Leading Polymer Producers and Compounders Gearing Up for Complexities Emerging Out of Material Trends, Vehicle Electrification, and Lightweighting

Posted by MarketsandMarkets on Jun 3, 2019, 4:17:04 PM
MarketsandMarkets

BASF SE (Germany) is planning to invest USD 10 billion in China to build a new plant for engineering plastics – a strategic move to further strengthen its leading position in the polymers market as the customers producing next-gen automotive, electronics, and electrical products turn to high-performance materials manufacturers for their specific needs. China is the leading market for electric vehicles (EVs), electronics, and electrical products as the country is a key supplier of components as well as end products to the world. The customers in these industries are turning to companies such as BASF to address industry trends such as vehicle electrification, lightweighting, electrical energy saving solutions, and miniaturization of electronic devices.

BASF, which is known for producing highly customized products for its customers, will be in a much stronger position in the Asia Pacific as the smart manufacturing site in Verbund, Zhanjiang starts functioning by 2022. BASF's capacity for engineering plastics and TPU compounding in the region will be 290,000 metric tons.

The supply of crude oil and its prices are fluctuating since 2014 lows. Geopolitics is playing a key role in this fluctuation. Environmental regulations are playing a key role in pollution and waste control. They direct fuel efficiency improvement in automotive, which has led to the transition from conventional fuels to natural gas, then to hybrid fuels and later to electric vehicles in the automotive industry. Europe and North America steering the regulatory changes. Low emission norms are at the center of these changes. New engine to no engine transition is visible now. Vehicles are getting more efficient, lightweight, smarter, and emitting less pollutants.

Lightweighting of ICE vehicles, and more importantly; next-gen cars is prompting the OEMs to shift from metals and other heavier materials to plastics as the companies worldwide are challenged to increase fuel efficiency. The increased use of plastics in cars is expected to reduce weight by 40-60% as against metals. High-performance polymers and elastomers are going to be used to integrate components and functions to reduce weight and provide strength at the same time to withstand extreme conditions in the car and design changes.

FIGURE 1     ENERGY AND ENVIRONMENTAL FACTORS DRIVING ELECTRIC VEHICLE DEVELOPMENT

polymer producersV1

Source: MarketsandMarkets™ Analysis

Impact on the Industry

“As the EV uptake is changing the dynamics of the material in the auto industry, material manufacturers need to strengthen their polymers portfolio as in the next 15-20 years, every third vehicle on the road will be electric-built with carbon fiber, polymer matrices, 3D additives, and so on - said Mr. Sarang Wadyalkar, (Sr. Manager Chemicals & Materials at MarketsandMarkets™)

Global automakers are planning to invest USD 300 billion to develop electrified vehicles and procure batteries over the next 5 to 10 years. This is a huge opportunity for the existing as well as new participants in the automotive ecosystem. There will be new kinds of participants in the ecosystem such as suppliers of battery separators, battery pack structures, battery pack cells, electric motors, thermal management systems, film capacitors, connectors, and cable jacketing.

The central element of EVs, which distinguishes them from conventional vehicles is the electric drive train. Materials designed specifically for automotive traction applications are most likely to be polyimide films, wire enamels and resins and varnishes will replace the prevailing ones.

The tire manufacturers will also be impacted by this change as the instant torque of electric vehicles can be hard on tires; traditional tires can wear out up to 30% faster on electric vehicles. Superior rubber and redesigned tires will be required to tame this challenge.

Developing IoT-enabled features and expanding into new markets keeping in mind the nature of local markets are among other challenges faced by auto OEMs today.

Recent Trends in Electric Vehicle Polymers Market:

The automotive industry has arrived at a point where almost all conventional technologies are on the verge of critical transition. These developments have forced automotive manufacturers to put lightweighting, electrification, and connected cars at the top of the priority list.

The engine run drivetrain of a car is being replaced with long-lasting electric battery (currently Li-ion) run the motor. The challenge for electric vehicles is the range extension or mileage per charge. This has put the EV manufacturers in a dilemma - to increase the range extension with an enhanced battery capacity or to limit the battery capacity and keep the weight in control. If the battery capacity is increased, it adds up to the total weight, which, in turn, limits the increase in range. To overcome these challenges, companies are looking for alternative materials that not only reduce the weight, but also help make more efficient batteries. A lot of companies are also in the development phase of newer battery technologies such as membrane cells and solid-state batteries that are expected to provide better battery performance, energy density, capacity, durability which in turn will lead to better battery materials. The emergence of solid-state batteries is going to be a big disruption. Many auto OEMs are backing solid-state batteries for next-gen electric cars in the “post-Li-ion era.” The electrolyte used in these solid-state batteries is likely to be made of either ceramics, glass, or polymers that will impact the durability and ease of manufacturing.

The polymers, composites, and other compatible materials play an essential role in this transition, and that is why the companies are working on the multi-material approach for lightweighting and metal replacement.

The engineering polymers & thermoplastics such as ABS, polyamide, polycarbonate, polyphenylene sulfide, and others are at the forefront of these developments and are expected to tap a significant chunk of this opportunity. MarketsandMarkets estimates that the opportunity for polymers in the electric cars stands close to USD 3 billion in 2019 and is expected to grow exponentially at a CAGR of 67% in the next five years. The leading polymer producers such as BASF SE, Celanese, Covestro, DowDuPont, Evonik, LANXESS, Solvay, LG Chem, and SABIC are chasing this huge opportunity.

Conclusion:

The resins & polymers are the materials which are expected to capture a large chunk of this opportunity in the EVs market. While the large manufacturers can deal with long runs of polymer production, the compounders will have to deal with the complexities related to additives and colors for components as the lot sizes narrow down. The same material and components made from these materials will be in demand, irrespective of whether the customers are in China or Europe, or South America with consistency in quality, pricing, and supply chain. As the resin manufacturers and compounders are forced to deal with this new dynamic, there have been multiple M&As, partnerships, and collaborations within the industry encompassing companies producing raw materials, compounders or component makers, and in some cases, auto OEMs as well.

All these participants are joining hands with new participants in the ecosystem because of the e-mobility trends. To name a few such developments: LyondellBasell Industries acquired Schulman, Celanese bought Omni Plastics last year, and India’s Next Polymers made five compounding acquisitions since 2014. Range extension and thermal management is a big challenge for EVs. Therefore, the battery industry has also witnessed noticeable developments recently where Rolls-Royce is investing in polymers to produce supercharged batteries, Nano One is developing Novel Coating Technique for a longer lasting battery, and Total SA bought a stake in the US battery developer, Ionic Materials.

Currently, battery costs over 40% of the cost of the entire electric vehicle. It could take a decade or so for EVs to drop to the price of a gasoline car. It is a crucial factor that will decide the total cost of ownership (TCO) for customers. Therefore, the pace of battery development will rule the investments of players in the EV battery business.  It will be interesting to see the incremental revenue opportunity for new battery producers in different adoption scenarios. The success of EVs largely depends on batteries and batteries charging. The EV service business depends on charging infrastructure in the local markets. The leading economies worldwide, have set aggressive targets to roll out EVs on roads. Many of them have already declared incentives or subsidies for consumers on EV purchase, which range from 10-20% of the total vehicle cost. The pace of development of charging infrastructure will be decided by key factors such as asset availability & quality, self-sufficiency of sustainable energy resources such as solar power or natural gas, and effective implementation of infrastructure plans. These developments are forcing analysts to constantly update the forecast of EV sales, EV components such as batteries, charging solutions, and related materials consumption, globally.

Topics: Chemicals, polymers market

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