EV Trends and Lubricant Demand in Asia

Automotive Lubricants Market Dynamics and Electrification Impacts

The global automotive lubricants market is undergoing significant changes due to the shift from internal combustion engine (ICE) vehicles to electric vehicles (EVs). Automotive ICE lubricants currently account for approximately 56% of total lubricant demand. However, the demand for lubricants in battery electric vehicles (BEVs) is far lower, as BEVs primarily require thermal fluids, transmission fluids, and greases.

The transition to EVs is expected to lead to a rapid decline in lubricant demand in regions like the OECD and Europe, where ICE vehicles are being phased out. By 2030, the number of BEVs globally is projected to rise from 8 million in 2020 to 250 million. In contrast, Asia’s trajectory is different. While China has set a goal of 40% BEV penetration for new vehicle registrations by 2030, other Asian countries are lagging in their commitments to electrification. Only Singapore has announced plans to phase out ICE vehicles, while other countries are introducing incentives to promote EV adoption.

Asia Pacific’s Unique Challenges and Opportunities

The Asia Pacific region faces unique challenges in the electrification of mobility. The size of investments required for electricity generation and transmission infrastructure is a significant barrier. Additionally, the region’s diverse market dynamics mean that electrification will progress at different speeds for different vehicle classes. For example, motorbikes and public transport in major cities are expected to electrify faster than trucks and cross-country vehicles.

Despite these challenges, Asia presents significant opportunities for the automotive lubricants market. While global sales of ICE vehicles may remain flat due to BEV substitution in the West, Asia’s ICE vehicle growth from 2025 to 2035 could match China’s growth over the last decade. Countries like India, Indonesia, Vietnam, and the Philippines, with a combined population of 2 billion, are expected to reach a GDP tipping point of $5,000 per capita by 2030, driving exponential growth in car ownership.

Sustainability and Base Oil Impacts

The shift toward EVs and the global drive to reduce waste and recycle are also impacting the base oil market. Demand for base oil is expected to migrate from developed to developing countries, with re-refined base oils gaining traction due to environmental mandates and incentives. However, the base oil supply-demand balance will remain volatile as refinery throughputs are rationalized.

Sustainability is becoming a key focus for lubricant manufacturers. Some countries are introducing mandates for spent oil recovery and re-refining, creating both challenges and opportunities for the industry. Additionally, alternative engine technologies, such as hydrogen engines and fuel cells, are being explored, particularly for heavy-duty industries like mining, agriculture, and shipping, which are expected to transform more slowly than passenger vehicles.

Strategic Considerations for Lubricant Manufacturers

In this rapidly evolving landscape, lubricant manufacturers must navigate several strategic questions. How can they leverage integrated players like Aramco to optimize their base oil and lubricants businesses? How can they capitalize on the pivot of automotive lubricants demand to Asia? Should they establish R&D facilities in Asia to align with the region’s ongoing research into next-generation ICE engines?

Manufacturers must also consider how to align their blending facilities and capacity with target markets, whether through investment, import, or toll manufacturing. Embracing sustainability and turning net-zero challenges into business opportunities will be crucial. Finally, companies must optimize their regional footprint through strategic alliances, acquisitions, or independence.

Conclusion

China’s geopolitical and economic challenges are reshaping the global supply chain, creating opportunities for other Asian economies. The automotive lubricants market is at a crossroads, with electrification driving demand destruction in the West but presenting growth opportunities in Asia. As the region’s GDP grows and vehicle ownership increases, Asia will become a key battleground for lubricant manufacturers. Companies that can navigate the complexities of sustainability, regional dynamics, and technological shifts will be well-positioned to thrive in this new era.