ILMA Compoundings - October 2020 - 29

"The e-mobility movement is well
underway in North America and
other regions of the world, with
most automotive companies
investing significant research
dollars into this area."

Source: K & E Petroleum Consulting

Lubricant Demand Decline Projection (vs. 2019), %
U.S.
Consumer -20 to -25
(PCMO)
Commercial -5 to -10
(HDEO)
Industrial -10 to -15
Overall -14.3

Canada

Mexico

North
America

>-25

-15 to -20

-20 to -25

-15 to -20

-5 to -10

-5 to -10

-15 to -20

-10 to -15

-10 to -15

-18.4

-12.2

-14.4

Figure 2. New Vehicle Production Forecast by Vehicle
Sources: K & E Petroleum Consulting, estimates from Boston Consulting Group

100
80

Share %

A new "demand norm" is expected once North America
exits from the COVID-19 grasp. Current estimates are that
North American demand will decline from approximately
8.8 ktpa to 7.8 ktpa, representing a baseline adjustment of
about 11%. Canada will be the hardest hit, with a demand
adjustment from approximately 0.64 ktpa to 0.59 ktpa,
while Mexico will fare better, with a minor demand decrease
from approximately 0.72 ktpa to 0.70 ktpa. The U.S. will
track North American projections, with a demand base
declining from approximately 7.42 ktpa to 6.53 ktpa. Once
demand has stabilized, the U.S. will remain the largest market in North America at 83.5%, down slightly from 84.5%
prior to COVID-19. Mexico and Canada are projected to
represent 9% and 7.5% of regional demand, respectively,
post-COVID-19.
One of the areas where demand will be affected will be
with the consumer, or passenger car motor oil (PCMO),
sector. Demand is expected to decline for a number of
reasons, including the continued demand for fuel economy
and longer drain lubricants that will extend oil life while
reducing demand. At the same time, engine design will continue to advance in an effort to identify and quantify new
sources for fuel economy. U.S. standards, as implemented by
the Environmental Protection Agency, have challenged the
automotive industry to achieve a fleet corporate average fuel
economy of 51.3 mpg by 2025 for domestically manufactured vehicles, which represents a significant increase in the
standard of 27.5 mpg in 2010.
One of the areas where fuel economy can be achieved is
through the use of hybrids and/or electric-powered vehicles. The e-mobility movement is well underway in North
America and other regions of the world, with most automotive companies investing significant research dollars into
this area. Figure 2 provides an overview of the e-mobility
movement as related to new car production. According to
Boston Consulting Group, internal combustion engines
(ICE) will represent less than 45% of new car production
by 2030, with MHEV (mild hybrid electric vehicles) and
BEV (battery electric vehicles) representing the second- and
third-largest market segments.

Table 1. Projected Impact on 2020 Lubricant Demand
Due to COVID-19

60
40
20
0

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
ICE
Diesel
MHEV
HEV
PHEV
BEV

Consistent with the emergence of new engine designs,
lubricant design continues to evolve. The new ILSAC
GF-6 and API SP performance specifications were recently
commercialized, and lubricant marketers are rapidly
transitioning to the new quality. More recently, General
Motors (GM) has finalized its performance requirements for
the next generation of dexos1 quality. Testing for the new
dexos1 Generation 3 performance category began Sept. 1,
with first available use Sept. 1, 2021.
The new specification will include essentially all of the
engine tests that are presently included with the ILSAC
GF-6 specification. The only exception is the replacement of
the Sequence IIIH bench engine test with the GM oxidation
and deposit test. This test will have stricter limits than the
Sequence IIIH, as will GM requirements for the Sequence
VH sludge test.
Many of the dexos1 Generation 2 test methods will be
carried forward to the new performance category, including
the low-speed pre-ignition (LSPI) test and a test for turbocharger deposits. Both tests, however, have tighter limits

29



ILMA Compoundings - October 2020

Table of Contents for the Digital Edition of ILMA Compoundings - October 2020

ILMA Compoundings - October 2020 - Cover1
ILMA Compoundings - October 2020 - Cover2
ILMA Compoundings - October 2020 - 1
ILMA Compoundings - October 2020 - 2
ILMA Compoundings - October 2020 - 3
ILMA Compoundings - October 2020 - 4
ILMA Compoundings - October 2020 - 5
ILMA Compoundings - October 2020 - 6
ILMA Compoundings - October 2020 - 7
ILMA Compoundings - October 2020 - 8
ILMA Compoundings - October 2020 - 9
ILMA Compoundings - October 2020 - 10
ILMA Compoundings - October 2020 - 11
ILMA Compoundings - October 2020 - 12
ILMA Compoundings - October 2020 - 13
ILMA Compoundings - October 2020 - 14
ILMA Compoundings - October 2020 - 15
ILMA Compoundings - October 2020 - 16
ILMA Compoundings - October 2020 - 17
ILMA Compoundings - October 2020 - 18
ILMA Compoundings - October 2020 - 19
ILMA Compoundings - October 2020 - 20
ILMA Compoundings - October 2020 - 21
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ILMA Compoundings - October 2020 - 24
ILMA Compoundings - October 2020 - 25
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