EV substitution in full swing

EV substitution in full swing

Something I think we're all familiar with, but this article puts some numbers to the global switchover that is beginning in earnest. Article starts with the China market and then expands to a more global discussion.



A profound change in the future of cars began to unfold in China last year. The trajectory shift may have happened so suddenly, however, that markets and the public have not fully processed the implications. There’s a term for this phenomenon. Cognitive conservatism describes our tendency to insufficiently revise our beliefs, when presented with new information. Time itself tends to cure this condition, but, when facing a system as large as the global vehicle market, new information coming through may be too unwieldy to process.

Start here: sales of vehicles powered by an internal combustion engine (ICE) are on course to fall by over 4.5 million units from a peak of 28.1 million in 2017 to 23.5 million units this year. That’s just astounding. Were this happening 20 years ago, we’d know that China had either entered, or, was close to a recession. And while it’s true the current trade-influenced slowdown in China has hit growth pretty hard, the concurrent ascent of electric vehicles has helped greatly in cushioning the market’s decline. For, as ICE vehicles are on course to fall 16% from the 2017 peak, the total car market in the same period is on course to fall 12.8%. The difference between the two, equal to about 2.9 million EV units, is due to the rollout of electric vehicles.

Here’s where cognitive conservatism comes into play. If you have a 28 million unit market, and a new technology enters and takes a 2.7% share (2017), then a 4.5% share (2018), and is on course to take a 6.5% share (2019) you should begin to have confidence there’s no regression coming, no imminent reversion to the old technology. And in the case of China, we can legitimately assert the substitution effect is in full swing, because China’s EV industry has largely produced mini, and super-mini EV that are quite affordable, and have been adopted quickly in China’s 2nd and 3rd tier cities.

----------------------------- | October 21, 2019

It's good to see other automakers finally seeing the light, but I worry quite a few are too late. EVs expected to be in cost parity with ICE in 2021-2022, at which time anyone with a brain would be stupid to buy ICE. The transition could be scary fast after that, yet many ICE automakers are hoping ICE will be here for the next 40 years and somehow they will remain relevant.

SamO | October 21, 2019

We are at price parity already. For the high end of the market.

Model 3 competes with Camry TCO.

Model S competes with BMW/Audi and Lexus best offering for substantially lower TCO.

And Model Y will easily best, cost-wise, comparable SUV and CUV offerings.

It’s only garbage like the Bolt and Leaf that don’t hold well against the Prius and Spark. The TCO is low. But you are comparing against very cheap ICE cars. Maybe by 2021 those low cost cars will reach parity. But otherwise, the future is here.

Can’t wait to see the TCO of the truck.

andy.connor.e | October 21, 2019

Cant imagine anyone buying a brand new Camry. If the sticker price of the vehicle does not matter, EVs are the obvious way to go. The more miles you drive per year, the lower the TCO of the EV compared to any gas car.

jordanrichard | October 21, 2019

While there is TOC parity, the general public doesn't think that way. Over the years I have lost count on how many people say, "....oh ya, I never thought of it that way". For example, I met someone that had a brand new Nissan Titan truck. Without asking him a personal question of how much he paid, I simply asked what can one of these cost. He said, "$45,000 and it's going to run me $5K a year in gas......" To which I replied, so this is a $70,000 truck. This made him pause as I told him that over the course a typical car note of 5 yrs, you are adding $25,000 to the cost of the truck. So this is truck will cost $70K. He replied slightly deflated, "ya, you're right"

That is just one of many examples. People are so conditioned in thinking one way, that thinking a whole new way takes someone to point things out.

jimglas | October 21, 2019

Another chinese hoax?

Frank99 | October 21, 2019

I'll pile on to your points:

Some choice nuggets:
"In what is likely a first for Car and Driver (C/D historians and archivists are still fact-checking this), we have actually paid real money for a new car"
"But we are going to drive the heck out of it for at least two years and report on its autonomous capabilities as they roll out. And we'll dutifully publish what goes wrong, what goes right, and what it's like to live with one."

So, despite being ignored by Tesla, and not spending a dime on advertising with them, C&D feels that the car, company, and goals are significant enough that they're going to stop turning tricks and give it away for the next two years. Amazing.

jordanrichard | October 22, 2019

Frank99, I think what it comes down to is selling magazines/getting clicks to their website. They can no longer ignore the attention (eyes) that the Tesla name generates.

Frank99 | October 22, 2019

I agree; I think it's funny that Tesla was able to force them into action without any kind of "pay to play".

TranzNDance | October 27, 2019

I read a Forbes article that was about a killer Tesla instead of a Tesla Killer. It pointed out that Tesla sold 8 times its closest competitor, the Bolt, in September. | October 27, 2019
andy | October 27, 2019

@SamO I did 15k miles in a 40kWh Leaf - it’s a great car for what it does and It was perfect for 50 mile return commutes. It’s a very spacious and well equipped hatchback and has some software functions that the Model 3 lacks and which I very much miss.

I wish we still had our Leaf - it would complement the Model 3 perfectly, but we had a lot of equity in it and so let it go when buying the Model 3 and kept the Audi instead. The Leaf was by far the better of the two though.