With the electrification of commercial fleets gathering increasing momentum, driven by market pull, sustainability initiatives, and regulatory support — and the same thing true for other transformative forces such as telematics and digitalization — the HDMO (heavy-duty motor oil) industry is in transition. Although these and other advancements have the potential to substantially reduce the consumption of HDMO, we expect to see a host of new market opportunities arise.
Says David Tsui, Project Manager in Kline’s Energy practice, “There is opportunity to work with vehicle and engine OEMs to codevelop greener solutions, as the combustion engine will need to keep the world moving until full electrification is ready.”
Here are some of the trends we are seeing, both now and on the horizon:
1. Accelerated Penetration of Lower-Viscosity Grades
Disruptive technologies are expected to accelerate the penetration of lower-viscosity HDMO grades in all regions, at varying paces. Growth in hybrid electric vehicles (HEVs) and plug-in hybrid electric vehicles (PHEVs) will drive increased demand for low-viscosity HDMO, as these engine oils help improve fuel economy. 0W and 5W viscosity grades are typically selected as factory-fill and service-fill by HEV/PHEV original equipment manufacturers (OEMs). This will drive demand for synthetics as well as more robust additive packages to support even longer drain intervals.
2. Big Data and Autonomy to Significantly Disrupt the Market
New off-highway farm equipment is expected to increasingly shift to autonomous drive. In 2021, John Deere agreed to purchase Bear Flag Robotics, which develops autonomous driving technology for tractors. In 2020, Kubota, a Japanese machinery maker, partnered with U.S. chipmaker Nvidia to develop autonomous farm tractors. These tractors will be equipped with Nvidia processing units and artificial intelligence, in addition to cameras, to instantly interpret and respond to collected data, including analyzing weather data and crop conditions. In addition, Case IH, Monarch Tractor, Autonomous Tractor Corporation, Fendt, and Precision Makers are showing up on radar screens with respect to autonomous tractors.
Autonomous Class 8 trucks are being tested in the U.S. At the end of December, TuSimple completed the first fully autonomous semi-truck run on open public roads without a human in the vehicle and without human intervention. The truck traveled on surface streets and highways at night, with the company’s Autonomous Driving System (ADS) navigating surface streets, traffic signals, on- and off-ramps, emergency lane vehicles, and highway lane changes in open traffic while naturally interacting with other motorists.
This shift to autonomy will change how these tractors and trucks get serviced. Technically, these AI vehicles will be capable of telling the OEM they need an oil change and even drive themselves in for servicing. With the growth in telematics, OEMs are looking to drive more of their trucks back to their own authorized service centers, as these dealers will be notified of the parts required to service the vehicle and will then offer the fastest turnaround for the owners so their investment can continue earning them profits.
3. Diesel and Alternative-Fuel Vehicles to Make a Strong Showing
The heavy commercial vehicle segment will continue to be dominated by diesel engines. Additionally, an increase is expected in the number of alternative-fuel vehicles such as battery electric vehicles (BEVs) and vehicles powered by compressed natural gas (CNG) and liquefied natural gas (LNG). “These vehicles,” says Tsui, “are going to necessitate the use of engine oils with low-ash formulations and a much stronger antioxidant combination to provide protection at the high temperatures experienced in modern natural gas engines.”
Some OEMs, like Cummins, have worked on new engine oil specifications for these purposes. Cummins’ newly introduced CES 20092 requires state-of-the-art additive systems, notably antioxidants enhancing high-temperature operating conditions, characteristic of modern mobile natural gas engine oils. BEVs, however, are expected to only require a gear oil or automatic transmission fluid (ATF), along with coolants and brake fluids.
4. These Segments to Experience EV Growth
EV growth is expected to occur in segments that are directly under government control, as well as in segments that are highly regulated. Government fleets of vehicles, such as public transport buses, are already seeing large shifts in select test cities. This transition will rapidly pick up momentum as charging networks are expanded and battery technology improves. On-highway fleets are also expected to witness some EV penetration as governments set increasing mandates for zero-emission vehicles. Off-highway tends to lag by several years due to the long service life of many off-highway vehicles.
“Until BEVs can take over,” says Tsui, “HDMO will continue to be necessary to support a more fuel-efficient and modern fleet and will need to be optimized for alternative fuels and fuel-saving and emissions-reducing technology fitted to these new trucks.” Tsui believes that this will likely fuel diversification of HDMO specifications and drive more customers back to OEM service centers.
For more information, check out The HDMO Market in 2040: A Long-Term Outlook, which summarizes the results of Kline & Company’s analysis of the long-term effects of electrification of the commercial vehicle segment on the global heavy duty motor oil (HDMO) demand and deep dives into seven of the key country markets. The report is available now.