How and When Will Electric Cars Replace Fossil-Fuelled Cars? Part 1

Figure 1: Diffusion of Innovations Curves (Image: Wikipedia)
Figure 1: Diffusion of Innovations Curves (Image: Wikipedia)

Electric cars are here, now, and selling in increasing numbers. They are getting better and cheaper each year to the extent that they are typically only slightly more expensive to buy than a fossil-fuelled car, and yet they are much cheaper to run. EVs are quieter, smoother and have zero emissions, and increasingly have the performance and range to match fossil-fuelled car.

It is natural, therefore, for the question to arise as to whether, or when, electric cars will replace fossil-fuelled cars. A quick Google search will show up many opinions on this subject. EV drivers are often very optimistic and believe EVs will take over in just a few years (say, by 2020). In contrast, conservative organisations don’t just take an opposing view, they often seem to ignore recent developments and seem to be able to argue that EVs will never compete with conventional cars or sell in significant numbers, even though they are already doing so.

An interesting example of this doublethink is the U.S. Energy Information Administration’s ‘Annual Energy Outlook’ report for 2014. It is due to be released soon, but an early version of the report was released at the end of 2013. It includes the headline prediction that in the US Just One Car Out of 100 Will Be Electric in 2040. This despite the fact that US plug-in sales have already increased from 0.14% in 2011 and 0.37% in 2012 to 0.62% in 2013 (source: Wikipedia).

It seems that most analyses of future EV market share simply represent the opinion of the author. However, I believe it is actually possible to make a data-driven projection of future market share based on known market share data so far. Further, the adoption and growth in market share of innovative technologies (computers, mobile phones, tablets, etc.) is already well studied and I believe EVs will follow the same path.

Specifically I posit that EVs will follow the standard diffusion of innovations approach, which is a theory that explains how, why, and at what rate new ideas and technology spread through cultures. A key element is that adoption begins with a small subset of buyers, the Innovators, then passes through other categories of consume to achieve full adoption (the other categories are Early Adopters, Early Majority, Late Majority, and Laggards).

The rate of change of market share follows a ‘bell curve’ with adoption being very slow at the start, then increasing significantly, then levelling off at 50% market share, before falling away as it takes over the remaining market – this is the blue curve shown in Figure 1. It is interesting to note that within the rate of adoption there is a point at which an innovation reaches critical mass – this is a point in time when the number of individual adopters ensures that continued adoption of the innovation is self-sustaining.

If we consider the percentage of market share over time then this follows an S-curve, with very low market share expected at the start. This starts to accelerate as the majority groups adopt the innovation, then it slows down again as the market approaches saturation – this is the yellow curve shown in Figure 1.

The adoption of electric cars is currently still in the almost flat starting part of this curve. In the next part I will show how we can apply the data we have on EV market share so far to this adoption curve to predict future adoption rates and market share for EVs, and calculate the likely timescale until EVs dominate the car market.

[Part 2]