Five major sectors that will bite the dust because of Electric Vehicles

Growing popularity of Electric vehicles would end up disrupting several industries. These 5 sectors would be the worst affected

Any new technology has its share of advantages and disadvantages. While electric vehicles are going to be good for the city air quality, they would end up disrupting some of the most labor-intensive sectors in the globe forcing heavy job losses.

Transportation accounts for approximately 23% of global energy-related greenhouse gas emissions, and road transport makes up 72% of that, according to the Intergovernmental Panel on Climate Change. In an effort to combat climate change, governments across the globe have implemented stringent emission norms and are actively promoting the electrification of the automotive industry.

This transition of the industry from Internal combustion engine cars to electric vehicles (EV) will affect several sectors. Following 5 sectors would be worst hit more than any others, if you are part of these sectors please rethink your career course

  1. Oil and Gas

  2. Lubricants

  3. Automotive After-sales service

  4. Foundries: Casting and Forging

  5. Exhaust system

1. Oil and Gas ⛽ 🏭

Oil and gas sector is one of the biggest sectors in the world. The market size of global Oil and Gas is around $3 trillion and contributes to around 3.8% of the global GDP.

Every day close to 85million barrels is produced out of which 47% are being used in road transportation. Countries that dominate the sector are: Saudi Arabia, the USA, and Russia

The oil exploration and production sector employs close to 4 million people across 350,000 business entities. An increasing population of electric vehicles would destabilize this sector forever. Plus increasing focus on the use of renewable energy in charging infrastructure means a net reduction in demand for the oil sector.

The value erosion would affect the complete value chain of the oil and gas industry, starting from exploration, refining to retail.

2. Lubricants 🛢️

The lubricants industry is one of the most profitable industries in the world. Among them, Road transport lubes are the highest margin earners. The global market size of the lubricant business is estimated to be around $130bn. Out of which 40% of the demand comes from road transport, thanks to ICE engine with 115 moving parts.

EVs with only 3 moving parts require almost none or minimal lubrication means a huge impact on the demand for Lubricants as the world is warming up to electric vehicles. Industry experts predict an estimated 35% decline in demand for lubricants

Reduced market size and margins will force many players out of the business and would significantly invest future investment and shareholder interest.

3. Automotive after-sales service 🚗🛠️

Automotive after-sales service is the driving force for the sustenance of the Dealer / Distributor network. Sales and other operations don't yield much profit because of huge competition and discounting. After-sales service is like a monopoly, once a customer buys a from a specific OEM he has to service it only in their network. 40% of dealer's gross profits come from service and maintenance. With the rise of EVs, the dealer fraternity is expected to suffer a 35% decline in the maintenance load in the next 5 years.

Oil (24%), Brakes (5%), and Tyres are the largest consumables by value in a maintenance load. With the reduced number of moving parts in EV, the requirement for oils and lubricants goes down significantly, and with the regenerative braking feature on EVs, the brake pad & tyre wear reduces. EV brake pads can last 3 times more than ICE engine cars.

4. Foundries - Casting and Forging 🏭

60% of Global forging output goes to Automotive. Out of which lions share is for Engines and Transmission. EVs would reduce the demand for forging by 60 to 70%. A huge consolidation in a manpower-intensive forging business would mean a huge blow to jobs

5. Exhaust System 🚕

EVs are also called "zero tailpipe vehicles", which means vehicles without an exhaust system. The Global Automotive exhaust system market is around $90bn industry, while the after-treatment market may flourish in the medium-term because of stringent emission norms for the ICE vehicles, but with increased penetration of EVs, exhaust system manufacturers will face the heat

Not all is gloom and doom, if these 5 sectors go down there are many other new sectors expected to emerge. Electric vehicles would open up multiple opportunities to soak up the global workforce. In our next article, we are going to look at the sectors that would benefit from EVs & the new sector expected to emerge because of Electric vehicles.

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Team "EV Quotient"

(EV Quotient is a platform to discuss and learn about electric vehicles. It’s an initiative by a team of experienced Automotive professionals with Global Exposure)

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