in Demand for Powertrain Electrification

The rising demand for electric powertrains, which include battery, hybrid, and plug-in hybrid electric vehicles, is due to an increasing trend of sustainability in the energy and transportation sectors. Rising government measures to control carbon dioxide and other pollutants such as nitrogen oxide, unburned hydrocarbons, and other particulates are also driving the adoption of Evs. The electric vehicle fluids meet the ongoing efforts to minimize the greenhouse gas trend of reduced CO2 emissions and improve fuel economy. Electric powertrains are environment-friendly, governments across the countries are implementing several laws and offering incentives to promote the sale of the electric powertrain. For instance, in 2020, the governor of California issued an executive order demanding that by 2035 all-new cars and passenger light trucks should be zero-emission vehicles.

Increasing government initiatives to promote the sales of EV

With the electric vehicle being environment-friendly, governments across the countries are adopting several initiatives in terms of tax rebates, bonuses, and subsidies to boost EV sales. For instance, governments worldwide spent USD 14 billion on direct purchase incentives and tax deductions for electric cars in 2020. Electric vehicles run on batteries and electric motors. It does not emit any hydrocarbon particulate and carbon dioxide, thus resulting in significant reductions in greenhouse gas emissions and air pollution. Thus, with the government's continuous support, the demand for electric vehicles rises, leading to substantial demand for electric vehicle fluid.

Following are some of the initiatives adopted by the government to boost EV sales:

1. By the end of 2020, Japan will double its subsidies for registering zero-emission passenger vehicles.
2. Recently, Canada announced an ambitious plan to reach zero-emission vehicles by 2050. The Canadian government is offering subsidies for zero-emission passenger vehicles to the owners.
3. Similarly, New York and California also offer incentives and tax rebates to promote EV deployment.
4. The Mexican government offers incentives such as exemption from the federal new car tax ISAN to electric-hybrid and hydrogen vehicle owners.

SEGMENTATION ANALYSIS

The battery EV fluid market is expected to dominate the industry during the forecast period and witness higher growth. This is primarily due to the rising demand for electric vehicles, which runs on battery. The government's supportive measure to reduce carbon emissions worldwide drives the production of electric vehicles. Henceforth, electric vehicle fluid is used instead of engine oil or other lubricants for the smooth functioning of battery vehicles and to ensure their long life.

A passenger vehicle is the largest segment and is projected to witness growth during the forecast period owing to the rising demand for electric passenger vehicles globally driven by the supportive government's measures on electrification of transport fleets and rising demand for zero-emission vehicles in the e-commerce and logistics sector for the eco-friendly vehicle. For instance, in the US, the EPA and NHTSA proposed implementing the Safer Affordable Fuel-Efficient (SAFE) vehicles rule to be effective from 2021 to 2026. The rule is supposed to set standards for corporate average fuel economy and greenhouse gas emissions for passenger and commercial vehicles.

OEMs are the largest distribution channels and will witness significant growth during the forecast period because OEMs, such as EV battery manufacturers, consume a significant chunk of fluid. Electric vehicle fluid manufacturers are partnering with OEMs to boost sales. For instance, Castrol India is working closely with two prominent four-wheeler OEMs to supply electric vehicle fluid for their electric vehicles. Hence, the above factors will likely drive the OEM sales of electric vehicle fluid.

The heat transfer fluid market is projected to witness the fastest growth during the forecast period due to its key use in BEV and PHEV for cooling the EV battery, maintaining optimal operating temperature range, and also enabling proper charging and discharging of electric vehicles. In addition, it is used to extend the battery life and protect the EV vehicle components.

APAC was the third-largest and fastest-growing electric vehicle fluid market. The region was led by China, where electric vehicle fluid products are witnessing a surge in demand from the high production of electric vehicles. In addition, supportive government policies to curb emissions and the manufacturing infrastructure for producing electric vehicle batteries also promote the growth of electric vehicle products. Countries such as India, South Korea, and Japan also support market growth due to the country's rising young and middle-class population and purchasing power. For instance, India's middle-class population is expected to reach around 800 million people, with a spending of 80% by 2030, per a World data report. Thus, higher disposable incomes mean an increased demand for vehicles, fueling the demand for electric vehicle fluid products.

COMPETITIVE ANALYSIS

The competitive scenario in the global electric vehicle fluids market is currently intensifying. The rapidly changing technological environment and sustainability scenario can adversely affect vendors as customers expect continual innovations and upgrades. The market is consolidated with a few players providing electric vehicle products with high functionality.

The major companies operating in the electric vehicle fluids market are Shell (US), Fuchs (Germany), ExxonMobil (US), Repsol (Spain), 3M (US), Valvoline Inc. (US), TotalEnergies (France), GS Caltex (South Korea), Petronas.
(Malaysia), and Phillips 66 (US), among others. These companies continually compete among themselves for the leading position in the market, with ongoing competition from local vendors.

The electric vehicle fluids market is provided for the forecast years 2022 to 2027 and the base year 2021. The market is segmented per Product Type, Vehicle Type, Distribution Channel, and Propulsion Type. The key developments in the past three years will be mentioned, and strategies undertaken by the players have also been mentioned. The report provides a holistic approach to the electric vehicle fluid industry, enabling customers to analyze the market efficiently.