Disclaimer. After nearly 40 years managing money for some of the largest life offices and investment managers in the world, I think I have something to offer. These days I'm retired, and I can't by law give you advice. While I do make mistakes, I try hard to do my analysis thoroughly, and to make sure my data are correct (old habits die hard!) Also, don't ask me why I called it "Volewica". It's too late, now.

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Sunday, May 14, 2017

World EV sales soar

World EV & PHEV sales, i.e., sales of cars with a socket, whether completely electric or plug-in hybrids, reached a record 1.5% of total world car sales in March, triple the percentage reached just 3 years ago.

At the recent Macquarie companies conference in Sydney, the CEO of CleanTech (CLQ.AX) talked about his company’s plans to produce cobalt, which is used in EV batteries.  He stated that China has a target for EVs and PHEVs as a percentage of new car sales of 8% in 2018 and 12% in 2020.  Of course these targets are driven by China’s horrendous air pollution, and many of the cars will be tiny and with a small range.  Size and range prolly don’t matter a lot in China right now.  As battery costs fall, and the costs of EVs decline, both will increase.  The Chinese targets will also force non-Chinese car manufacturers to increase their EV range and produce more EVs, or risk being shut out of the world’s largest car market. 35% of all cars sold worldwide are sold in China — Europe is 25%, US just 10%.

In a previous piece, I forecast that by 2019 10% of US sales will be EV/PHEVs.  And Europe is likely to start pushing EVs far more aggressively from now on after the Volkswagen diesel scandal and several episodes of extreme air pollution in some of Europe's major cities. If China meets its targets, if the US reaches 10%, then 4.5% of global car sales will be EVs/PHEVs in 2019, ignoring Europe and other countries.  Thereafter, the continued declines in battery prices and the demonstration effect—for example, an acquaintance buys an electric car and boasts about how nice it is, and how cheap it is—will lead to more sales.  Expanding sales will lead to growing charging networks which in turn will drive sales even higher.  Some countries (India, Austria, The Netherlands & Norway) plan to ban all new petrol and diesel car sales from 2025 onwards, and Germany has said that the only way it can meet its Paris targets is by doing this too. EV sales will continue to grow exponentially.  ICE* sales will start to decline, and the decline will accelerate.

The percentage of EV sales tripled over the last 3 years.  It’s likely to more than triple over the next 3.  At that point, the EV revolution will be unstoppable—if it isn’t already.  It’s hard to say what the percentage will be in 10 years, but if the adoption of EVs follows classic S-curve technology adoption patterns, and the historic growth rate continues, it could be close to 100%.  (The percentage is tripling every three years, so, 2019 — 5%, 2022 —15%, 2025 — 45%, 2027 — 100%)  Which is good news for global warming, but very much not good news for oil. And not good news for what now look increasingly like heritage car manufacturers, who still cannot really believe that EVs will very soon sweep ICEs away, and are still dithering about addressing this market properly.

(Source of basic data: Inside EVs & OICA.  2017 world car sales estimated.  My seasonal adjustments and my graphic)

*ICE = Internal combustion engine

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