Thread by @colinmckerrache

Short thread on s-curves:
I often get asked about this, usually framed as “we’re about to hit the steep part of the s-curve, why is BNEF still only forecasting EVs (including plug-in hybrids) at 11% of global sales in 2025”

To do part of our long-term EV forecast at BNEF, we use a modified Norton Bass Diffusion model (fancy speak for an S curve). We add a bunch of extra parameters for availability of charging, affordability and other factors.

But that doesn’t fully kick in until EVs hit price parity with their internal combustion counterparts. That’s still around 4-5 years out in most markets.

Why? Because in the short term, policy support is going to change. Direct subsidies get expensive beyond the first 3-4% of buyers, so most markets are moving to indirect measures (eg: fuel economy/CO2 regs) that force most automakers to cross subsidize their EVs.

In an ideal policy world, you subsidize/support things right up to the point where organic demand takes over. But that almost never happens, it’s always messy. Given the stakes, that’s ok.

So to do the short/medium term well, you have to go model by model (high, medium or low volume production intent?), region by region and policy by policy. We maintain a database of over 700 EV policies to help us do this, and track the EV plans of every automaker.

Another wrinkle: most consumer adoption diffusion theory is based on the whole population of buyers, not just buyers in that year. We’re still at under 1% of the total vehicle fleet (currently ~0.6%) ie: very much still in the Innovator phase.

Now, that’s contentious for autos because it’s a big purchase with a long lifetime and many people never buy a new car. Lots to think about here.

None of this means that the principles of consumer adoption don’t apply. They do. It just means this will be bumpy and for the next few years you probably can’t wave the s-curve wand just yet, or at least not reliably on a global basis.
/end