EVs pass the tipping point to mass adoption in 31 countries

By | March 31, 2024

New technologies tend to be blind. For example, when color televisions came onto the market in the 1950s, they seemed like a flop. The devices were expensive, programming was scarce, and after a decade on the market, few homes had one. Then prices suddenly dropped, a ratings war ensued, and within a few years most American households were watching.The Jetsons” in its futuristic palette.

According to A., a similar shift is currently underway with electric vehicles Bloomberg Green analysis of adoption rates around the world. By the end of last year, 31 countries had passed the crucial tipping point for electric cars: 5% of new car sales are purely electric. This threshold marks the beginning of mass adoption, after which technological preferences quickly change.

When we first completed this analysis in 2022, only 19 countries had passed the 5% turning point. Last year, that number soared as EVs spread across four continents. For the first time, some of the fastest growing markets were in Eastern Europe and Southeast Asia. The trajectory charted by the countries that came before them shows how EVs can rise from 5% to 25% of new cars in less than four years.

Why is 5% important?

New technologies – from televisions to smartwatches – follow an S-shaped adoption curve. Sales move at a rapid pace during the early adopter phase before joining a wave of mainstream adoption. The transition often depends on overcoming initial barriers such as cost, lack of infrastructure and consumer skepticism. The tipping point indicates the flattening of these barriers. While each country’s journey to 5% will be different, the timelines will converge in the years that follow.

“Once enough sales happen, you have a kind of virtuous cycle,” said Corey Cantor, an EV analyst at BloombergNEF. “More electric vehicles popping up means more people are seeing them as mainstream, carmakers are more willing to invest in the market and charging infrastructure is expanding on a good trajectory.”

Several countries passed the tipping point in blazing fashion last year. Thailand emerged as Southeast Asia’s EV pioneer, surpassing the 5% threshold in the first quarter of 2023 and then rising to nearly 13% of new car sales in the last quarter. The transition was boosted by the opening of Thailand’s first domestic EV factory, owned by China’s Great Wall Motor Co.

A similar story played out in Turkey, a country that was barely on the radar for electric vehicle adoption a year ago. The Turkish car company known as Togg flipped the switch with the introduction of its first battery-powered car – the T10X – an SUV that competes squarely with Tesla’s Model Y. Sales of the electric Togg set a blistering pace. Turkey crossed the 5% turning point in the third quarter and was the fourth largest EV market in Europe in the fourth quarter.

While this market share approach to EV tipping points shows how quickly the transition to EVs can occur, it does not rule out the possibility of delays or setbacks from year to year due to supply chain disruptions, economic downturns, bankruptcies and politics. Analysts at BloombergNEF expect sales of fully electric and plug-in hybrid vehicles to rise around 22% globally this year, which will be a slowdown from recent years, although the long-term prospects for electric vehicle adoption will not increase dramatically change.

The US is underperforming

The turning point for the US only came at the end of 2021 – relatively late for a country with its economic power. American drivers demanded electric vehicles with longer range than the earliest models offered, and America’s preference for pickup trucks and large SUVs required larger batteries than the emerging supply chain could handle.

Two years after crossing the tipping point, the US continues to lag behind the countries that preceded it. Fully electric cars accounted for 8.1% of U.S. auto sales last quarter, well below the 18.1% average for 20 countries at the same point on the adoption curve. The only country with a smaller share of electric cars after two years was South Korea, a country whose range anxiety rivals the US.

No country has yet taken more than three years to go from 5% to 15% EVs – meaning the US and South Korea will either break the trend by 2024 or require a sudden acceleration in sales will have to catch up.

Although the above analysis concerns battery-only vehicles, some countries, especially in Europe, were more likely to adopt plug-in hybrids. The US has mostly skipped hybrids, which have smaller batteries and are backed by a gasoline engine, but automakers are now turning to them to avoid a costly showdown with increasingly cheaper electric cars from China.

Because hybrids don’t require the same level of infrastructure or consumer involvement as fully electric cars, the initial adoption phase can be more erratic. A consistent tipping point for this broader category of electric vehicles will not be reached until 10% of new vehicles are hybrid or fully electric, he said. Bloomberg Green‘s analysis. The US just underperformed, with a market share of 9.9% in the second half of 2023.

A tipping point for the world

The countries that have now passed the EV tipping point account for two-thirds of the world’s car sales. That still leaves large parts of the world’s population behind the curve. Nevertheless, a tipping point could be approaching for India, Indonesia and Poland, key car markets where electric vehicles are on the rise. In South America, a big push from China’s BYD could be the spark for widespread adoption, starting in Brazil.

Applying this framework to the entire planet, the 5% EV tipping point was exceeded in 2021. In the fourth quarter of 2023, fully electric cars accounted for approximately 12% of new cars sold worldwide. The same forces that led so many car buyers to try their first electric model – falling battery prices, more chargers, better performance – continue to make electric vehicles competitive in new markets.

Methodological notes:
Tracking begins when the inflection point threshold is exceeded for one quarter. However, a transient period of more than 5% can later be ruled out if it turns out to be abnormal. Iceland’s quarterly market share figures show a twelve-month rolling average, which can smooth out large swings in quarterly reporting.

Leave a Reply

Your email address will not be published. Required fields are marked *