The Future of Electric Cars in Australia Part 4 – The Early Majority
I am currently writing a book on the future of electric cars in Australia with a couple of collaborators. I am going to explore a few issues here on this blog. The first of these is the adopter groups which I will explore one by one. The first three are:
This post is about the fourth group – the early majority.
This is where electric cars really go mainstream. The early majority is made up to two sub groups of purchasers. The first are those that have most of the characteristics as the very early majority but have been held back in some way by factors such as:
- Lack of availability of the model that they would prefer.
- Lack of charging options.
- Purchased a new fossil fuel vehicle in the previous 3-4 years and are reluctant to part with such a new vehicle as it would demonstrate their bad decision making.
The second group are more mainstream customers who are now attracted to the market because:
- There are a wider range of models.
- Price has fallen further, and it is now a decision between an electric car and a fossil fuel car that are the same price.
- The very early majority have demonstrated to them that this is now a mainstream thing to do.
- Owning and driving an electric car is getting easier and easier.
- Increasing battery size, density, and efficiency mean less range anxiety issues.
- Their household was one of the early majority who purchased an electric car and they now have the confidence for their second or third car to be an electric vehicle as well.
- In the later stages of this adoption stage stories start to emerge of difficulties finding petrol as petrol station volumes start to fall rapidly and consolidation happens to try and maintain volumes and margins.
Of course this is all affected by constraints on the supply side. Nathaniel Bullard wrote an article on April 13th , 2019: Electric Car Price Tag Shrinks Along With Battery Cost . In this article Nathaniel says:
“Every year, that crossover point gets closer. In 2017, a BloombergNEF analysis forecast that the crossover point was in 2026, nine years out. In 2018, the crossover point was in 2024 — six years (or, as I described it then, two lease cycles) out.
The crossover point, per the latest analysis, is now 2022 for large vehicles in the European Union.
There are a number of factors that have to play out for this to become true at the retail point. There are plenty of ways that the price of vehicles can still be higher than fossil fuel cars. The cost of production is not the same as the price of sale, and if battery materials, battery production, or car production are below demand levels at the point where batteries are theoretically cheap enough to make EVs the same price as fossil fuel vehicles the market is unlikely to deliver that result. Someone in the chain will look to make a profit margin higher than it would be in a fully competitive market. It might be battery makers, it might be car makers, and it might be car retailers. There are already stories floating around about prices in the USA for the Hyundai Kona being sold well above recommended retail prices, to the tune of US$5,000 per vehicle
This complicates the adoption scenarios which are the central part of the book. This is particularly true of Australia which I believe to be a secondary market for a number of reasons. More to be revealed when the book comes out