I’ve been browsing a number of transport presentations from 2015 IPENZ Conference, which was held on 24 March. One, from Andrew Jackson from the Ministry of Transport has the following chart, as an example model of Electric Vehicle uptake.
I’ve previously done my own crude hybrid vehicle modelling, based largely on the uptake in Japan, and our future adoption of their fleet as ours. That resulted in the chart below, and estimated that new vehicle sales would hit 50% around 2025, and that the fleet itself would take a lot longer to transition.
However since then we have also seen the emergence of the Tesla Model S, which shows for me, and many others, that the superiority of the electric car is a foregone conclusion. While the Tesla is expensive, it’s also luxurious, quiet, extraordinarily quick, reliable, safe and has long range. Tesla and other manufacturers (like BMW with the i3 and i8 and an amazing ) are showing that as battery costs continue to decrease in cost and increase in performance the old internal combustion powered cars will become obsolete.
I would argue that the pace of change is going to be limited by the availability of batteries, which I also believe will be a highly competitive space, where giant capital investment will deliver temporary market dominance, similar to the computer memory game in the past. The first players to make are move are Tesla themselves, who along with Panasonic are building a so-called Gigafactory to produce batteries in Nevada. Those batteries will have a ready market in Tesla cars, homes (as power packs) and in other manufacturer’s electric vehicles. I anticipate this will be the first of many large battery factories, whether by Tesla or other enterprises.
Given enough gigafactories will we see a faster transition to electric vehicles? Will we see a chart like this?
I hope we will, but it won’t be for a while. Tesla sold just over 10,000 vehicles in the first quarter of 2015, while about 3 million cars and light trucks are sold each month in the USA. Tesla’s ambition is to sell 500,000 cars a year by 2020, which is still a tiny fraction of the USA market. However I consider the Model S as the Apple iPhone of the car market, with a clearly increasingly superior product, fast development pipeline and the ability to increasingly capture the best segments and highest margins while the rest of the manufacturers scramble to deliver minimum economic volume and at low margins.
There is a very long way to go, and although we are very close to complete superiority of electric cars over internal combustion, let’s not forget how slow moving the car industry really is.