Posted on October 19, 2016 by Matt Pressman
Yesterday, we reviewed how Tesla Motors [NASDAQ: TSLA] has taken over the luxury auto segment. The Tesla Model S is actually outselling Mercedes S-Class and BMW 7-Series combined. That said, it's important to remember Tesla's stated mission: to accelerate the advent of sustainable transport. Therefore, even though Tesla is demolishing its competition in the luxury auto segment, it's worth taking a step back to evaluate if Tesla's mission is coming to fruition. At the Paris Auto Show, brands like Mercedes were announcing significant electric vehicle initiatives coming soon — albeit with concept cars. Nevertheless, some recent studies show that Tesla's impact is leading to major electric vehicle milestones.
Above: Tesla Model S (Instagram: @trevornottautocorp)
The future looks bright for electric vehicles. For one thing, this year, electric vehicle sales have already demonstrated strong growth — likely finishing the year with another major milestone. According to CleanTechnica, approximately 312,000 plug-in electric cars were sold during the first half of 2016 — a nearly 50 percent increase over the first half of 2015. But the most significant data point is, "notably, global plug-in [electric vehicle] sales to date are likely to hit the 2 million milestone by the end of the year."
One of the reasons that electric vehicles are proliferating, according to Bloomberg, is because, "Plunging battery costs will drive the auto industry’s biggest change in more than a century... The price of lithium-ion battery packs for electric cars has fallen 65 percent since 2010 and is likely to keep declining, according to a report by Bloomberg New Energy Finance [BNEF] and McKinsey & Co."
Above: Electric vehicle battery pack prices are plunging (Source: Bloomberg)
And Reuters also reports on BNEF's research citing the study's findings: "In densely populated, high-income cities like London and Singapore ... electric vehicles could represent as much as 60 percent of all vehicles on the road by 2030, the result of low-emission zones, consumer interest and favorable economics," the report said. You can see this transformation taking place already in cities like Wellington, the capitol of New Zealand. Tesla just announced that it's expanding into New Zealand due to "overwhelming demand for Model 3 and enthusiasm from owners who have imported their Tesla’s into the country."
Above: Cities like Wellington, New Zealand are pushing electric vehicle growth forward (Source: Wellington City Council)
Electric vehicle growth continues worldwide, led by China. Europe and the U.S. aren't far behind. And, this week, research from Transport & Environment forecasts Europe will have over 500,000 EVs on the road by the end of this year noting that, "Electro-mobility offers an unequalled solution to make Europe’s transport more efficient and less polluting... Europe is the world’s second biggest market, aided by strong sales in Norway and the Netherlands." News also came this past week that the U.S. just surpassed 500,000 electric vehicles.
Above: Geographies showing significant electric vehicle growth (Source: Transport & Environment)
The Transport & Environment research report also notes, "Tesla is by far the largest [battery electric vehicle manufacturer] with around 9300 new cars sold in Europe in 2015, and with many more in the USA and around the world... [and] Global battery production for EVs is currently dominated by Panasonic [see below], which has a strategic partnership with Tesla to whom it sells most of its battery output. Reflecting this, output has been growing steadily and is expected to increase dramatically in the near future, reflecting the opening of Tesla and Panasonic’s new joint venture ‘Gigafactory’ in the Nevada Desert." They also note that Tesla, "is pushing the other global players to rethink their plans for competitive EV offerings."
Above: Growth in battery production for electric vehicles in MWh, dominated by Panasonic, Tesla's battery partner (Source: Transport & Environment data adapted from industry sources)
Looking at data points in these recent research studies, it's clear that electric vehicle growth is advancing and Tesla's mission to "accelerate the advent of sustainable transport" is, indeed, underway. However, the real accelerant will be Tesla's forthcoming Model 3. With ~400,000 pre-orders, it's likely that Tesla may, single-handedly, change the automotive industry and be the catalyst for a paradigm shift in vehicle electrification. Until then, these early signs are very promising.