Estimating the Growth of Electric Vehicles & Tesla Sales, an Exploration of S-Curves

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On this particular report from CleanTechnica reader and knowledge analyst David Gines, we get a high-quality, skilled, helpful exploration of exponential progress of EV gross sales — Tesla’s gross sales, Norway’s EV gross sales, and broader regional and world EV gross sales.

By David Gines, {an electrical} engineer specializing in algorithms for knowledge evaluation

How briskly will the world transition to electrical autos (EVs)? Nobody is aware of for certain, however all of us have opinions. Many are actually saying that EV progress has stalled. Others acknowledge progress, however think about that it’s linear (growing by a set quantity every year), when in actual fact it’s exponential (growing by a set share every year). Over-zealous advocates, alternatively, assume that exponential progress will final ceaselessly, which in fact can be not true.

The actual story lies someplace in between. As authors and commentators right here on CleanTechnica have identified, new applied sciences typically develop by way of “s-curves,” which start with a interval of exponential progress, adopted by linear progress, then exponentially declining progress, earlier than lastly settling all the way down to a set stage. The graph has a attribute s-shape, as we’ll see beneath. What do these curves should say concerning the transition to EVs? We’ll use them right here to discover EV market share progress in Norway, China, Europe, and the US, and likewise for Tesla.

Earlier than persevering with, I ought to level out that it is a purely mathematical development evaluation; it’s not primarily based on socio-economic components, which could embrace authorities incentives, mineral provides, new battery chemistries, technical feasibility, price, and so forth. That form of evaluation can be necessary (nice instance here), so this text is supposed to be complementary, not a substitute.

Naked mathematical extrapolation can in fact be naïve, particularly when knowledge is sparse. However the EV market is starting to mature, and due to this fact most of the arguments for and towards electrical automobiles are already constructed into at this time’s knowledge. Sure, main occasions can ship shockwaves by the system, and we’ve seen actual examples of that previously few years, but it surely takes actual effort to divert the trajectory of main actions. No less than within the brief time period, knowledge can have predictive energy.

Let’s begin with a easy instance. In 2022, Elon Musk introduced that Tesla had aspirations to sell 20 million cars per year by 2030. This prediction might have appeared random, as if pulled from an optimistic hat, however the quantity is in actual fact a direct extrapolation from Tesla’s historic, exponential progress price. Right here’s a chart of Tesla’s quarterly gross sales:

If Tesla’s progress was linear, the curve would appear like a straight line, and extrapolating gross sales out to 2030 can be easy. However the progress has been exponential, which makes predictions much less apparent. There’s a trick we will use, nonetheless, to extrapolate exponential curves. The following chart exhibits the identical knowledge plotted on a logarithmic scalewhich turns exponential curves into linear ones. We will now extrapolate future gross sales by becoming a line to the information (aka, doing linear regression).

The graph exhibits that if their present progress price was to proceed, Tesla would exceed 5 million gross sales per quarter (and thus 20 million gross sales per yr) by 2029, which is correct at Elon’s objective of 2030. So, not a random prediction in any respect.

Will they obtain this? We’ll discover that extra beneath, however for now, suffice it to say that they’d want exponential progress to final from now till then, whereas in observe, exponential progress by no means lasts ceaselessly, as we’ll see within the subsequent instance: Norway.

Norway is a mature marketplace for EVs, with market share hovering above 90% (BEV + PHEV). But it surely didn’t get there by linear progress, nor by limitless exponential progress. Here’s a plot of Norway’s EV market share, together with a number of makes an attempt to mannequin the expansion by way of s-curves (for illustrative functions):

To create s-curve fashions, we want three issues. First, we have to know what the ultimate stage is, and right here I feel we will safely assume that the Norwegian EV market share is headed to 100%, or close to sufficient to it. Second, we have to know how briskly the transition occurs. And third, we have to know when it occurs. We don’t know these second two numbers, however we will check out a number of guesses and see which curves give the most effective match to the gross sales knowledge. Within the Norway plot, the inexperienced curve occurs at about the precise time, however at too quick a price, the blue curve has the precise progress price however incorrect timing, whereas the purple curve is about proper, and has the most effective match. For Norway, the s-curve illustrates how the previous couple of share factors of progress may be as gradual as the primary few.

Let’s return now to Tesla. Not like Norway, the place the story has already largely performed out, becoming an s-curve for Tesla is much less sure. We will anticipate bigger error bars. However we will make an affordable strive.

As earlier than, we have to assume a ultimate worth for Tesla’s market share. And right here, in contrast to Norway’s EV market share, we don’t know what Tesla’s final share of the market shall be. Quite than try to reply that query, we will plot separate s-curves for various values. The following plot tries ultimate values of 5, 10, 15, and 20% market share (assuming 70 million world auto gross sales per yr). For comparability, be aware that Toyota presently has the most important market share at round 11%.

Whereas it’s nonetheless too early to inform the place this curve goes, we will say a few issues. First, Tesla will nearly definitely not attain 20 million gross sales per yr by 2030, as a result of, even when it attains 20% market share (which might be a heroic accomplishment), that trajectory doesn’t get Tesla to twenty million gross sales, it takes them to lower than half that quantity (roughly 2.25 million gross sales per quarter, as marked within the chart). Observe that this has nothing to do with last quarter’s disappointing results; if you happen to take away these from the dataset, you’ll get an analogous reply.

Second, and alternatively, if the final quarter was solely a blip, then none of those progress curves may be dominated out but, so Tesla nonetheless holds destiny in its personal palms. Even when the final quarter was an indication of issues to come back, it’s potential that Tesla has merely entered the linear a part of the curve, which signifies that progress will proceed, simply not exponentially. That’s not essentially a failure, as all new corporations and merchandise undergo this section ultimately.

Let’s now have a look at the larger image: EV market share within the US, Europe, China, and the general world market. Right here’s a plot of EV market share for these areas, together with fitted s-curves, assuming that EV market share is headed to 100%. It exhibits how China is main the way in which, knocking on the door of 100% market share by 2030, adopted by Europe, which might see 85%, after which the worldwide market at round 80% (closely influenced by China), whereas the US lags behind, reaching maybe solely 65% by then.

After all, completely something can and can occur between every now and then. There are short-term considerations for each Tesla and Europe, for instance, and these setbacks might flip into long run traits. Battery provide should proceed to broaden quickly. Wars, pandemics, inflation, supply-chain points, and different financial disruptions might wreak havoc on world markets. Commerce insurance policies, particularly as regards to China, stay controversial in each the US and Europe. Conventional automakers might proceed dragging their toes within the US and Europe. The fossil-fuel trade will proceed spreading misinformation. However, new battery breakthroughs, elevated incentives, extra fashions, and cheaper autos might speed up progress.

And, in fact, progress hardly ever follows a wonderfully clear s-curve. In observe, curves are at all times messy. So, in fact we will’t name curve-fitting a prediction, however we will name it an affordable instance of what would possibly occur — a default baseline from which numbers might transfer up or down. Most significantly, how these numbers transfer up or down sooner or later is but to be determined. However there may be hope that we’re still moving in the right direction. The place do you assume EV gross sales are headed?

Concerning the creator: Dave loves science, enjoys following the transition to scrub power by CleanTechnica, and likes to remain lively within the lovely outside of Colorado. David owns a small variety of shares in TSLA, VWAGY, and BYD. This text is just not meant to supply any funding recommendation.