IEA report shows EVs global sales and market share rising quickly but still only around 1%
The global electric car (EVs) fleet rose to two million in 2016, according to the Global EV Outlook 2017 from the International Energy Agency. The most important news from the IEA is that the electrification of transportation continues at a slow but steady pace as battery performance continues to rise and consumers become more accepting of the new technology.
But EVs continue to languish at the bottom of the technology diffusion S-curve in almost every country, purchased by Innovators willing to pay a higher price premium and accept the higher risk (e.g. lack of charging infrastructure) that comes with new technologies.
About 750,000 EVs were bought in 2016 and sales rose 60 per cent from the year previous. Let’s put some context around those numbers.
Global EV sales
Just over 88 million million cars and light commercial vehicles were sold worldwide in 2016 – a new record driven almost entirely by China – and up 4.8% from a year earlier, according to a report from Macquarie Bank.
Electric vehicles accounted about 0.85% of those auto sales. During a scorching hot market when industry darling Tesla has some of the sexiest models on offer and dominates media auto coverage, less than one per cent of consumers bought an electric car.
The IEA calls that “rapid market evolution.” I call that about what one would expect from a new technology that is still two times or more expensive than its competition, internal combustion engine (ICE) vehicles.
High purchase prices continue to be the major constraint to adoption.
For example, the Chevy Bolt sells for for $38,000 in the United States compared to the almost identical ICE Chevy Cruze for under $20,000. Not even a federal subsidy of $7,500 and $2,500 in many states could persuade consumers to buy Bolts, which were introduced to the market just this year.
According to Inside EVs, which tracks EV sales in the US market, from Jan. to May only 5,950 Bolts sold, an average of 1,488 per month.
Lest you think the Bolt’s poor sales numbers are indicative of a new model, the mighty Tesla Model S – poster child for the coming EV revolution – sold only 8,845 units, an average of 2,211 per month.
In fact, the best selling “electric vehicle’ in 2017 (9,187 units) – is the Chevy Volt, a plugin hybrid with an electric range of just 85 kilometres and a gasoline engine to prevent range anxiety.
Canadian EV sales are a pittance by comparison. According to a report from Fleetcarma, just 1,474 EVs were sold in the first quarter of 2017. Again, that included both plug-in hybrids and pure electric cars.
Cost and range are the by far the strongest constraints to adoption, but it’s important to keep in mind that there are no accelerators to offset them and boost sales.
Subsidies in the United States and China are winding down and not likely to be renewed in the near term. According to the EV battery experts I interviewed, the next generation of electro-chemistry – probably Lithium-metal or Lithium-sulphur – with significantly better energy density (perhaps as much as 20 times higher than Lithium-ion) won’t leave the laboratory for at least a decade, then it will take another five to 10 years to be incorporated into automakers’ design process.
EV global marketshare
Global market penetration is still tiny.
Sure, everyone points to the 29 per cent market share in tiny Norway, with a population of six million, an almost trillion dollar sovereign wealth fund, and a social democratic government committed to transitioning quickly to clean energy technologies.
Norway is an outlier.
Only the Netherlands had a market share above six per cent and only Norway had a share above three per cent. After that. only three countries managed to break the one per cent barrier – China, France, and the United Kingdom.
Canada clocked in at a paltry 0.59% and the United States at 0.91%.
The global EV share of the market is just 1.10%.
The IEA argues that with “record-high new electric car registrations in 2016…the transition to electric road transport technologies that began only a decade ago is gaining momentum and holds promise for a low-emission future, provided that such dynamism can be sustained over the coming decades.”
The real question here is, how many decades?
If the industry continues with the Replacement Model (head-to-head competition between ICE autos and EVs), and adoption continues on the same trajectory, then sales will continue to languish for the next 15 to 20 years, barely moving into the Early Adoption category.
And EVs will probably struggle to obtain a five per cent global market share.
The technical improvement that will accelerate adoption is a big boost in battery energy density. If a Chevy Bolt can travel 6,000 kilometres instead of 300, consumers will pay attention.
High battery energy density also allows manufacturers to build bigger, heavier vehicles with shorter ranges. In the United States, for instance, with its well known preference for big SUVs and pick up trucks, a high density battery could be the difference maker.
But there is a business model disruption on the horizon that could stand the Replacement Model on its head: Transportation as a Service. You can read my columns on TaaS here and here and here and here.
Tony Seba argues that TaaS could drive down transportation costs by a factor of 4x to 10x, causing consumers to abandon private ownership of automobiles by 2030 in the US.
These are the trends the IEA should be following.
And there are really only two questions the IEA should be asking:
Will EVs stay on the slow and steady path followed by most new technologies and become the dominant transportation technology by 2060 or 2100?
Or will TaaS disrupt markets and lead to an “iPhone moment,” that threshold when an innovation increases value to the consumer by leaps and bounds, leading to very rapid adoption within a decade or two?
“In the next 10 to 20 years the electric car market will likely transition from early deployment to mass market adoption,” the IEA concludes.
Under the Replacement Model, very unlikely. But, under the TaaS model, quite likely. May the best EV adoption model win.
Unbelievable you didn’t mention the 500,000 orders for the Tesla Model 3. Also you didn’t mention that GM has chosen a slow ramp-up for the Bolt, and that they are building a version for Europe right now. Finally, the availability of DC fast-charge stations is critical for EV adoption. Tesla’s brilliant strategy built in a business case for their Supercharging network, is on track for 10,000 by the end of 2017 and working toward doubling in 2018. And there are also their destination charging partners, several thousand charging locations not as powerful as the Superchargers, but usually far faster than nearly all the non-Tesla charging stations in the world. VW in the United States as part of their diesel settlement is spending $2B for fast-charge stations for non-Tesla vehicles, although Teslas will be able to use them with adapters, and a consortium including VW, Ford and others is beginning a huge build-out of fast-charge stations in Europe. The Bolt and Model 3 are already cost-competitive with ICE vehicles if you consider the complete vehicle life cost.