Hexpol carves its 'age of opportunity' out of ICE age

AKRON—Who knew the human race would find itself exiting the ICE age for a second time?

As the world wades deeper into the waters of EV automobile technologies and farther away from the land of internal combustion engines, custom compounders are being forced to innovate.

With between 60 to 70 percent of Hexpol Compounding Americas' customers in the OEM space, e-mobility trends in rubber products matter.

"Coming out of the pandemic, there was a tremendous amount of change and unforeseen circumstances," said Bruce Wynd, chief commercial officer for HCA, at the first day of the Rubber in Automotive Conference May 10. The conference is organized by Rubber News.

"All of it was nothing anyone could have ever predicted or thought would happen," he said.

As the compounding world peeks around the corner of this ICE age, it sees a new mobility that requires lightweighting and thermal management, noise and vibration dampening and innovative material design.

"We are coming out of concerns surrounding a recession, and in talking with customers and suppliers, we are looking at a soft landing," Wynd said. "Inflation appears to be slowing down and another interest rate hike is likely coming.

"But the economy should recover—it won't be as dire a situation as it seems ... and people will go out and buy cars."

The current average age of vehicles—which in the Americas is between 12 and 13 years old—should push the car buying trend to new heights in the coming years, Wynd said.

"People are going to buy cars as those older cars age," he said. "And rental car companies with their fleets are also coming back again."

For the next six months, inventory will be replenished. And the microchip supply appears to have stabilized, Wynd said.

"Shipping lanes have unclogged—different ports no longer have that dwell time where freighters are out of anchor," he said. "Parts now can come in to build vehicles. China has no more shutdowns. Inventory is at low numbers, and this will create demand. We expect higher sales to continue."

HCA is a 1,751-person segment that comprised about 55 percent of Hexpol Group's $2.2 billion in 2022 net sales.

"From our perspective, this is an age of opportunity," Wynd said.

With 15 million vehicles on track to be built this year in the U.S., about half will be light duty vehicles—the very type that most consumers operate.

In Norway, the California-sized country adjacent to where Hexpol Group is based, a litmus test was implemented. This pseudo-trial run was intended to demonstrate what might happen in the U.S. if a vast majority of vehicles sold were EVs.

About 80 percent of car sales last year in Norway were EVs, or EV hybrids. In California, about 14 percent of the vehicles registered are EVs.

"And this is a fairly significant portion in the world's fifth-largest economy (California) to have this percentage of EVs," Wynd said. "After that are Texas, Florida and N.Y.

"Midwest states don't have the urban connections, so they have been less likely to adopt EVs or hybrids."

In Norway, Tesla led the way in sales, followed by Volkswagen and then a Chinese auto maker.

"One thing we found is that the charging network is unreliable ... but the electric grid has not collapsed (in Norway)," Wynd said. "We found that most people charged overnight, not during peak hours."

The primary charging provider in Norway might sound familiar to U.S. citizens, as Circle K leads the way with infrastructure in Norway to provide the "pumps."

"And they are using that experience to figure out how to bring this infrastructure to the U.S.," Wynd said.

Currently there are between 2.5 million and 3 million EVs in the U.S. today, between one and two percent of the overall automobile capacity on domestic soil.

Hexpol experts predict that number to increase to 16 million by 2030, about 75 percent EV sales to 25 percent ICE sales.

This is significant, considering that transportation accounts for about one-quarter of the CO2 emissions on the planet (and road transportation represents about 75 percent of the overall transportation number).

"And the new custom compounders—the new entrants in the market—are going to have to look more at mobility," Wynd said. "Not the way an (ICE) engineer might think, but rather about temperature management and coolant hoses."

Other companies that are likely to find their way into the EV OEM sales chain include technology specialists in drive trains, transmission and power supply (battery) units.

"Just to offer some perspective on why this is important, it doesn't matter if it is government- or consumer-driven," Wynd said. "There will be a decarbonization across the world.

"Folks in Texas might use pickups to drive between farms, but they likely will go into town using an EV."

Still, seeing an increasing amount of EV cars on the road—whether in Norway, California or Cleveland—is a reflection of less CO2 in the air, Wynd said.

"As an industry we have some opportunities to see how rubber will be used on a vehicle," he said.

Jody Taylor, technical manager for Hexpol Compounding Americas, said there are numerous issues facing custom compounders in the EV world, including lightweighting and noise and vibration dampening applications.

"With weatherstripping, in dealing with the body of the vehicle, there will be an increased demand for sealing and noise cancellation," Taylor said. "This is a big issue facing the EV."

But lightweighting and noise reduction are inversely related, compounding the compounding issue.

And the NVH for suspension dampening is important as well, Taylor noted.

"We will see the load distribution increase for the air spring systems in EVs," he said.

And there are major opportunities for advancements in hose, tire, belt and wire and cable within EVs.

"Metal structural parts will be replaced by polymer materials to save weight," Taylor said. "And other metal parts are likely to switch to polymer materials due to their processability."

The power train alone for an automobile is expected to increase from 13 kilograms (for an ICE powertrain) to 30 kg for a BEV powertrain.

Drivers pushing the transition to EVs include the environment, first and foremost (less waste, renewable resources); followed by employees (cleaner air and water, safety); investors (transparency in corporate performance); and consumers (fuel efficiency, brand perception).

And some materials—like FKMs—may have more tenuous futures, at least in EVs.

"There is no longer going to be a need for handling fuels and other fluids in EVs," Taylor said. "Cooling may move away from flexible to rigid hoses, and there will be no more timing belts."

Wire and cable remains a "big upside in the transition to battery electric vehicles," Taylor said.

But the largest market will be in weatherstripping, the Hexpol experts said.

"This transition brings opportunities," Taylor said. "Certainly, there are instances of being nervous for the transition."

Outside of the engine, cabin noise from wind (no longer masked by the roar of the engine) is a major issue, he said.

"But as we said, noise reduction and weight reduction are opposing solutions," Taylor said. "This also brings in the need to focus on abrasion when it is a less durable product.

"But we are seeing success in our labs for these solutions."

Among the most important applications for newly formulated elastomers may be found in thermal management in and around the battery.

"Thermal management of the BEV is fundamental to performance," Taylor said.

EPDM is the main elastomer for flexible coolant hoses, but EVs may not have as many flexible hoses for cooling designs.

"These decisions will be dependent on the design engineers," Taylor said.

So, where does a custom mixing giant like Hexpol Compunding Americas put its resources now, an era of transition where the majority rules but the minority is gaining ground?

"It depends entirely on the application," Wynd said. "We would expect a much higher demand on products, with more weight on the vehicle because of higher demands."

With hose and seals, the technology is not necessarily defined yet.

"Heat management of the battery and motor ... we are spending on a lot of time with OEs on this," Taylor said. "Depending on the application, weatherstripping and dampening futures are bright; hose is up in the air; and seals will see less consumption on a vehicle."

And like any new technology requiring greater performance responsibility from its parts, EV components will have a higher price point.

"Yes, we expect to see higher cost compounds and higher cost components moving forward," Wynd said. "Parts will require more of the polymer and less of the filler, because the function will be higher and more will be demanded of them."