When the pace of adoption of technologies is examined, there are a number of interesting questions that bear on the projections of how quickly EVs and AEVs, as well as on-demand ride services, will be accepted. Are they going to be adopted as consumer technology items or truly revolutionary technologies and labor-saving devices? As shown in Exhibit 10, proponents of rapid technology adoption point to the cellphone, which took about a decade to go from zero to 60% penetration. That was about the same time span as the internet, but maybe only slightly longer than the VCR. On the other hand, the telephone needed nearly 50 years, while electricity needed only about 25 years, to reach the 60% penetration level. However, maybe we should look at these vehicle technologies as akin to those that brought significant lifestyle changes such as the stove, the clothes washer and the dishwasher, which needed between 35 and 50 years to reach 60% of American homes.

Our best guess is that the adoption rate will be somewhere between the cellphone and electricity, 10 to 25 years, but with a bias toward the longer timeframe. Why do we say that? It is important to understand that vehicles play an important role in family evolutions, something that hasn’t changed over generations. The hyped concern about millennials not getting married, starting families and buying homes, which was very popular during the years immediately following the global financial crisis of 2008, is disappearing. We now see millennials coming out of their parents’ basements, getting married, starting families and buying homes – although maybe not of the same size or in the same locations as their parents. These millennials are, however, continuing the generational pattern of societal evolution, although they are taking longer than previous generations to take some of the steps down that road. Given the pace of this phenomenon’s development, it is important to remember that automobiles remain the second largest purchase after homes for families. These purchases are not made frequently, they usually require significant research and time to reach a decision, and the decisions are often based on economic considerations involving all aspects of families’ lives and not just social concerns, such as climate change.

Given the factors involved in new car purchases, those forecasting the demise of petroleum must explain how those with limited incomes and wealth will voluntarily give up their perfectly functioning fossil fuel vehicle for an expensive EV, which because of battery technology may not get anywhere close to the advertised performance due to the climate where they reside. Their lives will become more complex until electric charging stations are as ubiquitous as gasoline stations, since they may not be able to afford the wait for battery recharges nor the cost of an installed charger in their home, if that option even exists for them.

There is also the question of what happens to the economics of EVs versus ICE cars when the values of used ICE cars go essentially to zero? In that case, unless gasoline and diesel fuels are banned, which may be the next target of environmental activists, it will be much cheaper to own and operate ICE cars than EVs.

There is also the question of how quickly the fleet of American vehicles can be converted to EVs or AEVs. For the past several years, Americans have purchased 17 million or slightly more new vehicles each year. At that pace, it will take 15 1/3 years to completely replace the approximately 260 million vehicles currently on America’s roads. To reach the magic 60% penetration rate, Americans must buy 17 million new EVs every year for more than nine years. Despite the high number of EVs in the fleet, it still leaves 104 million ICE vehicles on the roads burning fossil fuels.

Eoin Treacy's view

Here is a link to the full report.

Something that has always been at the back of my mind when reading comparisons about the pace of adoption of technologies is whether it is appropriate to compare adoption rates over more than a century. The pace of life has accelerated considerably in only the last decade so that we find it hard to imagine how anyone lived without the benefit of wifi or indeed indoor plumbing more than a century ago. My kids for example can’t imagine a world without iPhones, iPads and YouTube.

A big question is if the pace of electricity adoption was hindered by the need to build the physical infrastructure or simply by the slow pace of life which led to a lackadaisical approach to rollout.

There is no question that rolling out software across a network which already exists is considerably faster than laying cable. Cellphone towers leapt up on every available high point within a decade which facilitated the rollout of mobile, Wi-Fi, 4G and a future 5G network.

An electric vehicle fleet will need a lot more charging stations but no new cable needs to be laid, they can piggyback on the existing electricity infrastructure which means the rollout is dependent on demand. The cost of electric vehicles is therefore the primary inhibiting factor to the pace of technological penetration. That means battery technology is the gateway to the electric vehicle future many analysts project. If battery prices can be brought down while energy density and charging times improve the future of internal combustion engines will truly be in question.

While autonomous vehicles and electric vehicles are often quoted together their adoption is likely to occur independently of one another. Once autonomous programs have been designed it is eminently feasible that existing fleets could be retrofitted. If cars already have dynamic braking and lane assist it is not such a large logical leap to add autonomous capabilities. The autonomous fleet business model would certainly benefit from the economy of electric vehicles but I don’t believe it is a necessary condition for viability.

An additional point is that fully one third of all new car sales in the USA are leased. In a 17 million vehicle annual market that represents a significant potential source of demand for electric vehicles if the cost is right.

Tesla which is the standard bearer for electric vehicles right now continues to hit new highs as it pulls away from its most recent two-month range. A clear downward dynamic would be required to check momentum beyond a pause.