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2013-12-17

Electric Cars May Be About 50% On Their Way To Market Domination


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, (see Maisseu, A.(1991) Management Technologique Paris, ed Sirey), shows a similar trend for technology development:
How does this Law of Accelerating Returns indicate that plug-in electric cars could be 50% on their way to market domination?


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 ? 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:

The Law of Accelerating Returns isn’t really a law, of course. There’s nothing inevitable about technology development or adoption curves. While 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.
EVs have the benefits to take over the market, to see rapid growth over the coming years. The biggest barrier to EV growth is now simply awareness. Awareness will come along and will improve exponentially, as it always does.
EVs are more convenient, better for our health, better for our pocketbooks, better for the environment, better for our local and national economies, and funner to drive!
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. Electric cars on the market today are cheaper than the average new car bought in the US. Plus, they save massive money on fuel, and they save time as you never have to go to a gas station again.
And, perhaps most important at all for consumers: they are more fun to drive. Electric cars are genuinely a notch above gasmobiles, imho. It’s only a matter of awareness and time….