This report conveys 4 main points:
- Electric vehicles, particularly Teslas, are already more than competitive in certain market segments.
- The tech transitions that led to the electric vehicle (EV) market of today will continue in the coming decade.
- EV sales will rise quickly, outperforming most people’s current expectations.
- Tesla will continue to lead the market due to core competitive advantages.
The electric vehicle market 10 years ago was basically nonexistent. Almost zero market analysts or investors were on the lookout for a promising electric vehicle startup. You couldn’t find one person out of 100, probably not one out of 1,000, and maybe not even one out of 1 million, who expected an electric car to be the best selling automobile in some notable country and regional markets by 2020. Chances are good that you did not predict a Silicon Valley automaker would be outselling BMW, Mercedes, and Audi in the United States in the luxury car market. Nonetheless, this was the future that was awaiting us, and is here now. The Tesla Model 3 had more than twice as many sales as the second best selling automobile in the Netherlands in 2019. In the USA, the Tesla Model 3 significantly outsold all other luxury vehicles. In fact, the Model 3 has been outselling the BMW 2 Series, BMW 3 Series, BMW 4 Series, and BMW 5 Series combined.
The electric vehicle market of today seems unbelievably gigantic in the context of 2010 expectations, but this is not the pinnacle of electrification, not even close. The tech trends that brought electric vehicles (EVs) to where they are today will continue. Just as the past 5 to 10 years surprised the majority of the market, the next 5 to 10 years will surprise the majority of the market. Things will again change much faster than people thought possible. The technology has not stopped improving. The costs have not stopped dropping.
Plug-in vehicles accounted for approximately 2% of global vehicle sales in 2019. If they double their market share every two years, that’s 16% market share in 2025, and 64% in 2029. Even if the growth is half that fast, plug-in vehicles will become 32% of new vehicle sales within the decade.
On one hand, such rapid growth seems hard to believe in an industry as large, complex, and slow-changing as the auto industry. On the other hand, tech transitions are almost never slow once a technology becomes cost-competitive. The fabled S-curve of tech adoption looks much more like the steep rise of a mountain than an S.
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