Home / Blog / ICE replacement is not ’round the corner, yet

ICE replacement is not ’round the corner, yet

Estimated trends in gross margin for lubricant used in passengers vehicles. In black the one deriving from ICE, in blu from EV. Image credit: McKinsey & Company

There is no question that we are shifting towards electric vehicles, EV, but how long time will it take for these EV vehicles to change the landscape, e.g. to replace the majority of ICE, Internal Combustion Engines, vehicles. It turns out the swap is nowhere around the corner.

There are today some 2 billion ICE vehicles around, and just 30 million EV. By 2035 the number of EV is expected to reach 400 million, that is a 20% of the total. Big number but still a fraction of what is out there.

I stumbled onto the graphic created by McKinsey&Company to present the expected business of fluids (engine oil, coolers, gears oil) in terms of gross margin (hence in terms of volume). As you can see from the graphic the gross margin is -overwhelmingly- expected to derive from ICE (the black bars) and even the foreseen 20% of EV by 2035 are not going to change the situation. The reason is that EV requires very little fluid (nothing for the engine, nothing for the gears, since and EV has non gear -basically the power train is driven directly by the electric motor). In the long term the lubricant business is going to disappear but that will be in the very very long term.

I found this diagram interesting because it points out the inertia -at worldwide level- in the replacement of current ICE with EV. In spite of all the good intention to decrease the CO2 impact on the planet deriving from ICE the swap is still in the distant future.

About Roberto Saracco

Roberto Saracco fell in love with technology and its implications long time ago. His background is in math and computer science. Until April 2017 he led the EIT Digital Italian Node and then was head of the Industrial Doctoral School of EIT Digital up to September 2018. Previously, up to December 2011 he was the Director of the Telecom Italia Future Centre in Venice, looking at the interplay of technology evolution, economics and society. At the turn of the century he led a World Bank-Infodev project to stimulate entrepreneurship in Latin America. He is a senior member of IEEE where he leads the Industry Advisory Board within the Future Directions Committee and co-chairs the Digital Reality Initiative. He teaches a Master course on Technology Forecasting and Market impact at the University of Trento. He has published over 100 papers in journals and magazines and 14 books.