Electric Cars May Be About 50% On Their Way To Market Domination
This is a topic I’ve written about numerous times, but I just ran across some more numbers and studies that make me even more optimistic. When a new technology goes from no market share to market domination, it does not follow a linear growth trend. It follows an exponential growth curve — commonly, an S-curve. In other words, it may seem to be growing slowly at the beginning, but the dynamics of market growth and technology adoption are such that sales growth will then fly through the roof before a lot of people in competing industries know what’s happening.
The Law of Accelerating Returns, discovered by Ray Kurzweil, an American inventor and entrepreneur, shows a similar trend for technology development. It has been shown time and time again to nail the exponential improvement trend. Tam Hunt of Community Renewable Solutions summarizes how it fit the development of the Human Genome project:
This was a government-funded effort to decode the entire human genome in about fifteen years. Well, halfway through the project the effort was only at about 1 percent completion. Many observers wrote off the effort as a failure that couldn’t possibly reach its goal. Kurzweil, however, wrote at the time that the game was won because 1 percent was halfway to 100 percent in the terms that actually mattered: the rate of improvement in sequencing technology.
And he was right. The Human Genome Project finished slightly early and helped to bring down the costs of genome sequencing technologies by orders of magnitude, as well as dramatic reductions in the time it takes for sequencing. We can now pay about $1,000 to sequence our own genome in a matter of days.
How does this Law of Accelerating Returns indicate that plug-in electric cars could be 50% on their way to market domination?
Well, 50% from no market share to 100% market share under this law is actually 1%, and plug-in electric cars (including PHEVs) are about ready to hit 1% of new car sales in the US (electric cars are set to hit about ⅔ of 1% of light duty car sales in 2013, and almost certain to pass 1% in 2014). “That is, there are seven doublings from the start of growth to 1 percent and seven doublings from 1 to 100 percent,” Tam writes.
Optimistically, based on all of this, electric cars could dominate the market by 2020. If growth slows a bit, however, we could still see domination by 2030. Here’s a chart based on different growth rates:
Why would growth slow? Tam notes the obvious:
The Law of Accelerating Returns isn’t really a law, of course. There’s nothing inevitable about technology development or adoption curves. If there was, the Betamax video player would be in every household today. While Kurzweil’s data shows that many technologies do follow the traditional S-shaped development curve and continuously improve, the fact remains that the vast majority of new technologies and new ideas don’t become ubiquitous.
Of course, I do think EVs have the benefits to take over the market, to see rapid growth over the coming years. I actually think the biggest barrier to EV growth is now simply awareness. Awareness will come along and will improve exponentially, as it always does.
The single biggest technological barrier for EVs is simply continuing to improve the batteries. EVs have already hit market competitiveness, but as batteries improve, they will stand out as better options for more and more people. Luckily, batteries are already pretty far along the technology improvement curve. As they improve, costs come down, ranges improve, the cars become more attractive.
But the cars are already awesome today. 11 electric cars on the market today are cheaper than the average new car bought in the US. Plus, they save you massive money on fuel, and they save you time if you never have to go to a gas station again.
And, perhaps most important at all for consumers: they are more fun to drive.
We have seen Apple become the most valued brand in the world through products which aren’t cheap but are a notch above anything that was on the market before. Electric cars are genuinely a notch above gasmobiles, imho. It’s only a matter of awareness and time….