EV Sales Forecasts Often Miss Disruptive Nature Of EVs & How Disruptive Technology Grows

Originally published on EV Obsession.

Electric car forecasts are a dime a dozen (actually, they cost a lot more than that, but they’re probably worth a dime a dozen). They often don’t account for the exponential growth that comes from disruptive technology. Some studies base growth on broad surveys of potential buyers… despite the fact that most people know very little (if anything) about electric cars, so can’t really answer such surveys in a useful way. They don’t yet realize the benefits of electric cars, and why they are more likely than not to go electric within the coming decade (my forecast for the majority of the population). Other studies just project linear growth based on historical data. But some do get the picture and reproduce it well for others to see.

A recent UK study (h/t Herman Trabish) stimulated this article, as it included a couple of key charts that show how I think adoption of electric cars is likely to occur. The projected adoption trend is based on different types of buyers jumping in at different phases of market growth. Their propensity to adopt this new technology is built on previous research examining the historical adoption trend of other technologies as well as particular issues unique to electric cars. Have a look at the charts that caught my eye:

As you can see, the charts don’t put a timeframe on things, but adoption is expected to really speed up at about 15% of the market. (Electric car market share in most countries is still under 1%, while it is way up at ~26% in Norway — approximately a year after it was at 15% there, incidentally.)

It’s hard to argue with the categorization and generic projection for how adoption will occur. The characteristics for early “pioneers” match early EV adopters very well, and seem logical.

The next phase (in many countries) will see “optimists” joining in, buyers with a lot in common with “pioneers” but also some differences that turn them into a separate group.

The pragmatists kick in once they see success for early adopters and see risk removed a bit. Then you slowly (er… quickly) go up through the ranks of people less capable or less eager to jump in early and buy a new technology.

It all makes a lot of sense in my eyes, and generally matches earlier efforts to categorize, graph, and forecast the phases of adoption of a new technology, like this graph from 1962:

An important key here is that things seem to go slow up to about 15% adoption (and really slow up to about 1%), and then growth occurs at a much faster pace. You can think of how the adoption of cell phones, smartphones, computers, laptops, tablets, dishwashers, TVs, color TVs, flat-screen TVs, vacuums, and other technologies occurred… if you were around during the mass adoption of those new technologies and remember the transition, that is.

But this all skips over one key point: a new technology has to be better — much better, even — than the incumbent technology in order to follow this growth trend and take 100% of the market… or anything close to 100% of the market. And this is again a key point that market forecasters underacknowledge.

When it comes to personal transport, electric cars:

1. are much more convenient the majority of the time — you spend a few seconds plugging in and then you go enjoy your dinner, hang out with family, do some work, or do whatever else you have on your agenda;
2. offer a much nicer driving experience — providing instant torque that lets you accelerate off the line faster than any gasoline-powered car out there, while also offering a much quieter and smoother driving experience;
3. typically require much less maintenance, which means fewer trips to the mechanic;
4. is much cheaper to “fuel,” especially since they are much more efficient;
5. come with big environmental benefits, keeping the air cleaner for people who care about healthy lungs, hearts, etc;
6. come with big climate benefits, which any sane person should care a great deal about;
7. and reduce our country’s reliance on oil, which many people care about.

The only real downsides of electric cars at the moment (compared to gas- or diesel-powered cars) are that they have somewhat higher upfront prices than comparably sized and internally equipped competitors, and they generally need to charge more often and can’t charge up as quickly. Regarding the former point, this cost comparison disregards the unique benefits of electric cars and the fact that we’re really comparing bananas and oranges — both fruits, but quite different fruits. Regarding the latter point, this is likely a challenge just about 5% of the time. Even then, we can often eat, sightsee, work, or do other things while we charge. Additionally, plug-in hybrids and extended-range electric cars eliminate the issue entirely.

To get to mass adoption, I think the upfront costs will need to come down, but I think the pioneers, optimists, and pragmatists will get us to that point naturally. Similarly, I think longer-range electric cars and many more fast charging options will be on the market by the time the masses will become aware enough of EVs to become potential buyers. And, again, plug-in hybrid electric cars and extended-range electric cars will fill the gap for those edge cases and edge customers who need some form of liquid fuel backup. However, at that point, I wonder how abundant gas stations will actually be….

Trying to put all of this into a projection of sorts for the United States, if you consider that we’ve gotten to ~1% of the new car market in ~5 years, we could perhaps hope to get to ~3% in another ~5 years, and then to ~15% in ~5 more years. Jumping from there to ~50% in another 5 years, approximately half of the new-car market would be electric cars by 2030.

Looking at world-leading Norway, I think we could see electric cars hit 50% of the new car market within 2 years.

This is all speculation, as all forecasts are. But I think it is built on a better premise than most electric car sales forecasts. Feel free to add to it and improve it in the comments below.