US Crosses the Electric-Car Tipping Point for Mass Adoption

People of a certain age can remember holding a phone. The devices drew a lot of people to parties. It wasn't unusual to not own one after a decade.

The same society- altering shift is happening with electric vehicles. According to the analysis, 5% of new car sales in the US are powered by electricity.

The US joined Europe and China in moving beyond the 5% tipping point. A quarter of new car sales in the US could be electric by the end of the next decade. It would be a couple of years ahead of most forecasts.

Why is 5% so important? 

The adoption curve for new technologies follows an S-shaped one. The last people to refuse to give up their flip phones are at the top of the curve.

5% seems to be the point when electric vehicles are overtaken by mainstream demand. Sales are slow before then. Demand quickly increases afterwards.

It's logical that countries around the world would follow the same pattern of EV adoption. There aren't enough public charging points, the cars are expensive, and buyers don't know much about them The road will be paved for the first 5% of the population.

The adoption curve followed by South Korea will look similar to the one taken by China in the first quarter of the year. Canada, Australia, and Spain are the next major car markets.

A higher bar for hybrids

Vehicles that only use batteries are analyzed. Plug-in hybrid, which has smaller batteries, was quicker to adopt in Europe. The world just surpassed 20 million electric vehicles on the road, and will double again by the end of next year, according to a recent report by analysts.

The early phase of adoption was less consistent since plug-in hybrid doesn't require the same level of infrastructure. Until 10% of new vehicles had a plug, there wasn't a consistent tipping point for this broader category of EV.

The US hasn't yet crossed the 10% threshold despite skipping plug-in hybrid and going straight to fully- electric vehicles.

Federal incentives and pollution standards are behind every country that crosses an EV tipping point. The Biden administration in the US issued an executive order last year that called for half of new vehicles to be electric by the year 2030. It should be able to beat that goal in a few years.

Tipping the carmakers

The growth of the automotive industry depends on the ability of suppliers to increase production quickly. By the end of the decade, Volkswagen, Ford, and BMW want to have half of their global sales electric.

There are also tipping points for the automakers. Retooling and reconfiguration of supply chains are required. To get the most cost savings, the entire vehicle needs to be changed. The share of electric sales in Europe triples within two years.

Toyota isn't included in the chart because it hasn't reached the EV threshold in Europe. As a share of its 10 million annual vehicle sales, Toyota is the least aggressive of the majors. The chart does not includeTesla, the world's biggest EV maker.

Is the world’s transition to EVs inevitable?

The US, China and Europe make up the majority of EV sales. The countries that make up a third of global auto sales haven't reached the tipping point. Latin America, Africa, and Southeast Asia have not made the jump. Global miners may not be able to keep up with demand for battery metals if they do.

In the last two years, global sales of electric vehicles tripled. All of the net growth in global car sales in 2021 came from electric cars, and that is a trend that BloobmergNEF predicts will continue indefinitely. Vehicles on the road without a plug could be in danger.

The share of fully electric vehicles in the world passed the 5% threshold for the first time last year. The tipping point will be passed this year. Demand can be expected to go up if the trends hold.

Samuel Dodge helped with the project.