It doesn’t take long from the first mass production EVs to start hitting the streets before people start to predict where they will be in 10 years time. Professionals, academics, industry speculators and politicians have started to begin quoting likely EV market penetration rates over the next five, ten and fifteen years. Barack Obama recently stated his (and by extension, America’s) desire to have over one million plug in vehicles on US roads by 2015. Some predictions have been somewhat conservation predicting EV sales to amount to 5% of the market by 2015 whilst others predict a large expansion between 2015 and 2020 with sales rising towards 20% of the market. The range of these predictions shows the uncertainty that currently prevails in the market. Why are these predictions so wide of each other, is it related to a variation or flaw in the methodologies used or the assumptions made? I will not pretend to have critically appraised all of the market predictions made but will talk here about how I would go about making a prediction based on reasoned and rational thinking rather than guesstimation.
To jump straight in, we know from previous research that vehicle costs are a big factor with consumers. Currently, EVs attract a price premium linked to their advanced technology making them relatively more expensive compared to their conventional counterparts. Now if we assume that conventional vehicle prices will remain constant at best or perhaps decline in the future, one way to boost the demand for EVs would be to decrease their price relatively faster. Recently, industry experts have stated that scale is not an issue with reducing the costs of producing EVs with more gain expected from technological breakthroughs. So, if we assume battery technology will advance at an increased rate in the future then this will assist EV market penetration. Similarly, if there is an increase to the purchase cost of conventional vehicles (a sales tax for instance), this will also assist EV demand. EVs currently require rare earth materials in their manufacturing with the extraction of these raw materials almost completely conducted in China. The Chinese Government has recently imposed a 90% restriction of the export of rare earth materials thus restricting the supply of a key factor of EV production to automotive firms. R&D has been switched on in an attempt to find substitutes for these materials but, if nothing economical can be found, this may prove a real barrier to mainstream market deployment of EVs.
