Lubricants Industry Disruptions – A potential opportunity of more than $20 Bn is opening up in the lubricants industry, owing to the shifting technology focus of customers towards electrification and stringent emission regulations.
According to MarketsandMarkets™ analysis,
- There is ~USD 8.6 Bn potential within electric vehicle fluids applications, more than half of which is being contributed by passenger vehicles.
- The electric fluids market is estimated to grow at a healthy CAGR of 30-32% in the coming 10 years, driven by the declining conventional passenger vehicle demand and stringent government regulations.
- Lubricants for renewable power generation application is one of the most talked-about trends.
- Adjacent markets hold a potential of over USD 34 Bn in lubricants
Unknowns and Adjacencies
Currently, businesses have low access to primary intelligence to clarify some unknowns and adjacencies in these opportunity areas –
- The demand for new lubricants made specifically for electric vehicles will be in more demand soon due to different lubricity requirements of electric vehicles in comparison to ICE vehicles. The year 2038 is expected to be the sales (number of units) meeting point of ICE vehicles (passenger cars) and electric vehicles as the sales for electric vehicles is expected to grow from this point.
- The lubricants market for conventional transportation category in the European countries, China, the US, and Canada is expected to be impacted the most due to stringent mandates in these geographies pertaining to the carbon emission and promotion of EVs by the government in these countries. Leading OEMs gradually exit from ICEs.
- Adoption rates of electric construction, mining, and agricultural equipment is more in Europe, Japan, and US.
- By 2035, farm mechanization rates will be 70-80% for Asia Pacific as currently it is below 30-40%.
Some of the growth problems encountered by lubricants companies are:
Customer prioritization and assessing unmet needs:
- What are the disruptions in our clients’ businesses? How can we support them for our own growth?
- Who are the most potential customers going forward? Should we prioritize electric vehicle on-highway/off-highway manufacturers, industrial segment customers, renewable/non-renewable power generation companies?
- What are the key unmet needs of customers? Who are the key stakeholders in different settings? Do vendor selection criteria differ by settings? Which new product features should be added to the existing products?
Where to play:
- Which industries and applications areas should we focus on? Should it be electric vehicles & other alternative energy, marine, aerospace, construction, mining, agricultural, industrial, power generation or any other?
- Which regions should we place our bets on? Should we continue with developed countries or do developing countries offer more growth opportunities?
Building a compelling Right-to-Win (RTW):
- For M&A, which are the right targets for us? Should we enter new markets directly or through partners?
- How can we differentiate from top players? What is their right-to-win vs ours?
Key uncertainties/perspectives which industry leaders seek answers to:
For lubricants companies:
- What lubricant product types will be relevant and redundant in the next 5 years?
- What will be the market potential for e-fluids for passenger cars, commercial vehicles, and off-highway vehicles in 2025 v/s 2030?
- First fill or service fill—which will be more relevant for e-fluids in the future?
- When tipping point of EVs arises and surpass ICEs? How can it impact lubricant manufacturers?
- What regulatory policies can help strategize and achieve volumetric scale-up?
- What are the recent developments in terms of premium grease, coolants, transmission fluids by EV fluids manufacturers and what are the customers’ biggest challenges and unmet needs?
For Companies in Adjacent markets:
- What are the regulations surrounding lubricant additives, grease, and bio-lubricants?
- What are the future opportunities for ‘where to play’- biodegradable lubricants, heat transfer fluids, dielectric coolants, synthetic lubricants, robotics lubricants, lithium-based grease?
- How are companies are diversified their product portfolio to key regions/countries?
- What will be the impact of regulations on bio-lubricants market?
Therefore, MarketsandMarkets™ research and analysis focuses on high growth and niche markets, which will become ~80% of the revenues of companies in the lubricants industry in the next 5-10 years.
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